Altice France, Magnolia set to price; California Resources, Petrobras decline; Intelsat mixed; Tesla firm

By James McCandless and Paul A Harris

San Antonio, July 16 – The high-yield primary market is expected to heat up on Tuesday, with at least two deals stated to price, while the secondary market began the week holding the volume experienced last week.

Altice France SA talked its $1.25 billion tranche of 8.5-year senior secured notes (expected ratings B1/B) to yield in the 8¼% area. Books close at 10 a.m. ET Tuesday, and pricing is to follow.

Magnolia Oil & Gas is set to price a $400 million offering of eight-year senior notes (B3/BB-/BB-) Tuesday.

The deal, which kicked off late last week, was talked to yield in the 6% area on Monday.

In the secondary market, a trader remarked Monday that “Today was pretty good in terms of volume but there was very little happening with the ETFs.”

California Resources Corp.’s 8% senior notes due 2022 slid against a mixed day for oil futures.

Petrobras Global Finance BV’s 5.75% notes due 2029 followed suit, declining Monday.

Intelsat SA notes were mixed, after the company has seen improvements recently after a favorable action by the Federal Communications Commission.

Tesla Inc.’s 5.3% senior notes due 2025 held at Friday’s levels despite recent headlines concerning chief executive officer Elon Musk.

Altice France dual-currency deal

The primary market is due to throttle up on Tuesday, with at least two announced deals set to price.

Altice France SA talked its $1.25 billion tranche of 8.5-year senior secured notes (expected ratings B1/B) to yield in the 8¼% area.

The dollar notes are coming as part of a dual tranche offering of the notes which also features a €650 million euro-denominated tranche of the 8.5-year notes.

Official talk on the euro notes was pending, late Monday afternoon, a trader said. However the euro notes are in the market with initial guidance in the 6% area, the source added.

Books close at 10 a.m. ET Tuesday, and the notes in both tranches are set to be priced thereafter.

Goldman Sachs International is the left bookrunner for the debt refinancing deal.

Magnolia talk 6% area

Magnolia Oil & Gas is also set to price its $400 million offering of eight-year senior notes (B3/BB-/BB-) Tuesday.

The deal, which kicked off late last week, was talked to yield in the 6% area on Monday.

Citigroup is the left bookrunner for the merger financing.

Bruin E&P roadshow

As oil prices continued their slide on Monday, with the barrel price of West Texas Intermediate crude for August 2018 delivery closing at $68, down $3.01, or 4.24% on the day, high yield energy names generally held in, traders said.

That should be good news for two energy names presently shopping deals in the primary market.

Bruin E&P Partners LLC started a roadshow on Monday for a $600 million offering of eight-year senior notes (B3/B+).

Initial talk has the deal coming to yield in the 7½% to 7¾% area, a trader said.

The deal is expected to price on Friday.

JP Morgan, Barclays, BMO, BOK, Capital One, Citigroup, Fifth Third, MUFG, RBC and TD Securities are joint bookrunners.

The Houston-based energy exploration and production company plans to use the proceeds to repay debt under its term loan and revolver, as well as to fund a dividend to its sponsor, ArcLight Capital Partners.

Meanwhile in a deal announced last week Comstock Resources, Inc. is expected to price $850 million eight-year notes (Caa1/B/B) sometime before Friday's close.

As the market awaits official price talk there is initial talk in the 9% area circulating the market, sources say.

Meanwhile there is a deal pipeline taking shape, a good deal of which figures to be post-Labor Day business, sources say.

However some of that pipeline is apt to materialize a good deal sooner.

Look for CEVA Logistics to possibly bring $350 million of new senior secured notes later in the July 16 week, according to a market source who expects Credit Suisse to lead the bond deal.

California Resources down

Los Angeles-based independent oil and gas producer California Resources saw its notes decline in the secondary space as West Texas Intermediate crude oil futures traded up.

“Usually those notes follow the oil, but I guess today was an anomaly,” a trader said.

The 8% notes due 2022 lost about 2½ points to close at 88½ bid.

Petrobras declines

Another popular oil name to decline on the day was Petrobras Global Finance, a Rotterdam, Netherlands-based subsidiary of Rio de Janeiro-based oil and gas giant Petrobras.

The 5¾% notes due 2029 lost about ¼ point to close at around 91 bid.

Intelsat mixed

Against the backdrop of an FCC decision to allow mobile carriers to access traditional broadcast airwaves and a ratings downgrade last week, Intelsat notes have been mixed to start the week.

Last Thursday, reports surfaced that the FCC is weighing a rule change that would allow mobile providers to use airwaves currently limited to traditional broadcasters. With satellite firms managing those airwaves, a new revenue stream could be in the works for the company.

The 7¾% paper due 2021 traded up about ¾ point to close at 95¼ bid. The 8 1/8% paper due 2023 shaved off about ¾ point to close at around 85¼ bid.

Tesla firm

Tesla’s 5.3% senior notes due 2025 remained steady despite a new round of headlines focused on CEO Elon Musk.

The notes were level at 90¾ bid on Monday after climbing up about ½ point on Friday.

Indexes

The KDP High Yield index was down 1 basis point to 70.38 with the yield remaining at 5.88%

On Friday, the index rose 6 basis points and made steady gains throughout last week.

The Merrill Lynch High Yield index continued to rise on Monday. The index gained 17 bps with the year-to-date return now at 0.604.

The index enters its seventh consecutive day of positive territory after turning positive on July 6.

The CDX High Yield 30 index saw another day rising. The index was up 32 bps to close the day at 106.927. The index was up 23 bps on Friday, was up 33 bps on Thursday, dropped 24 bps on Wednesday and lost 11 bps on Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.