DCP Midstream, Asbury Automotive price; Teva active; Continental gains; CommScope sinks

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 4 – Three issuers priced a combined four tranches of dollar-denominated junk on Thursday to raise an overall total of $2.35 billion.

One of the three, DCP Midstream Operating, LP, came with a drive-by.

The Denver-based petroleum midstream services company priced a $400 million issue of 3¼% senior bullet notes due February 2032 (Ba1/BB+/BB+) at par, at the tight end of talk.

Meanwhile, the secondary space was firm on Thursday as the 10-year Treasury yield sank to close the day at 1.529%.

While the market was up 1/8 to ¼ point, trading activity continued to focus on new and recent issues.

Teva Pharmaceutical Industries Ltd.’s dollar-denominated bonds (Ba2/BB-/BB-) remained active although with little movement in price.

While new issues like Teva remained in focus, earnings and topical news sparked activity in some outstanding issues.

Continental Resources Inc.’s 5¾% senior notes due 2031 gained more than 1 point on news the shale driller acquired assets in the Permian Basin.

CommScope, Inc.’s junk bonds were down in active trading following the global infrastructure network provider’s earnings report.

Teva active

Teva’s new dollar-denominated bonds remained active in the secondary space although with little movement in prices.

Both the 4¾% notes due 2027 and 5 1/8% notes due 2029 remained in the par to par ¼ context throughout Thursday’s session – levels reached shortly after breaking for trade.

Each tranche saw about $50 million in reported volume.

While the deal was heard to have played to heavy demand, the notes have fallen flat since hitting the secondary space.

Teva priced a $1 billion tranche of the 4¾% notes and a $1 billion tranche of the 5 1/8% notes at par on Tuesday.

Continental Resources gains

Continental Resources’ 5¾% senior notes due 2031 were on the rise in active trading following news the shale driller acquired assets in the Permian Basin.

The 5¾% notes rose 1½ points in active trading to close the day at 120, according to a market source.

The yield on the notes is now about 3.1%, the source said.

There was more than $40 million in reported volume.

The notes were on the rise following news the shale driller acquired drilling rights in the Permian Basin from Pioneer Natural Resources Co. for $3.25 billion.

The rights will allow Continental to generate about $500 million in free cash flow next year at current commodity prices, the company said in a press release.

While the bonds reacted favorably to the news, some analysts were skeptical of the acquisition due to the fear of a pullback in energy prices, a source said.

CommScope sinks

CommScope’s senior notes were under pressure on Thursday following a disappointing earnings report.

The 5% senior notes due 2027 were down 2½ points to close the day at 89¾, according to a market source.

There was about $12 million in reported volume.

The 8¼% senior notes due 2027 were down 2 3/8 points to close the day at 99 7/8.

There was more than $15 million in reported volume.

The company missed estimates and saw its net loss widen in the third quarter, a source said.

Indexes

The KDP High Yield Daily index rose 12 points to close the day at 69.67 with the yield now 3.89%.

The index shaved off 4 points on Wednesday, gained 2 points on Tuesday and fell 6 points on Monday.

The CDX High Yield 30 index fell 18 bps to close Thursday at 109.43. The index gained 23 bps on Wednesday and 21 bps on Tuesday after falling 6 bps 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.