Intelsat dominates trading; PHI recoups losses; Valeant Pharmaceuticals active

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 20 – While no new paper priced on Wednesday, dealers set the stage for a busy finish to the June 18 week.

Energizer Holdings Inc. set tight-to-guidance price talk in its $1.25 billion equivalent two-part offering of eight-year senior notes (B2/BB-).

Copenhagen-based TDC A/S set price talk in its €1.4 billion equivalent two-part offering of five-year senior notes.

Teekay Offshore Partners LP, PHI, Inc. and Baffinland Iron Mines Corp. are set to price dollar-denominated deals before the week comes to a close.

Cirsa Gaming Corp. SA is on deck with a €1.56 billion equivalent dollar/euro three-part seven-year senior secured notes offer (B2/expected B+) and International Game Technology plc plans to price a €500 million offering of senior secured notes.

Meanwhile, Intelsat Luxembourg SA’s 8 1/8% senior notes due 2023 dominated trading activity in the secondary space with the notes climbing more than 4 points.

The company’s stock and convertible bond also soared on Wednesday with anticipated approval from the Federal Communications Commission for the satellite service provider’s C-band proposal.

PHI Inc.’s 5¼% senior notes due 2019 recouped their losses from Tuesday with the notes up more than 2 points as the company’s roadshow for a new $500 million offering of senior secured notes came to an end.

While the notes were little changed, MGM Resorts International’s newly priced 5¾% senior notes due 2025 (Ba3/BB-) and Boyd Gaming Corp.’s newly priced 6% senior notes due 2026 (existing B3/confirmed B/confirmed B+) were active in secondary trading as Congress zeroes in on federal sports betting legislation.

Valeant Pharmaceuticals International, Inc.’s 9% senior notes due 2025 were also active in the secondary space and up slightly as the company prepares to redeem four series of notes.

Energizer sets tight-to-guidance talk

Energizer Holdings set tight-to-guidance price talk in its $1.25 billion equivalent two-part offering of eight-year senior notes (B2/BB-).

The Energizer Gamma Acquisition BV €650 million tranche is talked in the 4¾% area, tight to initial guidance of 4¾% to 5%.

The Energizer Gamma Acquisition, Inc. $500 million tranche is talked in the 6½% area, tight to initial guidance of 6½% to 6¾%.

Pricing is set for Thursday afternoon, New York time.

Barclays will bill and deliver for the acquisition financing.

TDC talks dual-currency deal

Copenhagen-based TDC A/S set price talk in its €1.4 billion equivalent two-part offering of five-year senior notes.

The deal features dollar-denominated notes talked to yield in the 9 3/8% area, slightly wide to the low 9% area initial guidance.

TDC is also selling euro-denominated notes talked in the 7% area.

The notes are set to price Thursday.

Deutsche Bank has the lead for the buyout deal.

Late-week calendar

Elsewhere, the market still awaits final talk and timing on one other dual-currency dollar/euro offering.

Spain's Cirsa Gaming Corp. is in the market with a €1.56 billion equivalent three-part seven-year senior secured notes offer (B2/expected B+) in three tranches.

The deal features euro-denominated floating-rate notes with initial guidance of Euribor plus 525 bps, euro-denominated fixed-rate notes with initial guidance in the 6% area, and dollar-denominated fixed-rate notes with initial guidance in the 8% area.

Pricing is set for late in the June 18 week.

Three dollar-denominated deals are also expected to price before the weekend.

Teekay Offshore Partners is in the market with a $500 million offering of five-year senior notes (Caa2/B/B). Initial guidance is in the low to mid 8% area.

PHI was expected to wrap up a roadshow on Wednesday for its $500 million offering of five-year senior secured notes (B3/B/B+). Initial talk is in the mid 8% area to 9%.

And Baffinland Iron Mines is scheduled to wrap up a roadshow on Thursday for its $550 million offering of eight-year senior secured notes (Caa1/B-). Initial guidance is in the high 8% area to 9%, sources say.

There is also one further euro-denominated deal expected to price before the weekend.

International Game Technology was scheduled to run a Tuesday-Wednesday roadshow for its €500 million offering of senior secured notes due July 2024 (Ba2/BB+). Initial price talk is in the 3¾% area.

Nordic market

There was also news on Wednesday from the Nordic high yield bond market.

OKEA AS announced that it launched a $180 million fully underwritten senior secured bond issue and amendments to the existing OKEA 01 $120 million bond.

A book building process for the bond is underway and expected to conclude on Monday.

ABG Sundal Collier is sole manager for the acquisition financing deal.

And Norway-based Bulk Industrier AS priced a NOK 150 million add-on to its three-month Nibor plus 650 bps secured floating-rate notes due May 2021 at par.

The reoffer price came on top of initial price talk.

