Morning Commentary: Junk trading with good tone; Protection 1 on deck and oversubscribed

By Paul A. Harris

Portland, Ore., April 20 – The junk bond market was up ¼ to ½ point and seeing better buyers heading into mid-morning on the East Coast of the United States on Wednesday, a trader said.

Energy names were up more, the trader remarked, and added that there is a lot of cash being put to work in high-yield bonds.

The dedicated junk bond funds had positive cash flows on Tuesday, with high-yield ETFs seeing $217 million of inflows on the day. Actively managed funds saw $15 million of inflows on Tuesday.

High-yield ETFs were mixed and basically flat heading at mid-morning Wednesday. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 3 cents, or 0.04%, at $83.34 per share. SPDR Barclays High Yield Bond ETF (JNK), at $34.99 per share, was down a penny, or 0.01%.

Quiet primary

The dollar-denominated primary market was quiet on Wednesday morning.

Protection 1’s $3.14 billion offering of second-priority senior secured notes due 2023 (B3/B-) is on deck.

The deal, backing the buyout of ADT Corp. by Apollo Global Management, was talked to yield 9¼% to 9½% on Tuesday.

Of the $3.14 billion amount, about $1.25 billion is being taken down by sponsor Apollo in a private placement, a trader said.

The remainder, about $1.89 billion, is being sold to accounts; that portion is said to be 1.5-times oversubscribed, the trader added.

Altice above issue prices

Freshly minted bonds from Europe-based cable operator Altice, a whopping $4.25 billion of junk that came in successive drive-bys on Monday and Tuesday, were trading above issue prices on Wednesday, the trader said.

The Altice Financing SA 7½% senior secured notes due May 15, 2026 (B1/BB-) were trading in context of par ½ bid heading into mid-morning, the trader said. The upsized $2.75 billion (from $2.25 billion) issue priced at par to yield 7½% on Monday, playing to about $7 billion in orders, sources said.

The new Altice-Cequel/Suddenlink 5½% senior secured notes due May 15, 2026 (Ba3/BB-) were at par 3/8 bid, par ½ offered on Wednesday morning.

The $1.5 billion issue priced at par on Tuesday.

The market expected a $1 billion upsize to the Tuesday deal, proceeds from which would have been used to refinance the Cequel 6 3/8% notes due 2021.

The upsize did not materialize as it might have triggered a credit ratings downgrade, the trader said.

Buzzi Unicem, Loxam on tap

The European primary market generated news on Wednesday morning.

Italy-based cement manufacturer Buzzi Unicem SpA talked a €500 million offering senior bullet notes due April 28, 2023 (BB+) at a 200 basis points spread to mid-swaps.

Books are closed.

The deal, which is coming in an investment-grade style execution – pre-marketed on a non-deal roadshow that started earlier this week – is said to be playing to €3.25 billion of orders and is set to price Wednesday.

Joint bookrunner Banca IMI will bill and deliver. BNP Paribas and Citigroup are also joint bookrunners.

And Paris-based equipment rental company Loxam SAS began a brief roadshow for a €210 million offering senior secured notes due 2023 on Wednesday in London.

The offer will be shopped in Paris on Thursday.

Deutsche Bank is managing the sale.

Loxam intends to use the proceeds to redeem its 7 3/8% senior subordinated notes due 2020.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.