Upsized Altice, Magnolia price; Rite Aid declines; Petrobras falls; Intelsat mixed again; CalRes improves

By James McCandless and Paul A. Harris

San Antonio, July 17 – Tuesday saw an uptick of new-issue activity in Junkbondland, with two issuers pricing notes, while the secondary market also saw increased volume.

Altice France SA priced an upsized issue of senior secured notes due Feb. 1, 2027. The deal included an upsized $1.75 billion tranche of notes that priced at par to yield 8 1/8%.

Magnolia Oil & Gas priced a $400 million issue of eight-year senior notes (B3/BB-/BB-) at par to yield 6%.

In the secondary market, Rite Aid Corp.’s 6 1/8% senior notes due 2023 declined.

Petrobras Global Finance BV’s 8¾% notes due 2026 and 7 3/8% notes due 2027 followed oil futures downward.

Intelsat SA notes saw another mixed day after the Federal Communications Commission moved a joint proposal from satellite firms forward last week.

California Resources Corp.’s 8% senior notes due 2022 went the opposite way of oil futures again, gaining.

Altice upsized and tight

In Tuesday's new issue market Altice France SA priced an upsized amount of senior secured notes due Feb. 1, 2027 (B1/B) in dollars and euros.

The deal included an upsized $1.75 billion tranche of notes that priced at par to yield 8 1/8%. The dollar tranche size increased from $1.25 billion, and priced at the tight end of yield talk in the 8¼% area.

The deal also included an upsized €1 billion tranche of the notes that priced at par to yield 5 7/8%. The euro tranche increased from €650 million and priced at the tight end of yield talk in the 6% area (early guidance on the euro-denominated notes was also in the 6% area).

The deal was handily oversubscribed, an investor said, adding that the dollar tranche was 2.5 times oversubscribed before upsizing, which prompted two accounts to drop out.

The investor spotted the Altice France 8 1/8% secured notes due February 2027 at par ¾ bid, in the secondary market late Tuesday afternoon.

The Paris-based telecom expects to use the proceeds plus cash on hand to redeem its $4 billion and €1 billion notes due 2022. Prior to the upsizing the 2022 maturity was to be only partially refinanced.

Magnolia eight-year deal

Also on Tuesday Magnolia Oil & Gas priced a $400 million issue of eight-year senior notes (B3/BB-/BB-) at par to yield 6%.

The yield printed in the middle of yield talk in the 6% area.

The deal was par 5/8 bid, 101 offered on Tuesday afternoon, with $83 million changing hands, a sellside source said.

Citigroup was the left bookrunner.

The Houston-based independent oil & gas company plans to use the proceeds to fund that business combination, as well as to fund any redemptions of common stock in connection with the combination, and for general corporate purposes.

In the wake of Tuesday's deals a pair of offerings remained on the active calendar as business expected to price before the Friday close.

Comstock Resources, Inc. is in the market with $850 million of eight-year notes (Caa1/B/B), with initial price talk in the 9% area.

And Bruin E&P Partners LLC is holding a roadshow for a $600 million offering of eight-year senior notes (B3/B+), with initial talk in the 7½% to 7¾% area.

Meanwhile, market conditions permitting, look for BMC Software (Banff Merger Sub Inc.) to show up in the near term (perhaps before the end of the week) with $1,825,000,000 of senior notes (Caa2) to fund the buyout of the company by KKR.

And CEVA Logistics is expected to show up in the near term with $350 million seven-year senior secured notes, a debt refinancing deal via Credit Suisse.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, the most recent session for which data was available, according to a bond investor.

High-yield ETFs sustained $75 million of outflows on Monday.

However asset managers saw $15 million of inflows on the day.

Rite Aid falls

Camp Hill, Pa.-based retail drugstore chain Rite Aid saw its notes falling in the secondary space. Recently, the company posted its Q1 earnings report, listing an adjusted loss per share of 1 cent that came in below analyst expectations.

The 6 1/8% notes due 2023 lost about ¼ point to close at around 102¾ bid.

Petrobras declines again

Petrobras Global Finance, a Rotterdam, Netherlands-based subsidiary of Rio de Janeiro-based oil and gas giant Petrobras, saw declines Tuesday in line with West Texas crude oil futures.

“These notes were basically following futures,” a trader said.

The 8¾% notes due 2026 dropped about 1¼ point to close at around 111¼ bid.

The 7 3/8% notes due 2027 fell about ¼ point to close at around 102¾ bid.

Intelsat mixed

Intelsat notes continued to trade mixed in the aftermath of an FCC decision to allow mobile carriers to access traditional broadcast airwaves and a ratings downgrade last week. The FCC announced last Thursday that it is considering allowing mobile providers to use airwaves currently limited to traditional broadcasters, potentially benefiting the satellite firms that control those airwaves.

“While it’s not a done deal officially, this has put the company in a pretty good light,” a trader said. “If they can position themselves correctly, they can come out as winners in terms of revenue.”

The 7¾% paper due 2021 lost 1¾ point to close at 93½ bid. The 8 1/8% paper due 2023 were level at around 85½ bid.

On Monday, the 7¾% paper traded up about ¾ point and the 8 1/8% paper fell about ¾ point.

California Resources up

Los Angeles-based independent oil and gas producer California Resources went the other way of oil futures again on Tuesday, trading up.

The 8% notes due 2022 picked up about ¼ point to close at around 88¾ bid.

On Monday, 8% notes lost about 2½ points.

Indexes mixed

The KDP High Yield index was up 1 basis point to 70.39 with the yield losing 0.01% to close at 5.87%.

On Monday, the index dropped 1 basis point.

The Merrill Lynch High Yield index extended its run of positive movement on Tuesday. The index gained 23 bps with the year-to-date return now at 0.627.

This is the eighth day in a positive streak after the index went positive on July 6.

The CDX High Yield 30 index declined. The index was down 159 bps to close the day at 106.662.

The index was up 32 bps on Monday, 23 bps on Friday, 33 bps on Thursday, and dropped 24 bps on Wednesday.

© 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.