Trailing massive $11 billion week, junk takes a breather; Yum! announces $2.3 billion

By Paul A. Harris

Portland, Ore., May 27 – Following a massive week in the high-yield primary market – a four-day period that saw $11 billion of issuance to Thursday’s close – the market was resting on its oars ahead of Friday’s early close and the extended Memorial Day holiday weekend in the United States, sources said.

Trading in the secondary market was also light at mid-morning on the East Coast.

What little activity there was tended to focus on new issues, traders said.

The new Albertsons Cos., LLC 6 5/8% notes due June 15, 2024 (B3/B+) were trading either side of 102.

The $1.25 billion issue priced at par on Wednesday.

Thursday’s Teck Resources Ltd. issues (B1/BB-) were also well above their reoffer prices on Friday morning.

The 8% notes due June 1, 2021 and the 8½% notes due June 1, 2024 were both at 102 bid, 102½ offered on Friday.

Intense demand – $12.5 billion of orders across both tranches, with 225 accounts in each book – set the stage for the 8% notes to price 25 basis points below the tight end of price talk.

Turning to a higher beta credit that came in that latter part of the big May 23 week, Cengage Learning, Inc.’s 9½% senior notes due 2024 (Caa1/CCC+) were at par ¼ bid, 101 offered on Friday, in very light volume, a New York-based trader said.

The $620 million issue – which was subject to two downsizings and came at the wide end of upwardly revised price talk – priced at par on Thursday.

Yum! announces $2.3 billion

Yum! Brands, Inc. announced a $2.3 billion offering of senior notes in tranches with maturities in 2024 and 2026 in a Friday morning press release.

The announcement – coming as it did ahead of an extended holiday weekend – mystified several market sources who spoke to Prospect News.

The deal (B1/BB) will be led by Goldman Sachs & Co. and is expected to price on Thursday, June 2, a trader said.

Louisville, Ky.-based fast food company Yum! plans to use the proceeds, along with new bank debt, to fund a return of capital to shareholders, as well as to repay revolver debt and for general corporate purposes.

© 2015 Prospect News.
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