Morning Commentary: New Shelf Drilling, CDK bonds trade higher; Albertsons floater on deck

By Paul A. Harris

Portland, Ore., June 6 – High-yield bonds priced earlier in the June 4 week were trading at premiums to new issue prices on Wednesday, a trader said.

The new CDK Global, Inc. 5 7/8% senior notes due June 2026 (Ba1/BB+) were 101½ bid, 102 offered, up a little on the morning.

The $500 million issue priced at par, tight to talk, on Monday.

Elsewhere the new Shelf Drilling Holdings, Ltd. 8¼% add-on notes were 101 3/8 bid, 101 7/8 offered.

The $300 million tap of the 8¼% notes, which mature in February 2025, priced at 101 on Tuesday.

Junk came out of the gates strong on Wednesday, the trader said.

High-yield ETFs were flat to slightly lower in volatile trading at mid-morning.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 0.05%, or 4 cents, at $85.43 per share. Earlier in the session those shares were up as much as 0.2%.

Albertsons on deck

In the primary market Albertsons Cos., Inc. is on deck with a $500 million offering of 5.5-year senior secured floating-rate notes.

The deal is expected to price on Wednesday, sources say.

As the market awaits official talk, early guidance is Libor plus 425 basis points with an offer price of 99.5.

Meanwhile Mueller Water Products, Inc. was set to shop its $425 million offering of eight-year senior notes (Ba3/BB) on a Wednesday conference call with investors.

The debt refinancing deal is in the market with early guidance in the high 5% to 6% area and is expected to price on Thursday.

An active European calendar figures to clear with executions expected to take place late in the June 4 week, a London-based senior debt capital markets banker said on Wednesday.

Conspicuous among the offers is the Matterhorn Telecom SA CHF 2,085,000,000 equivalent four-part senior secured notes deal (B2/B+), coming in tranches of seven-year notes in euros and Swiss francs and eight-year notes in euros and dollars.

In another conspicuous deal from the European technology, media and telecommunications sector, Amsterdam-based InterXion Holding NV has been marketing €1 billion of seven-year senior notes, also expected to price late in the June 4 week.

Price talk on both InterXion and Matterhorn was pending on Wednesday, the London-based banker said.

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