Primary kicks into high-gear; Transocean prices; Netflix on tap; forward calendar balloons; Mattel drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 22 – After a slow week that closed with a blank forward calendar, the domestic primary market kicked into high gear on Monday with one drive-by deal pricing and the forward calendar ballooning.

Seven deals joined the forward calendar on Monday, including a highly anticipated offering from Netflix, Inc.

In drive-by action, Transocean Inc. priced a $750 million issue of seven-year senior guaranteed notes (B3/B) at par to yield 7¼%.

Netflix is expected to price a $2 billion equivalent amount of non-callable 10.5-year senior notes (current ratings Ba3/BB-) in two tranches on Tuesday.

The media streaming company’s 5 7/8% notes due 2028 were active and trading down after the new offering was announced.

KLX Energy Services Holdings, Inc. started a roadshow on Monday for a $250 million offering.

GFL Environmental Inc., HC2 Holdings, Inc. and INTL FCStone Inc. plan to start roadshows on Tuesday.

GEP Haynesville LLC began marketing a $600 million offering of five-year senior notes (B3).

HC2 Holdings, Inc. also intends to sell a $225 million to $250 million offering of senior notes.

Meanwhile, trading volume in the secondary space remained thin, sources said.

Mattel, Inc.’s 6¾% senior notes due 2025 (B1/BB-/BB) were in focus and trading down after competitor Hasbro reported decreasing revenue due to the Toys “R” Us bankruptcy.

Hi-Crush Partners LP’s 9½% senior notes due 2026 saw heavy-trading volume with the notes firming despite the company reporting “abysmal” earnings prior to the market open, a market source said.

Transocean drives by

The drive-by market reopened and the active forward calendar ballooned during Monday’s primary market session.

Transocean priced a $750 million issue of seven-year senior guaranteed notes (B3/B) at par to yield 7¼% in a Monday drive-by.

The yield printed in the middle of official yield talk in the 7¼% area, which was also preliminary talk.

Citigroup was the left bookrunner. Wells Fargo, Goldman Sachs, DNB, Morgan Stanley and Credit Agricole were the joint bookrunners.

The Steinhausen, Switzerland-based provider of offshore contract drilling services for oil and gas wells plans to use the proceeds to pay a portion of its merger with Ocean Rig UDW.

Netflix coming Tuesday

Netflix expects to price a $2 billion equivalent amount of non-callable 10.5-year senior notes (current ratings Ba3/BB-) in two tranches on Tuesday.

The deal was marketed by means of a Monday investor conference call.

The dollar-denominated tranche is coming with official price talk in the 6¼% area, tight to preliminary guidance in the 6 3/8% area, sources said.

Netflix also plans to place a euro-denominated tranche of the notes on Tuesday. With official talk pending at press time Monday, preliminary guidance is in the 4 5/8% area.

Tranche sizes remain to be determined.

Morgan Stanley, Goldman Sachs, JP Morgan, Deutsche Bank and Wells Fargo are the joint bookrunners for the general corporate purposes deal.

GFL Environmental’s roadshow

GFL Environmental plans to start a roadshow on Tuesday in New York for a $400 million offering of eight-year senior notes (Caa2/CCC+).

The deal is set to price on Thursday.

Barclays is the lead left bookrunner. BMO and RBC are the joint bookrunners.

The Toronto-based environmental services company plans to use the proceeds to help fund its merger with Waste Industries.

INTL FCStone starts Tuesday

INTL FCStone plans to start a roadshow on Tuesday for a $350 million offering of five-year senior secured notes (expected ratings Ba3/BB-).

The offering is expected to price later in the Oct. 22 week.

BMO, BofA Merrill Lynch, Jefferies and Capital One are the joint bookrunners for the debt refinancing deal.

GEP Haynesville to price Friday

GEP Haynesville began marketing a $600 million offering of five-year senior notes (B3) on Monday.

Initial talk has the deal coming to yield 8½% to 8¾%, a trader said.

JPMorgan Securities is managing the sale.

The Woodlands, Texas-based oil and gas producer plans to use the proceeds, along with $350 million of new common equity, to repay $200 million of debt under its revolving credit facility and to redeem $733 million of preferred equity.

KLX’s secured deal

KLX Energy Services Holdings started a roadshow on Monday for a $250 million offering of seven-year senior secured notes.

The deal is expected to price on Friday.

Initial price talk has the notes coming with a yield in the mid-to-high 9% area, a trader said.

JPMorgan is the lead.

The Wellington, Fla.-based oilfield services provider plans to use the proceeds to help fund its acquisition of Motley Services, LLC.

