Morning Commentary: New Sinclairs sharply higher in trading; Trivium, Tekni-Plex on tap

By Paul A. Harris

Portland, Ore., July 19 – At least three bonds that came in Thursday’s $6.7 billion deluge of issuance – the biggest daily volume year to date – traded actively and at decent or better premiums on Friday, according to a New York-based trader.

Bonds priced in a massive $4,875,000,000 two-part acquisition financing deal from Sinclair Broadcast Group Inc., were very active on Friday morning, with more than $50 million changing hands.

The Diamond Sports Group/Diamond Sports Finance Co. (Sinclair Broadcasting) 5 3/8% senior secured notes due August 2026 (Ba2/BB) were 102½ bid, 102¾ offered, the trader said.

The $3.05 billion tranche, upsized from $2.55 billion, came at par, at the tight end of yield talk.

The Diamond Sports 6 5/8% senior unsecured notes due August 2027 (B2/B) were slightly better than the secured paper on Friday morning at 102 5/8 bid, 102 7/8 offered.

The $1,825,000,000 tranche, downsized from $2,325,000,000, also priced at par, 12.5 basis points tighter than price talk.

The new Hertz Corp. 7 1/8% senior notes due August 2026 (B3/B-) were par 7/8 bid, 101 1/8 offered on Friday morning, also in very active trading with more than $50 million changing hands, the trader said.

The $500 million issue priced at par, at the tight end of talk.

Less active were the Taylor Morrison Communities, Inc. 5¾% senior bullet notes due January 2028 (Ba3/BB), trading at par ¾ bid, 101¼ offered on Friday morning, the trader said.

The upsized $450 million issue (from $425 million) priced at par, also at the tight end of talk.

Away from recent issues, the distressed bonds of Mallinckrodt plc remained under pressure on Friday as the market heard that Jones Day is trying to organize discussions with secured lenders, possibly centering on Mallinckrodt's lawsuit against the U.S. Centers for Medicare and Medicaid Services over a decision to change Medicaid rebates for Mallinckrodt's Acthar Gel amyotrophic lateral sclerosis (ALS) drug, as well as a potential material adverse conditions event.

The Mallinckrodt International Finance SA/Mallinckrodt CB LLC 5½% senior notes due April 2025 traded Friday at 59½ on Friday, the trader said.

Earlier in the week the paper was 64 bid, according to a market source.

Mallinckrodt's bonds came under pressure earlier in the week after the company stated that the phase 2b clinical study evaluating Acthar Gel in treating ALS is being permanently halted because of increased incidence of pneumonia among ALS patients receiving the drug compared to patients in the study who were receiving a placebo.

Friday deals

The market awaits terms on the upsized Trivium Packaging Finance BV $2.85 billion (from $2.75 billion) megadeal, which launched late Thursday.

A $700 million equivalent tranche of euro-denominated seven-year senior secured fixed rate notes (B2) launched at 3¾%. A $400 million equivalent tranche of euro-denominated seven-year senior secured floating-rate notes (B2) launched at Euribor plus 375 bps. A $1.05 billion amount of seven-year senior secured fixed-rate notes (B2) launched at 5½%, and a $700 million amount of eight-year senior unsecured fixed-rate notes (Caa2) launched at 8½%.

All tranches launched at the tight end or tighter than price talk.

Proceeds from the big deal will be used to form Trivium Packaging BV, a joint venture combination of Ardagh’s metal, food and specialty business, with Ontario Teachers' Pension Plan Board’s Exal Corp.

Also on deck is Tekni-Plex, Inc., which talked its $345 million offering of five-year senior notes (Caa2/CCC+) to yield in the 9% area.

Books close at 1:30 p.m. ET on Friday.

And TPC Group Inc. is expected to allocate its $930 million offering of five-year senior secured notes (B2/B/B-) before the weekend.

On Friday morning the deal was talked to yield 10¼% to 10½% amid structural tweaks and document changes.

Mixed Thursday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Thursday, according to a market source.

High-yield ETFs sustained $149 million of outflows on the day.

However, asset managers, the actively managed funds, saw $155 million of inflows on Thursday, the source said.

News of Thursday's daily flows follows a late Thursday afternoon report that the combined high-yield funds saw $573 million of inflows in the week to Wednesday's close, according to Lipper US Fund Flows.

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