PBF Energy drives-by; RingCentral struggles; Fortrea falls; Roblox lower

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 14 – PBF Energy Inc. priced Monday’s sole deal, a $500 million issue of 7 7/8% seven-year senior notes (Ba3/BB/BB), which sold at 99.324 to yield 8% in a drive-by.

The yield printed at the wide end of the revised 7 7/8% to 8% yield talk. Earlier talk was 8% to 8¼%.

The deal was heard to have played to $2 billion of orders, according to a sellside source.

One deal remains on the active forward calendar.

Tenneco Inc. spent the past week roadshowing a $1.75 billion offering of 8% senior secured notes due November 2028, a revival of efforts by dealers to replace bridge financing backing the buyout of the company by Apollo, which became hung up on dealer balance sheets, due to market conditions, late last year.

Initial price talk has the notes coming deeply discounted, at 85 to 86, resulting in a 12% all-in yield.

Demand for the deeply discounted deal is heard to be about $2.5 billion, with hedge funds representing a significant portion of that interest, the sellside source said.

The roadshow is scheduled to wrap up on Tuesday.

Meanwhile, it was a flat day in the secondary space with volume light as market players await the next catalyst for movement.

The inflationary data of the previous week provided little certainty about the Fed’s next move with some market players now anticipating a resumption of rate hikes in November after a September pause.

With the macro trade in the background on Monday, recent issues and earnings-related news were the drivers of activity in the space.

RingCentral Inc.’s new 8½% senior notes due 2030 (B1/BB/BB) were struggling in the aftermarket, breaking below a 99-handle after a weak break.

Fortrea Holdings Inc.’s 7½% senior secured notes due 2030 (Ba3/BB/BB+) gave back all gains made since pricing in June and sank below par following earnings.

Roblox Corp.’s 3 7/8% senior notes due 2030 (Ba2/BB) continued to move lower after disappointing earnings the previous week.

RingCentral struggles

RingCentral’s new 8½% senior notes due 2030 were struggling in the aftermarket, breaking below a 99-handle on Monday.

The notes fell ¾ to 1 point to trade in the 98¾ to 99¼ context heading into the market close, according to a market source.

The notes saw a weak break and closed the previous session in the 99¾ to par ¼ context.

In its debut appearance in the junk bond market, RingCentral priced a $400 million issue of the 8½% notes at par on Friday.

The yield printed at the tight end of talk for a yield of 8½% to 8¾%.

Fortrea’s earnings

Fortrea’s 7½% senior secured notes due 2030 sank below par for the first time since pricing in June after a large earnings miss.

The 7½% notes were among the largest losers of Monday’s session with the notes falling 3 to 3½ points in heavy volume.

They opened the day at par and quickly plunged, trading in the 97¾ to 98 context heading into the close.

There was $18 million in reported volume.

The 7½% notes have largely traded in the 101 to 102 context since pricing at par mid-June.

The notes sank after the research company for the biopharmaceutical sector reported a large earnings miss and weak guidance.

Fortrea reported second-quarter adjusted Ebitda of $72.5 million, a 37% decrease year-over-year, a source said.

Roblox lower

Roblox’s 3 7/8% senior notes due 2030 continued to move lower in active trade after sinking late last week after an earnings miss.

The 3 7/8% notes were off another ½ point with the notes breaking below an 82-handle.

They were changing hands in the 81 7/8 to 82 1/8 context heading into the market close, a source said.

The yield was about 7¼%.

There was $11 million in reported volume.

The notes have been on a downtrend since the company reported loss increases on its Aug. 9 earnings report.

The notes were trading on an 84-handle heading into the earnings report.

Indexes

The KDP High Yield Daily index shaved off 1 basis point to close Monday at 50.22 with the yield now 7.56%.

The index was down 16 bps on the week last week.

The ICE BofAML US High Yield index fell 44 bps with the year-to-date return now 6.562%.

The index posted a cumulative gain of 34.1 bps on the week.

The CDX High Yield 30 index added 9 bps to close Monday at 102.77.

The index posted a cumulative loss of 32 bps on the week last week.

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