Arctic Securities managed the sale.

The Oslo-based real estate investment company plans to use the proceeds to fund its debt service retention account, as well as to make a contribution to the company in the form of equity or a loan, and for general corporate purposes.

Intelsat dominates

Intelsat’s 8 1/8% senior notes due 2023 dominated trading activity in the secondary space with the notes jumping more than 4 points.

The notes traded as high as 83¾ on Wednesday but closed the day at 82, a 4.5 point jump from its previous levels, a market source said.

With a net $85 million of the bonds traded during Wednesday’s session, Intelsat’s 8 1/8% notes were the most active issue in the secondary space.

Wednesday marked a good day for Intelsat across its asset classes. The company’s recently priced 4.5% convertible bonds due 2025 climbed 16 points outright to trade north of 131.

Intelsat stock also broke out to a new 52-week high on Wednesday.

RBC Capital Markets raised Intelsat stock to outperform from neutral and upped its price target to $30 from $5.

The upgrade was based on anticipated approval from the Federal Communications Commission on Intelsat’s and Intel’s joint C-band spectrum proposal, which would accelerate the introduction of 5G services in the United States.

The upgrade was also due to Intelsat’s improved balance sheets due to its recent convertible notes and common stock offering, Bloomberg reported.

PHI rebounds

PHI’s5 ¼% senior notes remained in focus in the secondary space with the notes recouping its losses from Tuesday.

The notes were seen trading between 97 and 98 with most prints between 97 1/8 to 97¼, a market source said.

The notes were up about 2.5 points from Tuesday’s levels when they were seen trading on a 95 handle.

A net $33 million of the bonds had traded by late afternoon Wednesday.

With the roadshow for PHI’s new $500 million senior notes wrapping up on Wednesday, there is increased confidence the debt refinancing deal will be completed, a source said.

PHI’s 5¼% notes have been in focus since whispers of the refinancing deal circulated in late May.

The games begin

Boyd’s recently priced 6% senior notes due 2026 and MGM’s recently priced 5¾% senior notes due 2025 saw a fresh bout of attention in the secondary market although the notes were largely unchanged in the high-volume trading.

Boyd’s 6% senior notes were seen trading just north of par with a net $18 million of the bonds on the tape by late afternoon, according to a market source.

The notes have been largely wrapped around par since hitting the secondary market.

MGM’s 5¾% senior notes were quoted slightly higher at par ¼ bid, par ¾ offered but continued to trade around par ½, a market source said.

A net $24 million of the bonds had traded by late afternoon.

The renewed interest in the recent deals from the gaming sector comes as Congress initiates the process to introduce legislation on sports betting.

The planned hearing on sports betting comes on the heels of a Supreme Court decision in May which allowed states to legislate sports betting.

Valeant active

Valeant’s junk bonds have also been active in the space as the company prepares to redeem four series of notes.

Valeant’s 9% senior notes due 2025 were up about ½ point to trade at 106 3/8 on Wednesday.

The notes saw high volume trading with a net $23 million of the bonds on the tape by late afternoon.

While the 9% notes were active on Wednesday, Valeant’s 6 1/8% notes were active on Tuesday although the notes were largely unchanged at 94, according to a market source.

Valeant’s recently priced 8½% senior notes due Jan. 31, 2027 (Caa1/B-/B-) have not been active in the secondary space since they initially broke for trade.

However, the notes continue to perform well and have been trading around 103½, a market source said.

Valeant priced the 8½% notes at par on May 17 as part of a refinancing package to take out the company’s 5 3/8% senior notes due 2020, 6 3/8% senior notes due 2020, 6¾% senior notes due 2021 and 7¼% senior notes due 2022.

Tuesday inflows

The daily cash flows of the dedicated high-yield bond markets were positive on Tuesday, the most recent session for which data was available at press time, according to an investor.

High-yield ETFs saw $168 million of inflows on the day.

Actively managed high-yield funds saw $75 million of inflows on Tuesday.

Dedicated bank loan funds were also positive on the day, with $71 million of inflows on Tuesday, the source said.

Indexes gain

Benchmarks for the high-yield secondary market saw gains on Wednesday after all posted losses on Tuesday.

The KDP High Yield index was up 3 basis points to close Wednesday at 70.81 with the yield now 5.75%. The index was down 6 basis points on Tuesday.

The Merrill Lynch High Yield index recouped its losses from Tuesday. The index was up 10.6 bps on Wednesday with the year-to-date return now 0.672.

The index was down 9.4 bps on Tuesday, its first loss in over six consecutive trading days.

The index broke into positive territory on June 5 for the first time since May 15 and has remained there since.

The CDX High Yield 30 index was up 4 bps to close Wednesday at 106.72. The index posted large losses on Tuesday and was down 31 bps after a 10 bps drop on Monday.

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