Morning Commentary: Weekend deal with banks gives Icahn Enterprises bonds a lift

By Paul A. Harris

Portland, Ore., July 10 – Reports that billionaire investor Carl Icahn finessed a tactical shift in his credit agreement over the weekend gave a significant lift to the bonds and stocks of Icahn Enterprises, market sources said on Monday.

The Icahn Enterprises LP/Icahn Enterprises Finance Corp. 5¼% senior notes due May 2027 traded at 87½ on Monday morning, up a point-plus, according to a bond trader in New York.

The same issuer’s 6¼% senior notes due May 2026 changed hands at 93¼, up 2 points, the trader said.

The share price (Nasdaq: IEP) was up 16½% at mid-morning.

In a Monday Securities and Exchange Commission filing, Icahn announced an agreement with lenders to, among other things, change the margin call provision in the credit agreement so that its trigger will be pegged to net asset valuations rather than the market price of IEP’s depositary units.

In May Icahn underwent an attack from short-seller Hindenburg, which asserted that Icahn Enterprises shares were overvalued and alleged that IEP utilizes “Ponzi-like economic structures” in its dealings with shareholders.

Away from that situation, the broad high-yield market opened the week unchanged, and remained unchanged at mid-morning, sources said.

With the S&P 500 stock index up 0.04% at mid-morning amid mixed performances among the major stock indexes, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.18%, or 24 cents, at $74.03.

Among recent dollar-denominated issues, the Howard Midstream Energy Partners, LLC 8 7/8% senior notes due July 2028 (B3/B+) were unchanged on the morning at par ½ bid, 101 offered, the trader said.

The $550 million issue priced at par on June 29.

A more recent euro-denominated deal from New Jersey-based vehicle rental company Avis Budget Group was faring less well in secondary action on Monday.

The Avis Budget Finance plc 7¼% senior notes due July 2030 (B1/BB-) were 99½ best bid, according to a London-based debt capital markets banker.

The €400 million issue priced at par last Thursday, in the middle of talk.

In the primary market, news was sparse as the week got underway.

Matterhorn Telecom SA, the parent of Swiss mobile phone and fiber optic services provider Salt Mobile SA, began a brief roadshow for a CHF 100 million offering of five-year senior secured notes (S&P: BB-).

The dollar-denominated new issue market, which has been skunked since the July 4 Independence Day holiday, remained quiet on Monday.

However, based upon conversations with clients, a trader is looking for $1 billion to $2 billion or more of issuance ahead of this coming Friday’s close.

JPMorgan will have one or two deals, said the trader, adding that Viasat Inc.’s $1.6 billion offering of senior notes, coming in support of its Inmarsat acquisition, might be re-ignited.

That deal, which has been mired in the backlog of hung acquisition financings, began being telegraphed to the market in mid-spring, at which time the whisper had it coming with an all-in yield of 12%.

Fund flows

High-yield ETFs saw $383 million of daily cash inflows on Friday, according to a market source.

Actively managed high-yield funds sustained $138 million of outflows on the day, the source said.

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