Junk primary quiet on election day; Molina gains; oil patch strong; Tupperware eyed

By Abigail W. Adams

Portland, Me., Nov. 3 – The domestic high-yield primary market was quiet on Tuesday as U.S. voters lined up at the polls to cast their ballots in a high-stakes presidential election.

While markets were strong leading into the election, potential issuers were in wait-and-see-mode.

The pace of new issuance may pick up if markets respond favorably to the outcome of the election, a source said.

Franchise Group Inc.’s $650 million offering of five-year senior secured notes remains the sole deal on the forward calendar.

However, there have been no official updates on the deal with sources expecting the offering to be pulled.

Meanwhile, the secondary space extended its gains on Tuesday with the cash bond market up another ¼ to ½ point following Monday’s rally.

Molina Healthcare Inc.’s 3 7/8% senior notes due 2030 (Ba3/BB-) were active with the notes improving after a lackluster break.

Tuesday was a strong day for the oil patch as crude oil futures surged.

Occidental Petroleum Corp.’s and Apache Corp.’s senior notes led the gains in the sector with the fallen angels’ capital structures up 1 to 3 points.

Tupperware Brands Corp.’s 4¾% senior notes due 2021 eyed following news the company plans to redeem in full the outstanding $380.2 million with proceeds from a new term loan.

Tuesday’s primary

The primary market was quiet on Tuesday with no deals pricing and no deals announced.

Franchise Group’s $650 million offering of five-year senior secured notes remains the sole deal on the forward calendar.

There have been no updates on the deal, which was initially slated to price on Friday and then rumored to be pricing on Monday.

The last known price talk was in the 8¼% area.

“I wouldn’t be surprised if it gets pulled,” a source said.

While quiet on Tuesday, primary market activity is expected to increase if the market tone remains strong following the election results.

“People are waiting to see how the election goes,” another source said.

Molina improves

Molina Healthcare’s 3 7/8% senior notes due 2030 were in focus on Tuesday with the notes making gains after a lackluster break.

The 3 7/8% senior notes were changing hands in the par 3/8 to par 7/8 context early in Tuesday’s session.

They rose to par 7/8 bid, 101 1/8 offered heading into the market close.

There were more than $60 million of the bonds on the tape during Tuesday’s session.

The 3 7/8% notes saw a lackluster break with the notes wrapped around par after freeing for trade on Monday.

Molina priced a $650 million issue of the 3 7/8% notes at par in a Monday drive-by.

Initial guidance had the notes coming with a yield in the low- to mid-4% area.

Oil patch gains

Tuesday was a strong day for the energy sector as WTI crude oil futures surged.

Higher-rated credits were the top performers with fallen angels Occidental Petroleum and Apache seeing their capital structures rise by 1 to 3 points.

Occidental’s 2.9% senior notes due 2024 gained 2½ points to 87 with more than $16 million in reported volume, a source said.

Occidental’s 8 7/8% senior notes due 2030 pared its losses from last week’s sell-off and popped up to a par-handle.

The 8 7/8% senior notes gained 2 points and stood poised to close the day at par 5/8, according to a market source.

The notes were hovering around 104 prior to the sell-off last Thursday and Friday.

The 5 7/8% notes gained 2½ points to 90 5/8.

The 3½% notes due 2029 gained 2½ points to 90 5/8.

While volume was comparatively light, Occidental’s 6 5/8% senior notes due 2030 rose 3 points to 91½.

Apache’s senior notes were also riding the uptrend in crude oil.

While volume was light, Apache’s 4¼% senior notes due 2044 were up almost 3 points to 88.

The 4¼% senior notes due 2030 were up almost 3 points to 92.

Apache’s 4 3/8% senior notes due 2028 were up 2½ points to 94¼.

After dropping nearly 10% on the week last week, WTI crude oil futures have made a strong comeback over Monday and Tuesday.

Crude oil futures settled at $38.15 on Tuesday, an increase of $1.34 or 3.64%.

Crude oil futures were extending their gains from Monday’s session with dip buying driving up prices, a source said.

Tupperware eyed

Tupperware’s 4¾% senior notes due 2021 were being eyed following news the issue would be redeemed with proceeds from a new term loan.

The notes rose 1¼ points to par following the news.

Market players were eyeing the notes’ make-whole table to determine what their takeout price would be.

The 4¾% notes have been on the rise since late last week when they jumped 1 point to a 97-handle following a large earnings beat.

The notes were among the few gainers on Wednesday as the sell-off accelerated in high yields.

The company has staged a remarkable recovery with the notes in deeply distressed territory as recently as May.

The notes were previously trading in the 20s with many expecting an imminent bankruptcy filing, a source previously said.

The company announced on Tuesday it would redeem the full $380.2 million outstanding with proceeds from a new term loan. (See related article in this issue.)

Tupperware entered into a commitment for $275 million of secured term loans with pricing at Libor plus 875 basis points with a step-down to Libor plus 825 bps if consolidated leverage is 2.75x and a 1% Libor floor, Prospect News reported.

Indexes gain

Indexes extended their gains on Tuesday paring their losses from the previous week.

The KDP High Yield Daily index rose 14 points to close Tuesday at 66.25 with the yield now 5.58%.

The index was up 5 bps on Monday.

The index posted a cumulative loss of 73 bps on the week last week.

The ICE BofAML US High Yield index gained 43.4 bps on Tuesday with the year-to-date return now 0.841%.

The index rose 23.9 bps on Monday after posting a cumulative loss of 109.1 bps on the week last week.

The CDX High Yield 30 index rose 76 bps to close Tuesday at 104.4.

The index was up 14 bps on Monday after posting a cumulative loss of 210 bps on the week last week.

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