Morning Commentary: Platform Specialty brings drive-by tap; new NRG makes strong showing

By Paul A. Harris

Portland, Ore., Dec. 1 – News flow in the primary market slowed dramatically on Friday, as the market digests $9.7 billion of post-Thanksgiving high-yield bond issuance which cleared the market to Thursday’s close.

In Friday drive-by action, Platform Specialty Products Corp. plans to price a $200 million tack-on to its 5 7/8% senior notes due Dec. 1, 2025.

Talk is par to par ¼.

Credit Suisse Securities (USA) LLC and Barclays are joint bookrunners for the debt refinancing deal.

Meanwhile, Cleaver-Brooks, Inc. is on deck with a $395 million offering of five-year senior secured notes (B2/B) talked to yield 7¾% to 8%.

In addition to price talk came covenant changes (see related story in this issue).

Icahn Enterprises LP is in the market with $1.26 billion of senior notes, including a $380 million add-on to the 6¼% senior notes due Feb. 1, 2022 talked at 103 to 103.25, a $380 million add-on to the 6¾% senior notes due Feb. 1, 2024 talked at 103.75 to 104 and $500 million of new eight-year senior notes talked to yield 6¼% to 6½%.

Jefferies LLC has the books.

And Mountain Province Diamonds Inc. plans to price $325 million of five-year senior secured second-lien notes (B3/B-/BB-), which are talked with an all-in yield of 8¼% to 8½%, including an original issue discount of about 1 point.

Credit Suisse and Scotia are the joint bookrunners.

New NRG at 101¾ bid

The new NRG Energy, Inc. 5¾% senior notes due Jan. 15, 2028 (B1/BB-) were turning in a strong secondary market performance on Friday morning, at 101¾ bid, a trader said.

The $870 million issue priced at par on Thursday.

The freshly minted paper was riding on the back of rallying energy prices, the trader said.

The barrel price of West Texas Intermediate crude oil for January 2018 delivery was up $1.29, or 2.25%, at $58.69.

The deal attracted its share of flippers using the bonds as a means of riding the energy rally, the source added.

NRG abandoned a similar offering earlier in November, when it postponed an $870 million offering of 10.25-year notes, citing market conditions.

At that time the company had targeted an interest rate of 5¾%, sources said, and added that investors were willing to buy the earlier 10.25-year bonds at 6%, but the company declined to pay the extra 25 basis points.

Thursday's deal had a whole new audience, the trader remarked.

Away from NRG, bonds in the energy sector were generally stronger Friday morning, said the trader, who was marking the broad market unchanged to slightly higher.

However high coupon bonds from the grocery sector, from names such as Tops Markets, LLC, Fresh Market, Inc. and BI-LO, LLC, were under pressure, as the likelihood of some sort of restructuring builds, the trader said, adding that BI-LO paper was trading in the 30s, while Fresh Market’s bonds traded into the 50s.

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