Alcoa prices; MSCI, Calfrac on tap; BWX Technologies, JW Aluminum on the road; Sprint, Hexion up

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 14 – The domestic primary market was active on Monday with one deal pricing and several more on tap.

Alcoa Corp. priced a $500 million issue of 10-year senior notes (Ba1/BB+) at par to yield 6 1/8% in a drive-by. The notes dominated secondary market activity after breaking for trade and were seen well above their issue price.

MSCI Inc. was expected to price a $500 million offering of 8.5-year senior notes (Ba2/BB+) in a Monday drive-by but terms were not available by press time.

Price talk was for a yield in the 5¼% area, slightly wide of early guidance in the low 5% area.

Calfrac Holdings LP is on deck for Tuesday, which will also see the launch of roadshows from BWX Technologies, Inc. and JW Aluminum Continuous Cast Co.

Kraton Corp. is in the market with a euro-denominated offering with proceeds to be used to pay off dollar-denominated debt.

While Alcoa’s new notes were in focus in the secondary market, Sprint Corp.’s 8¾% senior notes due 2032 and 6 7/8% senior notes due 2028 (B3/B) also saw heavy trading volume with the notes climbing 2 points after Sprint announced more aggressive terms for its consent solicitations.

Hexion Inc.’s 9% senior notes due 2020 (Ca/CCC) were also up in high volume trading after the company announced first quarter earnings.

Centene Corp.’s newly priced 5 3/8% senior notes due 2026 (Ba1/BB+) remained active in the secondary space although with the notes were down slightly at market close.

Alcoa drives by

Alcoa priced a $500 million issue of 10-year senior notes (Ba1/BB+) at par to yield 6 1/8% in a Monday drive-by.

The yield came at the tight end of yield talk in the 6¼% area and well inside of initial guidance in the 6½% area.

JP Morgan, Credit Suisse, Goldman Sachs, Citigroup, Morgan Stanley, BofA Merrill Lynch, Deutsche Bank and BNP Paribas were the joint bookrunners.

The Pittsburgh-based aluminum producer intends to issue the notes via its wholly owned subsidiary Alcoa Nederland Holding BV.

Proceeds will be used for general corporate purposes including mandatory or discretionary contributions to Alcoa’s U.S. pension and other post-retirement benefit plans.

MSCI misses deadline

Elsewhere on Monday, MSCI talked its $500 million offering of 8.5-year senior notes (Ba2/BB+) to yield in the 5¼% area, slightly wide of early guidance in the low 5% area, a trader said.

The deal, via JP Morgan, was expected to price on Monday. However, no terms were available at press time.

The New York-based financial services provider plans to use the proceeds for general corporate purposes including buybacks of its common stock and potential acquisitions.

Calfrac talk 8¼% to 8½%

Calfrac Holdings is on-deck for Tuesday.

The Calgary, Alta.-based oilfield services provider talked its $650 million offering of eight-year senior notes (B3/B-) to yield 8¼% to 8½%.

RBC is the bookrunner for the debt refinancing deal.

BWX Technologies roadshow

BWX Technologies plans to start a roadshow on Tuesday in New York for a $400 million offering of eight-year senior notes.

An investor conference call is scheduled to get underway at noon ET on Tuesday.

The deal is expected to price on Friday.

Morgan Stanley, Wells Fargo, JP Morgan, TD, US Bancorp and PNC are the joint bookrunners.

The Lynchburg, Va., supplier of nuclear operations services and products plans to use the proceeds to pay off its credit facilities and for general corporate purposes.

JW Aluminum starts Tuesday

JW Aluminum also plans to start a roadshow on Tuesday for a $285 million offering of eight-year senior notes, via sole bookrunner Goldman Sachs.

The Goose Creek, S.C.-based flat rolled aluminum manufacturer plans to use the proceeds to repay its term loan and to fund a portion of its boilermaker project.

JW Aluminum postponed a $300 million offering of eight-year senior secured notes in February 2018, citing adverse market conditions.

