Morning Commentary: BidFair/Sotheby’s starts roadshow; downsized InfraBuild on deck

By Paul A. Harris

Portland, Ore., Sept. 18 – The high-yield new issue machine generated news as the midweek session got underway.

A roadshow started Wednesday for a $550 million offering of eight-year senior secured notes (expected ratings B1/B+) backing the merger of Sotheby's and BidFair Ltd.

A global investor call was set to get underway at 2:30 p.m. ET on Wednesday.

The deal will be marketed through Friday.

Joint bookrunner BNP Paribas Securities Corp. will bill and deliver. Goldman Sachs & Co. LLC is also a joint bookrunner.

Advanced Drainage Systems, Inc. talked its $350 million offering of eight-year senior notes (B1/B) to yield 5% to 5¼%.

Books close at 2:30 p.m. ET on Wednesday, and the notes are set to price thereafter.

Meanwhile InfraBuild Australia Pty. Ltd. continued what has become a somewhat protracted endeavor in the primary market, as it downsized its restructured offering of five-year notes to $325 million from $475 million.

The downsizing follows a revision that saw the deal change into secured notes from what had previously been in the market as unsecured paper.

Price talk is affirmed in the 10% area, the trader said.

Earlier talk was 8¾% to 9%, according to market sources.

The deal is expected to price later on Wednesday.

The secondary

Bonds priced Tuesday in an upsized deal from Charter Communications, Inc. were trading at a premium on Wednesday, according to a New York-based bond trader.

The CCO Holdings, LLC/CCO Holdings Capital Corp. 4¾% senior notes due March 2030 (B1/BB/BB+), 10.5-year bonds, were par ½ bid, par ¾ offered, the trader said.

The upsized $1.35 billion issue (from $1 billion) priced at par, at the tight end of talk.

Elsewhere among recent issues, bonds priced early in the week by Performance Food Group Co. continued to turn in a strong secondary market performance on Wednesday.

The PFG Escrow Corp. 5½% senior notes due October 2027 (B1/B+) were up ¼ point on the day, having changed hands at 102¾, the trader said.

Those notes priced Monday at par in a $1.06 billion issue heard to be seven-times oversubscribed.

For European fixed income investors browsing the speculative-grade shelves, sub-1% junk bonds have become a reality.

What’s more, they are a reality which at least some investors find palatable.

In a €500 million deal priced Tuesday by Greek telecom OTE plc, the company's new 7/8% senior notes due September 2026 (S&P: expected BB+) were 99.3 bid, 99½ offered in the very early going, according to a market source.

Those levels represent a premium to the 99.233 issue price, the source pointed out.

Meanwhile in the oil patch, with prices gyrating on a barrage of good news/bad news principally generated by political and military brinksmanship in the Persian Gulf, high-yield energy names were sagging a bit on Wednesday, the trader said.

The Oasis Petroleum Inc. 6 7/8% senior notes due January 2023 changed hands at 95 on Wednesday morning, down 1½ points.

The Chesapeake Energy Corp. 8% senior notes January 2025 were down 1¾ points in the early going on Wednesday, the trader added.

The barrel price of West Texas Intermediate crude for October 2019 delivery was down 1.28%, or 76 cents, at mid-morning, at $58.58, having gotten as high as $63.38 in intraday trading earlier in the week.

Tuesday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Tuesday, according to a market source.

High-yield ETFs saw $376 million of inflows on the day.

Actively managed high-yield funds saw $90 million of inflows on Tuesday, the source said.

With only one session remaining to go in the tally, the combined high-yield funds are tracking a formidable $3.37 billion of inflows for the week which will conclude with Wednesday’s close.

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