Fortress begins roadshow; Carnival gives back gains; Post gains on tender offer; PetSmart upgraded

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 27 – In Monday's high-yield primary market Fortress Transportation and Infrastructure Investors LLC began a telephone roadshow for a $500 million offering of FTAI Escrow Holdings, LLC five-year senior secured notes.

Initial guidance has the notes coming with a coupon of 10¼% to 10½% at an original issue discount to yield 11%.

The deal, backing the spinoff of FTAI Infrastructure Inc., is expected to price Wednesday.

No dollar-denominated deals priced during the Monday session.

Meanwhile, the secondary space was quiet on Monday with the market flat to slightly softer following Friday’s strong session, a source said.

Trading volume remained thin with large, liquid issues continuing to dominate the tape.

Carnival Corp.’s senior notes remained volatile in heavy volume on Monday with the notes giving back their gains from Friday’s session.

Topical news also helped lift some outstanding issues.

Post Holdings, Inc.’s 4½% senior notes due 2031 improved on Monday following a tender offer.

PetSmart LLC and PetSmart Finance Corp.’s 7¾% senior notes due 2029 (B3/CCC+) were lifted after a ratings upgrade.

Carnival weaker

Carnival’s senior notes gave back their gains from Friday’s session in active trading on Monday as the rally in risk assets faltered.

The cruise line operator’s 10½% senior notes due 2030 (B2/B) fell 2 points with the notes wrapped around 90 heading into the close, according to a market source.

The 6% senior notes due 2029 were down 2.5 points and were changing hands in the 74½ to 75 context heading into the market close.

Carnival was one of the largest gainers of Friday’s session with strong market conditions and a better-than-expected second-quarter business update lifting the notes 2 to 3 points.

However, Carnival was among the largest losers of Monday’s session with their 10½% notes and 6% notes returning to their previous level heading into Friday’s session.

Carnival’s notes have been volatile surrounding the release of its second-quarter business update.

The company’s capital structure rallied on Friday with the results better-than-expected.

However, they were under pressure again on Monday as investors reassessed the impact a recession would have on the company’s business operations.

Post’s tender

Post’s 4½% notes due 2031 improved on Monday following a tender offer for the notes.

The 4½% notes rose 1 point with a round lot trade at 83 3/8, a source said.

The notes closed the previous session on an 82-handle.

They have slowly improved alongside the broader market after hitting an all-time low of 79 5/8 in mid-June.

Post was taking advantage of the discounted level of the notes by launching a tender offer, a source said.

Post announced on Monday that it was launching a cash tender offer to purchase $450 million of its 4 5/8% senior notes due 2030 and 4½% senior notes due 2031.

The 4½% notes may be tendered with a minimum bid price of 80 and a maximum bid price of 87, Prospect News reported.

The 4 5/8% notes may be tendered with a minimum bid price of 81 and a maximum bid price of 88.

The tender offer did little to move the 4 5/8% notes, which continued to trade on an 85-handle.

PetSmart’s upgrade

PetSmart’s 7¾% senior notes due 2029 were lifted after a ratings upgrade removed it from the riskiest corner of the market.

The 7¾% notes rose ¾ point to close Monday at 92¼, according to a market source.

Moody’s lifted PetSmart’s unsecured debt to B3 from Caa1 on Monday due to a significant decrease in the company’s debt to EBITDA ratio and expected strong free cash flow and good liquidity.

Indexes

The KDP High Yield Daily index added 4 points to close Monday at 55.20 with the yield now 7.39%.

The index posted a cumulative gain of 36 points on the week last week.

The ICE BofAML US High Yield index rose 5.76 basis points with the year-to-date return now negative 12.30%.

The index posted a cumulative gain 65 bps on the week last week.

The CDX High Yield 30 index shaved off 13 bps to close the day at 98.77.

The index posted a cumulative gain of 184 bps on the week last week.

ETFs see $732 million Friday inflows

The high-yield ETFs saw a hefty $732 million of daily cash inflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were negative on the day, sustaining $111 million of outflows on Friday, the source said.

© 2015 Prospect News.
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