Kraton brings €290 million

In a deal that sees a U.S. corporation raising euros to pay off dollar-denominated debt, Kraton Corp. is in the market with €290 million of eight-year senior notes.

A roadshow for the offer, which is being led by JP Morgan, is expected to wrap up on Friday.

The Houston-based producer of engineered polymers and styrenic block copolymers plans to use the proceeds, plus an additional $90 million in incremental dollar denominated term loans under its existing senior secured term loan, to tender for and/or redeem its 10½% senior notes due 2023.

The European primary market has been quiet over the past two weeks, as spring holidays have taken place in a number of European countries, a London-based debt capital markets banker said.

Now that the vacation season is in the rear-view mirror, look for new issue activity in the European market to pick up, the source advised.

Alcoa in demand

Alcoa was active in the secondary space after breaking for trade with almost $90 million of the bonds in play, a market source said.

The new notes immediately traded up and were seen at 101¼ bid, 101¾ offered late in the afternoon, sources said.

“The book must have been good,” a market source said, noting that the notes traded up despite pricing at the tight end of talk.

There are not many junk bonds available from aluminum companies and Alcoa has decent credit, another source said of the notes performance.

In a joint venture backed by Apple, Alcoa recently announced that it was joining with Rio Tinto to advance the large-scale development and commercialization of a carbon-emission free process to produce aluminum.

Sprint asks for consent

Sprint’s junk bonds were once again in the spotlight and seeing gains after announcing consent solicitations for its 67/8% notes due 2028 and 8¾% notes due 2032.

The 6 7/8% notes were up 2 points to close at 101½, a market source said. More than $25 million of the bonds traded during Monday’s session.

The 8¾% notes were also up 2 points to close at 113 bid, 114 offered. More than $35 million of those bonds traded.

Sprint is soliciting consents from holders of the notes to amend the notes’ indenture to enable its merger with T-Mobile, Prospect News reported.

Sprint is offering to pay holders who give their consents to the amendments a pro rata share of $49.5 million for the 6 7/8% notes and $40 million for the 8¾% notes if it secures the needed majority for that series.

“The terms were a little more aggressive,” a market source said.

Sprint has already secured consents for eight other series of notes. (See related article)

While Sprint’s junk bonds were again active and making gains on Monday, T-Mobile’s junk bonds were not doing much of anything, a market source said.

Hexion gains

Hexion’s 9% senior notes due 2020 climbed 2¾ point on Monday after reporting first quarter earnings prior to the market open.

The notes traded up to 84¾ at market close with more than $21 million bonds traded during Monday’s session.

Hexion reported a net loss of $13 million for the first quarter, a 9% increase in sales to $946 million and a segment EBITDA at $118 million, which is a 24% year-over-year increase.

Centene remains active

Centene’s recently priced 5 3/8% senior notes due 2026 remained the most active in the secondary space with the notes seen slightly weaker at the market close.

The notes were seen at par ¾ bid, 101 ¼ offered. They closed the market down about 1/8 point at par 7/8. About $17 million of the bonds traded during Monday’s session.

Centene priced the upsized $1.8 billion issue of 5 3/8% notes at par in a drive-by on May 9.

Indexes mixed

Benchmarks for the high-yield secondary market were again mixed on Monday with one seeing a slight loss, another a slight gain and a third remaining flat.

The KDP High Yield index was flat at 70.65 while the yield increased 1 basis point to 5.82%. While the index was also 70.65 on Friday, the yield was 5.81%.

The Merrill Lynch High Yield index crossed into positive territory on Monday. The index was up 6.5 bps on Monday with the year-to-date return now 0.019%.

Monday marked the first time the year-to-date return was in positive territory since April 22.

The index broke into positive territory after a long run of negative year-to-date returns on April 12 but returned to negative territory on April 23.

The CDX High Yield 30 index again took a slight dip on Monday. The index was down 7 bps to close Monday at 107.14. The index dipped 4 basis points to close Friday at 107.21 after a 35 bps rise on Thursday.

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