Morning Commentary: American Midstream, SunCoke on tap; Mattel’s $1 billion could price Thursday

By Paul A. Harris

Portland, Ore., Dec. 14 – A pair of small, late-year drive-by add-on deals surfaced on Thursday in the high-yield bond market.

American Midstream Partners LP and American Midstream Finance Corp. (existing ratings Caa1/B+) plan to price a $100 million add-on to their 8½% senior notes due Dec. 15, 2021.

Initial talk has the tap coming at a 102.5 reoffer price.

Active bookrunner Wells Fargo Securities LLC is the left lead for the debt refinancing deal.

Meanwhile SunCoke Energy Partners, LP plans to price a $70 million add-on to its 7½% senior notes due June 15, 2025.

Initial guidance has the deal coming at a reoffer price of 104.

BofA Merrill Lynch has the books.

Both add-ons are likely being driven by a substantial amount of reverse inquiry, a trader said.

Mattel possible for Thursday

Meanwhile, in what figures to be the last big junk issue of the year, Mattel, Inc.'s closely watched $1 billion offering of eight-year senior notes (Ba2/BB-/BB) appears to be going well despite the company's recent credit rating downgrades and an ensuing sell-off in its existing bonds, sources say.

The deal has attracted followings among investment-grade and high-yield accounts, and the book is thought to be OK, a trader said, adding that guidance remains in the high 6% to 7% area.

The Mattel deal, which is being led by BofA Merrill Lynch, was expected to remain in the market until Friday but could price Thursday, a trader said.

Inter Media talk 5%

In the European market Inter Media and Communication SpA talked its €300 million offering of guaranteed bonds due 2022 (BB-) to yield 5%.

The deal is set to price on Thursday.

Goldman Sachs is the global coordinator and bookrunner.

The Italian football club's debt refinancing deal is expected to be the final euro-denominated junk issue of 2017, a London-based sellside source said.

Secondary

Liquidity in the secondary market continues to thin, traders say.

High-yield ETFs were doing a moderate amount of selling on Thursday morning, according to a trader based in New York.

Freshly minted bonds from Cooke Omega Investments Inc. were trading well through new issue price, the trader said.

The Cook Omega 8½% senior secured notes due Dec. 15, 2022 (B3/B+) were 99 bid, par offered on Thursday morning.

The restructured $330 million deal priced at 97.058 to yield 9¼% on Wednesday.

Cook Omega came cheap, with investor-friendly concessions including a maturity that was reduced to five years from eight years, and covenant changes, the trader said, adding that there was not a lot of trading in the bonds, but they were well bid for.

Meanwhile the new Whiting Petroleum Corp. 6 5/8% senior bullet notes due Jan. 15, 2026 (B3/BB-) continued to turn in a strong secondary market performance on Thursday morning, trading at 101 3/8 bid, 101¾ offered, a trader said.

The paper got as high as 101¾ bid on Wednesday, the source added.

The $1 billion issue, upsized from $750 million, priced on Tuesday at par, on the tight end of yield talk in the 6¾% area.

Wednesday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Wednesday, a trader said.

High-yield ETFs sustained $244 million of outflows on the day.

Actively managed high-yield funds were essentially flat at negative $10 million on Wednesday.

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