AES drive-by prices; Staples downsizes megadeal; busy Tesla trading; Calumet bonds jump on asset sale

By Paul Deckelman and Paul A. Harris

New York, Aug. 14 – The new week got off to a start as power generating company AES Corp. was heard by high-yield syndicate sources to have priced $500 million of 10-year notes.

Traders did not immediately report any initial aftermarket dealings in the new paper.

The sources meantime said that giant office supplies retailer Staples Inc. was downsizing its pending offering of eight-year notes to $1 billion

They also said that plastics and rubber manufacturer Trinseo – which had been expected to price a quickly shopped $450 million issue of eight-year notes Monday – will now likely do that deal on Tuesday.

Tuesday is also expected to see a pricing of $500 million of eight-year notes from metals maker Big River Steel LLC.

Among recently priced issues, Friday’s giant-sized offering from electric car maker Tesla, Inc. was rolling up some giant-sized trading volume in the secondary market.

Healthy activity levels were also seen in such recently priced credits as United States Steel Corp., Parexel International Corp. and Restaurant Brands International Inc.

Away from the new deals, petroleum derivatives producer Calumet Specialty Products Partners, LP’s bonds firmed smartly on news that it will sell a Wisconsin refinery, with the expected proceeds to go towards deleveraging.

Statistical market performance measures turned higher on Monday for the first time since Aug. 2; those indicators had been mixed on Friday after three consecutive sessions on Tuesday, Wednesday and Thursday during which they had been lower across the board.

AES drives by

In Monday new issues AES Corp. priced a $500 million issue of 10-year senior notes (S&P: BB) at par to yield 5 1/8% in a quick-to-market trade.

The yield printed in the middle of the 5% to 5¼% yield talk.

J.P. Morgan, Credit Agricole, Goldman Sachs and SG were the joint bookrunners for the debt refinancing deal.

Elsewhere, Staples Inc. downsized its offering of eight-year senior notes (B3/B-) to $1 billion from $1.3 billion, and talked the notes to yield in the 8¼% area.

The most recent downsizing of the bonds comes on the heels of a decrease to $1.3 billion from $1.6 billion, which took place during the Aug. 7 week.

The acquisition deal was expected to price on Monday evening, however no terms were available at press time.

Big River Steel talk 7¼% area

Big River Steel LLC talked its $500 million offering of eight-year senior notes (B3/B) to yield in the 7¼% area.

The Goldman Sachs deal is set to price Tuesday.

ClubCorp talk 8% to 8¼%

ClubCorp Holdings Inc. talked its $475 million offering of eight-year senior notes (Caa1/CCC+) to yield 8% to 8¼%.

The deal, being helmed by RBC, is also set to price Tuesday.

Also on Tuesday Trinseo is expected to price a $450 million offering of eight-year senior notes.

Deutsche Bank is leading the debt refinancing deal.

Enova roadshow

Enova International Inc. plans to start a roadshow on Tuesday for a $250 million offering of seven-year senior notes.

Jefferies is the active bookrunner. JMP is the passive bookrunner.

The Chicago-based financial services company plans to use the proceeds to refinance a portion of its 9¾% notes due 2021 and for general corporate purposes including future loan growth.

Friday outflows

The daily cash flows of the dedicated high-yield bond funds were substantially negative on Friday, the most recent session for which data was available at press time.

High yield ETFs sustained $350 million of outflows on the day.

Actively managed funds sustained $170 million of outflows on Friday.

Tesla trades around

In the secondary sphere, Tesla’s giant-sized-sized $1.8 billion offering – the biggest junk bond deal to hit the market since broadcaster SiriusXM Radio Inc.’s $2 billion two-part megadeal priced on June 26, according to data compiled by Prospect News – dominated the Most Actives list on Monday, a market source said.

He saw $153 million of the Palo Alto, Calif.-based electric car maker and energy storage technology company’s new 5.3% notes due 2025 changing hands, on top of Friday’s $52 million of initial aftermarket volume.

