Vistra, Grubhub price; Intelsat adds; Siri up; L Brands flat; funds out $3.22 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 6 – The domestic high-yield primary market resumed a vigorous pace on Thursday, as the market saw $2.2 billion of junk clear in three upsized tranches from three issuers.

Vistra Energy Corp., priced an upsized $1.3 billion issue of eight-year senior notes (Ba3/BB/BB) at par to yield 5% in a Thursday drive-by.

Grubhub Inc. priced an upsized $500 million issue of eight-year senior notes (Ba3/BB) at par to yield 5½%.

Intelsat Jackson Holdings SA priced an upsized $400 million add-on to its 9¾% senior notes due 2025 (Caa2/CCC+) at par to yield 9.746%.

Following Thursday’s session, only one deal remains on the forward calendar.

Stericycle, Inc. is expected price its $550 million split-rated offering of five-year senior notes (BBB-/BB+) on Friday.

The European primary market also saw an uptick of activity.

Cabot Credit Management Ltd. priced an upsized €400 million issue of five-year senior secured floating-rate notes (B1/BB-).

And Bilfinger SE priced a €250 million issue of 4½% five-year senior notes (S&P: expected BB).

Meanwhile, the secondary space was again firm on Thursday with the market up about 1/8 point, a source said.

New paper was in focus although with mixed performances.

Sirius XM Radio Inc.’s newly priced 5½% senior notes due 2029 (existing ratings Ba3/BB) continued to post gains in the secondary space with the notes trading at a large premium to their issue price.

L Brands, Inc.’s 7½% senior notes due 2029 (existing ratings Ba1/BB), in contrast, were straddling their issue price.

Outside of the new paper, Tesla Inc.’s 5.3% convertible notes due 2025 were rebounding from their lows following news about an uptick in deliveries.

The notes were slow to trade earlier in the week when stock hit a new low, with many watching the name to see if it would crack.

Meanwhile, high-yield mutual funds and exchange-traded funds broke a recently set record for the largest outflow year-to-date with $3.217 billion leaving the space for the week ended Wednesday.

The outflow marked the second consecutive billion dollar plus outflow and superseded the year’s previous record for largest outflow by almost $700 million.

Funds saw an outflow of $1.27 billion for the week ended May 29.

Prior to the week ended Wednesday, the largest outflow of 2019 was the $2.57 billion that left the space for the week ended May 15.

Vistra returns, upsizes

Vistra Energy priced an upsized $1.3 billion issue of eight-year senior notes (Ba3/BB/BB) at par to yield 5% in a Thursday drive-by.

The issue size increased from $1 billion.

The yield came at the tight end of yield talk in the 5 1/8% area and in line with initial guidance in the low 5% area.

Goldman Sachs was the left bookrunner for the debt refinancing deal.

The new 5% unsecured notes came just two days after Vistra Energy priced $2 billion of split-rated senior secured notes (Ba1/BBB-) in tranches of 3.55% notes due 2024 and 4.3% notes due 2029.

Grubhub oversubscribed

Grubhub priced a $500 million issue of eight-year senior notes (Ba3/BB) at par to yield 5½%.

The debt refinancing deal was playing to a $3 billion-plus order book before final pricing was announced, according to a trader.

The 5½% notes due 2027 were trading as high as 102 on the break and heading out late Thursday at 101½ bid, 101¾ offered, the source said.

Final price talk was 5½% to 5¾%, ratcheted in from early guidance of 6% to 6¼%.

J.P. Morgan Securities LLC, BofA Securities Inc., Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC were the joint bookrunners.

Intelsat taps 9¾% notes

Intelsat Jackson Holdings priced an upsized $400 million add-on to its 9¾% senior notes due 2025 (Caa2/CCC+) at par to yield 9.746%.

The issue size was increased from $300 million

The issue price came in the middle of price talk in the par area.

Initial price talk had the deal coming at 99.5 to par.

Goldman Sachs was the left bookrunner.

The satellite telecommunications company plans to use to proceeds for working capital and general corporate purposes, which may include, among other things, debt repayment, capital expenditures and strategic transactions.

Stericycle talk 5¼% to 5½%

Stericycle is on deck to price a $550 million split-rated offering of five-year senior notes (BBB-/BB+) on Friday.

Talk of 5¼% to 5½% surfaced Thursday, slightly wide of initial guidance in the low 5% area.

