Morning Commentary: United Group notes on deck; Thursday deals hug modest premiums

By Paul A. Harris

Portland, Ore., May 10 – The April 6 week appeared poised for a low-key finish after putting up the biggest weekly issuance totals in more than nine months in the run-up to Friday.

For the week to date, the new issue market saw issuers raise $10.5 billion, the biggest weekly total since the week of Aug. 6, 2018, which saw $12.33 billion of issuance.

Although there are a couple of dollar-denominated deals on the active calendar, there were no early indications that either would price on Friday, sources said.

In a generally quiet market, the biggest new issue news came out of Europe.

Amsterdam-based and EM-focused United Group BV set price talk in its €856 million two-part offering of high-yield notes.

The deal features six-year senior secured floating-rate notes (B) with one year of call protection, talked to price at par with a 425 basis points spread to Euribor with a 0% Euribor floor.

United Group is also selling 6.5-year senior unsecured pay-if-you-can notes (B-) that are non-callable for two years, with 8¾% to 9% cash-pay talk that would step up by 75 bps for in-kind interest payments.

The deal is set to price on Friday.

Thursday deals

The Thursday session generated nearly one-third of the above-mentioned $10.5 billion weekly total.

Most of the Thursday issuance was trading at modest premiums to new issue prices on Friday morning.

The most active was the Bausch Health Cos. Inc. 7% senior notes due January 2028 (B3/B-/B), which were par ¼ bid, par 3/8 offered, according to a trader, who noted seeing buyers all morning.

The Bausch Health 7% notes priced at par on Thursday in a $750 million tranche. Bausch Health also priced a $750 million tranche of 7¼% senior notes due May 2029 at par on Thursday.

One of the high-yield market's most familiar names, Charter Communications, Inc., also appeared on Thursday to price a downsized $750 million (from $1 billion) issue of 5 3/8% senior notes due June 2029 (B1/BB/BB+) at par.

The trader, who saw the new Charter (CCO Holding LLC and CCO Holdings Capital Corp.) 5 3/8% notes at par bid, par 1/8 offered on Friday morning, said that Charter downsized the deal in order to achieve the rate it wanted and added that the new 5 3/8% paper was trading as though it had been priced “on the screws.”

The new Century Communities, Inc. 6¾% senior notes due 2027 (B2/B+) were par ¼ bid, par 3/8 offered on Friday morning in light trading, the source said.

The upsized $500 million issue (from $400 million) priced at par on Thursday.

Away from recent issues the bonds of Tronox Ltd. were under pressure following a Thursday earnings report in which the company reported a loss of $34 million in its first quarter.

The Tronox Inc. 6½% senior notes due April 2026 were down a point on Friday at 97½.

Mixed Thursday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Thursday, according to a trader.

High-yield ETFs sustained $337 million of outflows on the day.

However, actively managed high-yield funds saw $60 million of inflows on Thursday, the source said.

News of Thursday’s daily flows follows a late Thursday afternoon report that the combined funds sustained $212 million of outflows in the week to Wednesday's close, according to Lipper US Fund Flows.

It was only the fourth negative weekly cash flow of 2019, the trader said.

© 2015 Prospect News.
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