CGG, Drax roll out dollar deals, new American Greetings bonds trade sharply higher

By Paul A. Harris

Portland, Ore., April 6 – A new issue calendar for the April 9 week began to take shape on Friday morning as two European issuers set roadshows for dollar-denominated notes.

France-based CGG Holding (US) Inc. began a roadshow on Friday for a $650 million equivalent offering of five-year senior secured notes (B2/B) coming in dollar- and euro-denominated tranches.

The dollar-denominated notes have initial price talk in the high 9% area. The euro-denominated notes have initial talk in the high 8% area to 9%.

The roadshow wraps up on Wednesday.

Global coordinator Credit Suisse will bill and deliver for the dollar-denominated notes. Global coordinator JP Morgan will bill and deliver for the euro-denominated notes.

Meanwhile England-based Drax Group Co. starts a roadshow on Monday for a $300 million offering of 7.5-year senior secured notes (current ratings BB+//BB+).

Global coordinator Barclays will bill and deliver. BofA Merrill Lynch is also a global coordinator. Deutsche Bank is a joint bookrunner.

American Greetings gains

Bonds priced Thursday at a steep discount by American Greetings Corp. were up well over 3 points on Friday, a buyside source said.

American Greetings’ 8¾% senior notes due 2025 (Caa1/CCC+) were at 90½ bid, 91½ offered at mid-morning.

The twice-downsized and restructured $282.5 million issue priced at 87 to yield 11.499%. The issue price as higher than talk for a price of 85.

It was Happy Easter as the Cleveland-based greeting card company set out with $325 million of eight-year notes, initially guided in the low-to-mid 8% range. However by the time the roadshow wrapped up it was Get Well Soon, as guidance blew out to 10½% to 11%, proceeds were shifted to the term loan and one year was lopped off the maturity of the bond.

Meanwhile, in another recent transaction that sailed into a hurricane of investor pushback, McDermott International Inc.’s 10 5/8% senior notes due May 2024 (B2/B-) were trading well above their new issue price – also a big discount to par – at 96 3/8 bid, 96 7/8 offered, Friday morning, the buysider said.

However those levels were down from 97 1/8 bid, 97 5/8 offered seen on Thursday morning, sources said.

The downsized $1.3 billion issue priced at 94.75 to yield 11.865% on Wednesday, 136.5 basis points beyond the midpoint of yield talk amid a raft of document changes and bereft of a proposed tranche of eight-year notes. The amount was cut from $1.5 billion.

Turning away from deals that challenged the market, the higher quality offering from Targa Resources Partners LP of 5 7/8% senior notes due April 2026 (Ba3/BB-) was trading at par 5/8% bid, par 7/8 offered on Friday morning.

The upsized $1 billion issue priced at par in a Thursday drive-by.

Mixed Thursday flows

Daily cash flows for dedicated high-yield bond funds were mixed on Thursday, the buyside source said.

High-yield ETFs saw $417 million of inflows on the day.

However asset managers sustained $110 million of outflows on Thursday.

Those daily fund flow numbers follow a report on Thursday from Lipper US Fund Flows that dedicated junk funds sustained $573 million of outflows in the seven-day period ending on April 4.

It was the ninth negative flow in the past 10 weeks, extending the funds’ year-to-date cumulative cash loss to $16.08 billion, according to a Prospect News analysis of the data.

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