Tenneco a blowout, bid up 5 points; Tervita at 98 OID; Sizzling Platter, Interface gain

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 13 – The domestic high-yield primary market priced two deals during Friday’s session – one which was a blowout, sources said.

In a heavily oversubscribed offering, Tenneco Inc. priced a $500 million issue of senior secured notes due Jan. 15, 2029 (Ba3/B/BB).

The deal was quickly bid up 5 points in the secondary.

Elsewhere, Tervita Corp. priced a $500 million issue of 11% five-year senior secured second-lien notes (B3/CCC+) at a discount.

While the forward calendar was light heading into the Nov. 16 week, one deal is on deck.

CP Atlas Buyer, Inc., also known as American Bath Group, is expected to run a Tuesday through Thursday roadshow in the week ahead for a $335 million offering of eight-year senior notes (Caa2/CCC+).

Meanwhile, the secondary space pared its losses from Thursday’s session with the cash bond market set to close the day up ¼ point.

New paper was in focus in the secondary space with several recent issues trading with steep premiums.

“It’s a good day for new issues,” a source said.

Following a strong break, Interface Inc.’s 5½% senior notes due 2028 (B1/B+) continued to gain in high-volume activity.

Sizzling Platter, LLC’s 8½% senior secured notes due 2025 (B3//B-) were also in demand with the notes climbing to a 102-handle.

While Chemours Co.’s 5¾% senior notes due 2028 (B1//B) did not reach the same heights as other new issues in the market, it was trading with a healthy premium.

Tenneco’s blowout offering

In a Friday blowout, Tenneco priced a $500 million issue of senior secured notes due Jan. 15, 2029 (Ba3/B/BB) at par to yield 7 7/8%.

Pricing on the deal – heard to be playing to as much as $4 billion of orders – ground tighter as the Nov. 9 week wore down.

The yield printed at the tight end of the 7 7/8% to 8% final yield talk, which had tumbled from earlier official talk in the 8¼% area.

All-in-all the deal came a full 100 basis points lower than initial guidance in the high 8% area, sources said.

Having seen it price, investors were on the chase late Friday, with traders spotting the deal as high as 105 bid.

At 105 the new Tenneco 7 7/8% notes due 2029 yield 6.7%, a trader noted.

Tervita’s discount

Elsewhere, Tervita priced a $500 million issue of 11% five-year senior secured second-lien notes (B3/CCC+) at 98 to yield 11.53% on Friday.

Pricing widened substantially during the time that deal was in the market.

The yield printed over 40 bps beyond the wide end of yield talk in the 11% area, talk that came 100 bps wide of earlier guidance in the 10% area.

Wider pricing attracted a decent crowd, sources said.

The $500 million issue played to around $600 million of demand across 42 accounts, according to a trader, who added that the new Tervita 11% second-lien notes traded to 98½ bid, 99½ offered on Friday afternoon (see related stories in this issue).

A look ahead

The Nov. 16 week gets underway with one deal on the active calendar.

CP Atlas Buyer, also known as American Bath Group, is expected to run a Tuesday through Thursday roadshow in the week ahead for a $335 million offering of eight-year senior notes (Caa2/CCC+), a deal backing the LBO of the Savannah, Tenn.-based bathtub-maker by Centerbridge Partners.

Initial guidance is in the 8% area.

Beyond that, the Nov. 16 week is something of a question mark, as continued dire news on the pandemic front, and uncertainties surrounding the orderly transition of the United States presidency remain causes for wariness, sources say.

Interface on the rise

Interface’s 5½% senior notes due 2028 continued to rocket higher in active trading on Friday following a strong break.

The 5½% notes traded in a range of 102¾ to 103¼ during the session.

They were marked at 102 7/8 bid, 103 1/8 offered in the midafternoon.

The notes were active with more than $25 million in reported volume.

They continued to gain momentum following a strong break which saw them quickly rise to 102½ bid, a source said.

The notes carried a decent yield with the commercial flooring company a decent credit compared to other building supply companies in the sector, a source said.

The 5½% notes priced with a spread of 476, which was cheap compared to other single-B credits, another source said.

Interface priced a $300 million issue of the 5½% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 5 5/8% area. Initial guidance was in the high 5% area.

Sizzling Platter sizzles

Sizzling Platter’s 8½% senior secured notes due 2025 were putting in a strong performance in the secondary space with the notes trading up to a 102-handle.

They were marked at 102¼ bid, 102 3/8 offered in the midafternoon, a source said.

The notes from the parent company of restaurant chains “was an attractive piece of paper provided restaurants return to normal,” a source said.

Sizzling Platter priced a $350 million offering of the 8½% notes at par on Thursday. Pricing came on top of guidance.

The offering was Sizzling Platter’s second pass at the high-yield market with a similarly structured $325 million offering pulled in late October.

The earlier offering was marketed with talk for a yield of 7¾% to 8%. The company had been hoping for a yield of 7¾%, a source said.

Chemours at a premium

Chemours’ 5¾% senior notes due 2028 were in focus on Friday with the notes gaining momentum after a lackluster break.

The 5¾% notes were marked at par 7/8 bid, 101 1/8 offered in the late afternoon, a source said.

They were marked at par 1/8 bid, par 3/8 offered after breaking for trade on Thursday.

Chemours’ 5¾% notes gave up some duration compared to the company’s 5 3/8% senior bullet notes due 2028, with the 5¾% notes callable after three years.

However, what the 5¾% notes gave up in duration, they made up for in yield, a source said.

Chemours priced an upsized $800 million, from $750 million, issue of the 5¾% notes at par on Thursday.

The yield printed at the wide end of the 5½% to 5¾% yield talk.

However, the notes came at the tight end of initial guidance for a yield of 5¾% to 6%.

$1.06 billion Thursday outflows

High-yield ETFs sustained $1.055 billion of daily cash outflows on Thursday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds has $150 million of outflows on Thursday, hence the combined funds sustained $905 million of net outflows on the day, the source said.

News of Thursday's daily flows follows a report that the combined dedicated high-yield funds saw a huge $4.565 billion of inflows in the week to Wednesday's close, according to the Refinitiv Lipper Fund Flow Report Newsline.

That's the biggest weekly inflow since the week ending June 10, the market source said.

Indexes mixed

Indexes were mixed on Friday. However, all closed the week with cumulative gains.

The KDP High Yield Daily index shaved off 5 points to close Friday at 67.37 with the yield 5.09%.

The index was down 32 points on Thursday and 12 points on Tuesday after jumping 69 points on Monday.

The index posted a cumulative gain of 20 points on the week.

The ICE BofAML US High Yield index shaved off 3.2 bps with the year-to-date return now 2.764%.

The index was down 43.8 bps on Thursday and 28.1 bps on Tuesday after jumping 122.3 bps on Monday.

The index posted a cumulative gain of 47.2 bps on the week.

The index dropped below the 3% year-to-date return on Thursday after blowing past it on Monday.

The index was brushing up against negative returns just two weeks ago.

The CDX High Yield 30 index rose 46 bps to close Friday at 107.12.

The index dropped 91 bps on Thursday, was up 17 bps on Tuesday and jumping 141 bps on Monday.

The index posted a cumulative gain of 113 bps on the week.

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