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Midday Commentary: Two high-yield bond deals on deck for Wednesday as primary winds down
By Paul A. Harris
Portland, Ore., Dec. 18 - The 2013 active primary calendar dwindled to just three deals by Wednesday's open.
At least two of those deals are on deck to price by the session's close, sources say.
Darling International Inc.'s $500 million offering of eight-year senior notes (B1/BB+) via Goldman Sachs, JPMorgan and BMO is talked to price with a yield in the 5½% area.
The deal is well spoken-for, and allocations are expected to be tough, sources say.
Also on deck for Wednesday is Global Ship Lease Inc.'s $400 million offering of seven-year first-priority secured notes (expected B3/confirmed B) via Citigroup. The notes are talked to yield in the 9½% area.
Early week deals
Three of four deals that came in Monday's session - now expected to be the last big burst of drive-by activity for 2013 - are trading at premiums to their respective new issue prices, a trader said on Wednesday morning.
Michaels Stores, Inc.'s 5 7/8% senior subordinated notes due Dec. 15, 2020 (Caa1/CCC+) are par ¼ bid, par 5/8 offered. The $260 million deal priced at par on Monday, the trader recounted, noting that of the 27 deals that priced since the beginning of the Dec. 9 week, eight have a triple C rating on at least one side of the split.
Halcon Resources Corp.'s add-on to the 9¾% senior notes due July 15, 2020 (Caa1/CCC+) was 103 5/8 bid on Wednesday morning. The $400 million deal priced at 102.75 to yield 8.999% on Monday.
The First Data Corp.'s add-on to the 11¾% senior subordinated notes due Aug. 15, 2021 (Caa2/CCC+) was 104 bid on Wednesday, up half a point, the trader said. The upsized $725 million deal came at 103.5 to yield 10.863% on Monday.
The exception to the rule was the MGM Resorts International 5¼% bullet due March 31, 2020 (B3/B+), the trader said, spotting the deal at 99¾ bid, par offered on Wednesday morning.
The $500 million issue priced at par on Monday.
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