At Thursday's close, Stericycle was the only announced deal teed up to price ahead of the coming weekend.

June is typically a light month in the new issue market, as are July and August, a syndicate banker remarked on Thursday.

However, given supportive market conditions, and factoring an accommodative Federal Open Market Committee, summer could see a fairly decent parade of opportunistic refinancing deals, the source added.

Cabot upsizes

There was news Thursday in the European primary market.

Cabot Credit Management priced an upsized €400 million issue of five-year senior secured floating-rate notes (B1/BB-) with a 637.5 basis points spread to three-month Euribor at par on Thursday, according to market sources.

The issue size increased from €310 million.

The spread came on top of spread talk and lower than initial talk of Euribor plus 650 bps to 675 bps.

Morgan Stanley, Credit Suisse, HSBC and DNB were the global coordinators for the debt refinancing deal.

Bilfinger comes back

Bilfinger priced a €250 million issue of 4½% five-year senior notes (S&P: expected BB) at 99.45 to yield 4 5/8%.

Initial price talk was in the 5% area.

Commerzbank, Deutsche Bank and HSBC were the managers.

Bilfinger returned to the primary market on Thursday after postponing a €300 million offering in October of 2018, a market source recounted.

The Mannheim, Germany-based civil and industrial construction engineering services provider had been attempting to clear the market last October with five-year unsecured paper yielding 3¾%, the source added.

Sirius gains

Sirius XM’s newly priced 5½% senior notes due 2029 continued to post gains on Thursday.

The notes were seen at 101 1/8 bid, 101 3/8 offered early in the session, according to a market source.

They were changing hands at 101¼ in the late afternoon. More than $75 million of the bonds were on the tape shortly before the market close.

The notes closed Wednesday at 101 after trading in a wide range of par 1/8 to 101 after breaking for trade.

Sirius XM priced an upsized $1.25 billion issue of the 5½% notes at par in a Wednesday drive-by.

The issue size was increased from $1 billion.

The yield printed in the middle of yield talk in the 5½% area and at the tight end of the 5½% to 5¾% initial talk.

L Brands flat

L Brands’ newly priced 7½% senior notes due 2029 were straddling their issue price in the secondary space on Thursday.

The notes were range bound between 98 1/8 and 98 5/8, a market source said.

More than $47 million of the bonds were on the tape by the late afternoon.

Sources attributed the lackluster performance of the new notes to their tight pricing.

The fashion retailer priced a $500 million issue of the 7½% notes at 98.286 to yield 7¾% in a Wednesday drive-by.

Proceeds from the offering will be used to partially fund tender offers for the full $338.38 million outstanding of its 7% notes due 2020, up to $449 million of its 6 5/8% senior notes due 2021, its 5 5/8% senior notes due 2022 and its 5 5/8% senior notes due 2023.

Tesla rebounds

Tesla’s 5.3% senior notes due 2025 were rebounding from their lows on Thursday with the capital structure improved on news of an uptick in vehicle deliveries.

The 5.3% notes were up 1 5/8 points to 84 7/8 in the late afternoon with more than $30 million of the bonds in play, according to a market source.

The notes traded as low as 81 at the close of last week, a market source said.

While slow to trade as the stock hit a new 52-week low on Monday, several market players were eyeing the name.

With stock crossing a key technical indicator, many were waiting to see if the name would crack.

However, Tesla’s stock has since rebounded.

Its entire capital structure was on the rise on Thursday on news the electric car manufacturer is on the verge of hitting a new sales record with employees being offered incentives to reach its goals.

Indexes

Indexes marked their third consecutive day of gains on Wednesday.

The KDP High Yield Daily index was up 4 bps to close Thursday at 69.63 with the yield now 5.93%.

The index was up 7 bps on Wednesday and 18 bps on Tuesday after sliding 6 bps on Monday.

The ICE BofAML US High Yield index gained 12.7 bps with the year-to-date return now 8.213%.

The index gained 17.7 bps on Wednesday and 43.7 bps on Tuesday after sliding 4.7 bps on Monday.

The index again crossed the 8% year-to-date threshold on Wednesday after dropping below it on May 29. The index has largely posted returns of 8% plus since early April.

The CDX High Yield 30 index gained 25 bps to close Thursday at 105.63.

The index was up 9 bps on Wednesday and skyrocketed 92 bps on Tuesday after dropping 17 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.