Remaining proceeds will be used for general corporate purposes including acquisitions.

HC2 Holdings starts Tuesday

HC2 Holdings plans to start a roadshow on Tuesday in New York for a $535 million offering of five-year senior secured notes.

Initial guidance has the deal coming with a yield in the low-to-mid 9% area, a trader said.

The deal is set to price early in the Oct. 29 week.

Jefferies is the sole bookrunner for the debt refinancing deal.

Bluewater’s mandate

Bluewater Holding mandated DNB Markets and Pareto Securities to arrange investor meetings beginning on Tuesday.

The Hoofdorp, Netherlands-based company intends to sell $225 million to $250 million of five-year senior notes, pending market conditions.

Proceeds, in addition to proceeds from a new revolving credit facility to be sized from $200 million to $220 million, would be used to refinance the company's balance sheet.

Bluewater Holding BV provides equipment and services to support offshore oil and gas exploration and production.

It has operations in the United Kingdom, Angola, Nigeria, China and Brazil.

Netflix active

Netflix’s 5 7/8% senior notes due 2028 were active in the secondary space with the notes trading down after the media streaming company launched its new offering.

The notes were down about ½ point to trade at 98 1/8, a market source said. More than $13 million of the bonds were on the tape by the late afternoon.

The 5 7/8% notes were up last week after the company reported a large third-quarter earnings beat. They were trading between 99 and par, a market source said.

Mattel drops

Mattel’s 6¾% senior notes due 2025 were losing ground in high-volume trading on Monday after competitor Hasbro announced declining revenue.

The notes were down about ¾ point to 94 1/8, a market source said. More than $25.5 million of the notes were on the tape by the late afternoon.

They were losing ground after Hasbro announced a large third-quarter earnings miss, a market source said.

Hasbro announced non-GAAP earnings per share of $1.93 on revenue of $1.57 million versus analyst expectations for earnings per share of $2.23 on revenue of $1.71 billion.

The decline in Hasbro’s revenue was attributed to the closure of Toys “R” Us stores. “They’re having a hard time because the pipeline has been cut,” a market source said.

Toys “R” Us vendors have been struggling to move inventory after the toy store retailer’s bankruptcy, a market source said.

The 6¾% senior notes are the most liquid issue in Mattel’s capital structure, a market source said.

Mattel priced a $500 million add-on to the 6¾% notes at 96.25 to yield 7.403% in May. The toy manufacturer priced $1 billion of the 6¾% notes at par in December of 2017.

Hi-Crush eyed

Hi-Crush’s 9½% senior notes due 2026 were active in the secondary space after the company announced third-quarter earnings prior to the market open.

The 9½% notes gained in the high-volume activity.

However, they were in the sights of distressed debt players.

The notes were firming largely due to a credit versus equity trade, a market source said.

They were up about 1 point to trade just south of 92 with $18.5 million of bonds on the tape by the late afternoon, another source said.

Hi-Crush’s equity dropped more than 5% on Monday after the company announced third-quarter earnings and slashed its quarterly dividend by more than 50 cents prior to the market open.

Given the circumstances, “people were viewing the credit favorably,” a source said.

However, Hi-Crush’s earnings “were abysmal,” with the company missing analyst expectations for EBITDA by a large amount, the source said.

Hi-Crush reported adjusted EBITDA of $49 million to $51 million for the third-quarter.

The proppant and logistics service provider to the petroleum industry has a business “that could be cracking,” a market source said.

The proppant sector as a whole has been under pressure with massive supply coming online, the source said.

The 9½% notes have been under pressure since Hi-Crush priced the $450 million issue at par in late July.

The deal attracted a lot of fast-money, a market source said.

“It doesn’t seem like they have the most supportive holders,” the source said.

Hefty Friday outflows

The daily cash flows of the dedicated high-yield bond funds were decidedly negative on Friday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs sustained $549 million of outflows on the day.

Actively managed high-yield funds saw $250 million of outflows on Friday, the trader said.

Indexes slide

Three benchmarks for the high-yield market opened the week as they closed the last – with losses.

The KDP High Yield Daily index dropped 10 basis points to close Monday at 69.74 with the yield now 6.09%.

The index was down 9 bps on the week last week with the yield gaining 5 bps.

The ICE BofAML US High Yield index slid 1 bps on Monday with the year-to-date return now 1.497%.

The index closed out a volatile week last week with a 7.8 bps loss.

The CDX High Yield 30 index fell 22 bps to close Monday at 105.49.

The index dropped 50 bps on the week last week.

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