Morning Commentary: Big River Steel, ClubCorp, Trinseo on deck; new Staples 8½% notes active

By Paul A. Harris

Portland, Ore., Aug. 15 – A chunk of the active high-yield forward calendar is poised to clear on Tuesday.

Three deals are set to go.

Big River Steel LLC launched an upsized $600 million offering of eight-year senior notes (B3/B) at 7¼% on Tuesday morning.

The deal size is increased from $500 million.

The launch comes on top of price talk in the 7¼% area.

Goldman Sachs & Co. is the bookrunner.

ClubCorp Holdings Inc. is on deck with its downsized $425 million offering of eight-year senior notes (Caa1/CCC+).

The deal, featuring RBC on the left, was downsized from $475 million.

Talk is 8% to 8¼%.

The issue will come at 8¼%, a trader forecast, and added that there were covenant changes to the bonds.

And Trinseo expects to price its $450 million offering of eight-year senior notes (B3/BB-) before the Tuesday close.

Talk is 5¼% to 5½%, tighter than the 5½% to 5¾% earlier talk.

The order book is OK, a trader said.

Deutsche Bank Securities Inc. is the lead.

Staples swoops

Terms on the new Staples Inc. 8½% senior notes due 2025 became available on Tuesday morning, and traders described their initial performance in the secondary market as “heavy.”

The bonds priced at par in a downsized $1 billion issue (B3/B-), decreased from $1.3 billion, after having been previously decreased from $1.6 billion.

The notes traded as low as 98 bid, 98½ offered Tuesday morning, a trader said, and added that they subsequently improved to 99 3/8% bid, 99 5/8 offered, adding that it felt as though the shorts had quit the trade.

Another trader had them at 99 bid, 99¼ offered at mid-morning.

BofA Merrill Lynch was the lead bookrunner for the buyout deal.

Elsewhere high yield was flat to unchanged on Tuesday morning, a trader said.

Amid a slight amount of weakness in crude oil prices, high-yield energy names were mostly unchanged, the source said.

The barrel price of West Texas Intermediate crude oil for September 2017 delivery was down 29 cents, or 0.61%, at $47.30.

High-yield ETFs were flat to slightly better.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was up 3 cents, or 0.03%, at $87.82 per share.

Monday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Monday, a trader said.

High-yield ETFs sustained $152 million of outflows on the day.

Actively managed funds sustained $185 million of outflows on Monday.

© 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.