JBS USA, Five Point add-on price; Teva in focus; LSC Communications craters; Realogy rebounds

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 23 – The domestic high yield primary market’s drive through window reopened on Tuesday with two upsized drive-bys pricing.

JBS USA Lux SA priced an upsized $1.25 billion issue of 10.5-year senior notes (Ba3/BB-) at par to yield 5½%.

Five Point Holdings LLC priced an upsized $125 million add-on to the Five Point Operating Co., LP and Five Point Capital Corp. 7 7/8% senior notes due Nov. 15, 2025 (expected ratings B3/B) at par.

Official price talk also circulated for Citgo Holding, Inc.’s $1.37 billion offering, with pricing expected on Wednesday.

In the European primary market, Cirsa Gaming Corp. SA priced an upsized €490 million issue of floating-rate notes, and Banca Popolare di Sondrio BB priced €200 million of 10-year subordinated unsecured tier 2 bank capital.

Meanwhile, the secondary space was firm on Tuesday with equities on the rise and crude oil futures again seeing a modest increase.

New paper from JBS was strong out of the gate.

Teva Pharmaceutical Industries Ltd.’s junk bonds were in focus on Tuesday with the entire capital structure posting gains.

LSC Communications Inc.’s 8¾% senior notes due 2023 cratered on news Quad/Graphics Inc. was terminating its acquisition of the printing company.

After trading off earlier in the month, Realogy Group LLC’s junk bonds were on the rebound after the real estate company entered into a new partnership with Amazon.

Two upsized drive-bys

The drive through window of the junk bond new issue market reopened on Tuesday.

Ultra-familiar issuer JBS came with a deal that saw a big upsize but still priced on the tight end of talk.

JBS USA Lux launched and priced an upsized $1.25 billion issue of 10.5-year senior notes (Ba3/BB-) at par to yield 5½%.

The issue size increased from $1 billion.

The yield printed at the tight end of the 5½% to 5 5/8% yield talk, which was tight to initial guidance in the mid-to-high 5% area.

Barclays was on the left.

Elsewhere, Five Point Holdings priced an upsized $125 million add-on to the Five Point Operating Co. and Five Point Capital’s 7 7/8% senior notes due Nov. 15, 2025 (expected ratings B3/B) at par.

The Citigroup deal was upsized from $100 million and was priced on the investment grade desk.

The reoffer price printed on top of price talk.

Citgo talk 9½% area

Citgo Holding is on deck for Wednesday with a $1.37 billion offering of five-year senior secured notes (Caa1/B/B+).

The deal was talked in the 9½% area, on top of earlier guidance.

The active calendar for the July 22 week also includes Advisor Group with $400 million, initial talk in the 10% area, Global Partners with $400 million, initial talk in the low 7% area, and Nesco with $475 million, initial talk in the 9% area.

Cirsa upsizes FRN

The European market generated news on Tuesday.

Madrid-based gaming and leisure firm Cirsa Gaming Corp. priced an upsized €490 million issue of three-month Euribor plus 362.5 basis points floating-rate notes due in September 2025 (B2) at par.

The issue size increased from €440 million.

The maturity of the notes was extended to September 2025 from May 2025.

The yield printed 12.5 bps beneath the tight end of the Euribor plus 375 to 400 bps price talk.

Elsewhere, Italy's Banca Popolare di Sondrio priced €200 million of 10-year subordinated unsecured tier 2 bank capital (Fitch: expected BB) at par to yield 6¼%.

The yield printed in the middle of yield talk in the 6¼% area.

JBS trades up

JBS’ newly priced 5½% senior notes due 2030 saw a strong start out of the gate.

The notes traded up to par ½ soon after breaking for trade, according to a market source.

The bonds saw more than $38 million in reported volume shortly before the market close.

Teva in focus

Teva’s junk bonds were in focus and making gains on Tuesday after the capital structure traded off in the previous week.

Teva’s 6¾% senior notes due 2028 were up about ½ point to 86 on Tuesday, according to a market source.

The notes were among the most actively traded issues in the secondary space with $61 million in reported volume by the late afternoon.

Teva’s 3.15% senior notes were up 1¼ point to 75¼, a market source said. The bonds saw more than $25 million in reported volume.

The generic drug makers 2.8% senior notes due 2023 were up 7/8 point to 85 3/8, according to a market source.

The notes were paring their losses from last week.

Teva’s capital structure traded off after Morgan Stanley downgraded the company’s stock due to increased competition in the generic drug space and the ongoing liabilities from opioid litigation.

LSC craters

LSC Communications’ 8¾% senior notes due 2023 cratered on Tuesday after news broke that Quad/Graphics was terminating its acquisition of the company.

The 8¾% notes dropped almost 12 points to trade as low as 84, according to a market source.

The notes were active with more than $19 million in reported volume by the late afternoon.

The notes tanked after LSC Communications and Quad/Graphics announced they were terminating their merger due to the U.S. Department of Justice’s antitrust lawsuit.

The notes previously tanked in late June after the DOJ filed the antitrust lawsuit, which claimed Quad/Graphics acquisition of LSC Communications would stifle competition in magazine, catalog and book printing services, of which the two companies are the primary providers.

Prior to June, LSC Communications’ notes were trading in the 105 range, which was their takeout price, a source previously said.

Realogy rebounds

Realogy’s junk bonds were on the rebound on Tuesday after the real estate company formed a partnership with Amazon.

Realogy’s 9 3/8% senior notes due 2027 gained about 3 points to trade up to 89¾.

The 4 7/8% senior notes due 2023 rose 2 points to close Tuesday at 87½, according to a market source.

The notes were posting gains on Tuesday after the real estate company entered into a new partnership with Amazon called TurnKey.

Under the new program, homebuyers searching for a real estate agent will be directed to a Realogy agent.

Following the purchase of the home, buyers will receive up to $5,000 in Amazon Home Services and products.

The notes have been losing ground since late June.

However, they sank about two weeks ago after Realogy filed suit against competitor Compass Inc. alleging Compass violated non-compete agreements, attempted to price-fix, and had other questionable business practices.

Monday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $51 million of inflows on the day.

Actively managed high-yield funds, the asset managers, saw $55 million of inflows on Monday, the source said.

With three of five days in the tally for the present weekly reporting period (an interval that concludes with Wednesday's close), the combined funds are tracking $820 million of net inflows, according to the market source.

Indexes gain

Indexes were on the rise on Tuesday after a mixed start to the week.

The KDP High Yield Daily index was up 5 basis points with the yield 5.48%.

The index shaved off 1 bp on Monday.

The ICE BofAML US High Yield index rose 15.4 bps with the year-to-date return now 10.391.

The index was up 9.4 bps on Monday.

The CDX High Yield 30 index gained 29 bps to close Tuesday at 107.46. The index gained 22 bps on Monday.

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