Morning Commentary: EP Energy, BWX Technologies offerings on deck; new Valeant notes trade up

By Paul A. Harris

Portland, Ore., May 18 – The Friday session in the high-yield primary market got underway with a considerable calendar expected to clear before the weekend.

EP Energy Corp. talked its $1 billion offering of eight-year 1.125 lien senior secured notes (B1/B) to yield 7¼% to 7½%.

Books close at 2 p.m. ET on Friday, and the deal, via lead left bookrunner Credit Suisse Securities (USA) LLC, is set to price thereafter.

EP Energy’s offering is heard to be going fine at price talk, according to a trader, who said that the Houston-based E&P might upsize to as much as $1.4 billion. EP Energy needs to take out the Everest Acquisition LLC/Everest Acquisition Finance Inc. 9 3/8% senior notes due May 2020, and this might be their best opportunity, the trader said.

It has been radio silence from the dealer regarding the book size, the source added.

EP Energy announced that it is tapping the market to repay revolver debt and put cash on its balance sheet.

Elsewhere BWX Technologies, Inc. talked its $400 million offering of eight-year senior notes (Ba3/BB+) to yield in the 5½% area.

Official talk comes at the tight end of the 5½% to 5¾% initial guidance.

Books were scheduled to close at 10 a.m. ET on Friday, and the deal was set to price thereafter.

Morgan Stanley & Co. LLC, Wells Fargo Securities LLC, J.P. Morgan Securities LLC, TD Securities (USA) LLC, U.S. Bancorp Investments Inc. and PNC Capital Markets LLC are the joint bookrunners.

Two other dollar-denominated deals had been expected to clear before the weekend.

Ithaca Energy (North Sea) plc has been marketing $350 million of five-year senior notes (Caa1/CCC+).

Initial price talk came in the low 9% area

And JW Aluminum Continuous Cast Co. is in the market with a $285 million offering of eight-year senior secured notes with early guidance in the mid-to-high 9% area.

JW Aluminum is returning to the new issue market after it postponed a $300 million offering of eight-year senior secured notes in February 2018, citing adverse market conditions.

There were no updates on either Ithaca Energy or JW Aluminum on Friday morning.

In Europe, meanwhile, Premier Foods Finance plc talked its £300 million offering of senior secured fixed-rate notes due October 2023 (B2/B/B) to yield in the 6¼% area.

That deal is also set to price on Friday.

Valeant trades higher

The new Valeant Pharmaceuticals International, Inc. 8½% senior notes due Jan. 31, 2027 (Caa1/B-/B-) were trading at a premium to new issue at 101 bid, 101¼ offered on Friday morning, according to a bond trader.

Another trader spotted the new Valeant 8½% notes at par 7/8 bid, 101 1/8 offered, after trading as high as 101 3/8.

The $750 million issue of 8.6-year notes priced at par in a Thursday drive-by.

A couple of smaller Thursday deals were not faring nearly as well, traders said.

The new SRS Distribution, Inc. 8¼% notes due July 2026 (Caa2/CCC+) were 98¼ bid, 99¼ offered on Friday morning.

The downsized $350 million issue (from $380 million) priced at par on Thursday.

The new Hearthside Food Solutions LLC 8½% senior notes due June 2026 (Caa2/CCC+) were 98½ bid, 99¼ offered on Friday morning.

The downsized $350 million issue (from $375 million) also priced at par on Thursday.

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