He saw the notes closing Monday at 99½ bid, down ½ point from their par issue price.

A second trader saw the notes in a 99¾-to-par bid context.

At another desk, a trader declared that the new Teslas “have not done well,” seeing them last trading between 99 1/8 and 99 5/8 bid.

Recent issues show gains

One of the traders characterized the day’s dealings as “your typical quiet August Monday.”

But most issues were firmer, in line with a generally better market.

This included several recently priced names, including Parexel International Corp.’s 6 3/8% notes due 2025.

Those notes “are still up there” around 100¼-to-100½, a trader said.

A market source saw them up ¼ point at 100¼ bid, with around $11 million having traded – although that was well down from the $58 million which traded on Friday and the $65 million which moved around on Thursday, topping the Most Actives list both days.

The Waltham, Mass.-based biopharmaceutical services company had priced its $770 million regularly scheduled forward calendar offering at par Thursday after it was upsized from $750 million.

U.S. Steel’s 6 7/8% notes due 2025 gained 5/8 points, a trader said, to end at 99 5/8 bid, on volume of around $12 million.

The Pittsburgh-based steelmaking giant had priced its scheduled $750 million offering at par on Aug. 1.

Restaurant Brands International’s 5% senior secured notes due 2025 were seen up by ¾ points on the day, a trader said, ending around 101 bid, with about $11 million traded.

They had also gained 5/8 point in Friday’s dealings on volume of over $20 million.

The Oakville, Ont.-based company – which operates and franchises the Burger King, Tim Hortons and Popeyes Louisiana Kitchen quick-service restaurant chains in the United States, Canada and internationally – priced $1.3 billion of the notes at par on Tuesday, after that quick-to-market transaction was upsized from an originally announced $1.3 billion.

Calumet climbs on asset sale

Away from the new-deal sphere, traders said the day’s standout issue was Calumet Specialty Products Partners’ 6½% notes due 2021, which shot up by 2¾ points on the day to end at 96¼ bid, with more than $14 million having traded.

Its 7 5/8% notes due 2022 likewise firmed to around 96¼ bid, on volume of about $9 million.

Calumet’s Nasdq-traded shares meantime zoomed by 55 cents, or 10.09%, to end at an even $6.00, on volume of over 1.5 million shares, more than five times the norm.

The bonds and shares jumped after the Indianapolis-based maker of specialty lubricants and other petroleum derivative announced that it had agreed to sell its Superior, Wisc. refinery to a unit of Husky Energy for $435 million.

Calumet said it planned to use a portion of the proceeds from the sale for deleveraging and other balance sheet improvements.

Indicators turn higher

Statistical market performance measures turned higher on Monday for the first time since Aug. 2; those indicators had been mixed on Friday after three consecutive sessions on Tuesday, Wednesday and Thursday during which they had been lower across the board.

The KDP High Yield Daily index was unchanged on Monday at 71.96, after four consecutive big losses and seven straight downturns overall, including Friday’s plunge of 17 basis points and Thursday’s 15 bps slide.

Its yield moved up by 1 bp to 5.27%, its sixth successive widening; it had also risen by 6 bps on Friday and by 5 bps on Wednesday and again on Thursday.

The Markit CDX Series 28 High Yield Index posted its second straight upturn after breaking out of its six- session slump, firming by 11/32 point on Monday to end at 106 29/32 bid, 106 15/16 offered, after having edged up

by a little more than 1/16 point Friday; on Thursday, it had dropped by more than ½ point, on top of Wednesday’s more than ¼ point retreat.

The Merrill Lynch North American High Yield Index also moved over to the plus side on Monday after four straight losses before that, ending up 0.214%, versus Friday’s 0.09% loss.

Monday’s improvement raised the index’s year-to-date return to 5.543% from Friday’s 5.317%. However, it remained down from the Aug. 2 close at 6.233%, its 2017 year-to-date peak level.

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