Ascend Learning on tap; Match lags; Coty, Mattel gains continue; Bristow tanks post-earnings

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 11 – While the high-yield primary market saw no new deals price during Monday’s session, one did join the forward calendar.

Ascend Learning, LLC plans to price $300 million senior notes due Aug. 1, 2025 (existing ratings Caa2/CCC+) on Tuesday with price talk for a coupon of 6 7/8% and an issue price of 93 to 94.

Ascend joins Getty Images Inc. on the forward calendar with Getty planning to price its $400 million offering of eight-year senior notes (S&P: CCC+) in the middle part of the week.

Meanwhile, the secondary space was largely flat on Monday with trading volume light, sources said.

Match Group, Inc.’s newly priced 5 5/8% senior notes due 2029 were the most actively traded issue in the secondary space with the notes lagging their issue price.

CommScope Inc.’s three tranches of senior notes remained active although little changed during Monday’s session.

Mattel, Inc.’s 6¾% senior notes due 2025 (B1/BB-/BB) and Coty Inc.’s 6½% senior notes due 2026 continued their upward momentum on Monday after both posted surprise earnings beats.

However, Bristow Group Inc.’s junk bonds tanked after the company reported an earnings miss and terminated its acquisition of Columbia Helicopters, Inc.

Ascend Learning mirror notes

Ascend Learning disclosed plans to price $300 million of notes mirroring its existing senior unsecured notes due Aug. 1, 2025 (existing ratings Caa2/CCC+) on Tuesday afternoon.

The indicative coupon is 6 7/8%, the same as the notes in the existing issue.

Initial price talk is 93 to 94, a trader said.

Barclays is the left lead bookrunner.

The Burlington, Mass.-based provider of educational content, software and analytics solutions plans to use the proceeds to fund a dividend to its shareholders and put cash on its balance sheet.

The forward calendar

Ascend Learning takes a spot on a sparsely populated active calendar.

Getty Images is on the road with a $400 million offering of eight-year senior notes (S&P: CCC+) set to price in the middle part of the week ahead.

Initial price talk has the deal coming to yield in the 10½% area.

However, other opportunistic issuers – some clearing their earnings blackout periods – are expected to step forward as the week progresses, sources say.

Investors have cash to put to work in junk and are on the lookout for another build-up of the new issue calendar, sources say.

One factor inhibiting new issue volume is an earnings blackout period, as some potential issuers await fresh earnings data ahead of any potential capital markets transactions, sources say.

Match lags

On a relatively light volume day, Match Group’s newly priced 5 5/8% senior notes due 2029 were in focus with the notes trading down in the high-volume activity.

The 5 5/8% notes were quoted at 99¾ bid, par ¼ offered in the mid-afternoon.

They were changing hands around 99 7/8 shortly before market close with more than $25 million of the bonds on the tape.

Like most of the recent deals to underperform in the secondary space, sources attributed the lackluster performance of the 5 5/8% notes to the tight pricing.

Match priced an upsized $350 million issue of the 5 5/8% notes at par in a Friday drive-by.

The yield printed in the middle of the 5½% to 5¾% yield talk. Initial guidance was 6%.

The initial size of the deal was $300 million.

CommScope active

CommScope’s newly priced senior notes remained major volume movers in the secondary space on Monday although the notes were relatively unchanged.

CommScope’s unsecured tranche continued to trade at a premium to its issue price while the network infrastructure provider’s secured tranches remained largely wrapped around par.

CommScope’s 8¼% senior notes due 2027 were quoted at 101 5/8 bid, 102 offered, sources said.

They were changing hands around 102 in the late afternoon with about $17.25 million on the tape.

CommScope’s 5½% senior notes due 2024 were quoted at par 3/8 bid, par 5/8 offered and were changing hands around par ½ in the late afternoon.

More than $20 million of the bonds were on the tape during Monday’s session.

CommScope’s 6% senior notes due 2026 were the least active of the tranches with the notes continuing to trade around par, according to a market source.

CommScope priced an upsized $3.75 billion of senior notes over three tranches last Thursday with each tranche pricing at par.

While the secured tranches saw the heaviest demand during bookbuilding, the unsecured tranche was the most positively received in the secondary space.

Upward momentum

Mattel’s 6¾% senior notes due 2025 and Coty’s 6½% senior notes due 2026 continued their upward momentum on Monday after both made significant gains on Friday following large earnings beats.

Mattel’s 6¾% notes rose another 7/8 point to 99 7/8 on Monday, according to a market source.

More than $18 million of the bonds changed hands during the session.

The notes rose 1¼ points to 99 on Friday after the toy manufacturer reported EBITDA that was nearly double analyst expectations.

Coty’s 6½% senior notes due 2026 continued to make large gains in secondary trading.

The 6½% notes rose 1¾ point on Monday to 94¼ with about $10 million of the bonds changing hands.

The notes rose 2½ points on Friday to 92½.

The beauty company beat on both the top and bottom lines in its second-quarter earnings report.

Bristow tanks

Bristow’s junk bonds tanked in a flurry of late-day trading activity after the company reported its third-quarter earnings and announced the termination of its acquisition of Columbia Helicopters, according to a market source.

The civil aviation company’s 8¾% senior notes due 2023 dropped almost 9 points late Monday in the last hour of Monday’s trading session.

The 8¾% notes started the day at 82 and were trading on an 81 handle in the run up to the earnings announcement, a market source said.

Following the announcement, the notes traded as low as 70 but stood poised to close the day at 73, the source said.

More than $10 million of the bonds traded hands during Monday’s session.

While volume was light, Bristow’s 6¼% senior notes due 2022 dropped more than 13 points to 35 Monday afternoon with the yield almost 43%, a market source said.

While Bristow’s third-quarter earnings beat on the bottom line, it missed on the top.

Third-quarter revenue was $317.1 million versus analyst expectations for revenue of $373.5 million.

Bristow reported a loss per share of 57 cents, which beat analyst expectations for a loss per share of 59.

Bristow also announced that it was terminating its planned acquisition of Columbia Helicopters and paid the company $20 million in connection with the termination.

In November 2018, Bristow announced it had signed a definitive agreement to acquire Columbia Helicopters for $560 million.

Developments following the definitive agreement made a merger not feasible, the company said in a press release.

Mixed Friday flows

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

High yield ETFs sustained $248 million of outflows on the day.

However, actively managed high-yield funds were flat to moderately positive with $20 million of inflows on Friday, the trader said.

Factoring in the $3.86 of inflows which the combined funds saw in the most recent week, the fourth largest weekly inflow on record, the combined funds have seen a robust $8.2 billion of net inflows in the year to last Friday's close, including $3.3 billion into the ETFs, the trader said.

Hence, in terms of cash attracted to the asset class, the junk funds are off to a strong in 2019, trailing record-setting outflows of $46.9 billion in 2018, the source added.

Indexes mixed

Indexes remained mixed on Monday after a mixed week last week.

The KDP High Yield Daily index was down 6 basis points to close Monday at 69.42 with the yield now 6.28%.

The index saw a cumulative gain of 8 bps on the week last week.

The ICE BofAML US High Yield index gained 7.7 bps on Monday with the year-to-date return now 4.963%.

The index posted a cumulative gain of 16.7 bps on the week last week.

The index sank below the 5% threshold last Thursday after shooting past it just two days earlier last Tuesday.

The index surpassed 4% year-to-date returns on Jan. 30.

The CDX High Yield 30 index dropped 2 bps to close Monday at 105.63.

The index dropped a cumulative 25 bps on the week last week.

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