Morning Commentary: Colfax, Dun & Bradstreet set talk; recent issues lead secondary

By Paul A. Harris

Portland, Ore., Jan. 31 – The final high-yield primary market session of January generated new deal news in the morning, with dealers detailing offers set to clear the market ahead of the coming weekend.

Colfax Corp. is on deck to price $1 billion of senior notes in two tranches (Ba2/BB+) on Thursday.

A heavily oversubscribed order book allowed the Annapolis Junction, Md.-based technology company to set official price talk tighter than initial guidance, market sources said.

Official talk has the five-year notes, which come with two years of call protection, coming to yield 6% to 6¼%, tighter than initial guidance in the 6½% area.

The seven-year notes are talked to yield 6¼% to 6¾% versus initial talk in the 7% area.

The market expects the $1 billion acquisition financing deal to be split evenly between the two tranches.

Meanwhile Dun & Bradstreet Corp. set price talk it its $1.35 billion two-part offering of high-yield notes.

The deal includes $500 million of 7.5-year senior secured notes (B2/B/BB) talked in the 7¼% area, tighter than initial guidance in the mid 7% area. The unsecured tranche features $850 million of eight-year senior notes (Caa2/CCC/B-) talked to yield 10% to 10¼%, tighter than initial guidance in the 10¼% to 10½% area.

The buyout deal is set to price on Friday.

Well-bid secondary

With West Texas Intermediate crude topping the $55 per barrel mark, and mixed performance in the stock indexes, there was a bid for junk on Thursday morning, a New York-based trader said.

The spotlight tended to shine on recent issues.

The new TransDigm, Inc. 6¼% senior secured notes due March 2026 (Ba3/B+) were trading very well at 101 3/8 bid, 101½ offered, the trader said.

The upsized $3.8 billion issue priced at par on Wednesday.

The issue size increased from $3.7 billion.

In a move said by one investor to reflect the buyside's present desire to move up the capital structure, a proposed $1 billion tranche of eight-year senior subordinated notes was withdrawn from the market, and the proceeds shifted to the secured tranche.

The new Greif Inc. senior notes due March 2027 (B1/BB-) were par ½ bid, par ¾ offered, slightly off their highs at mid-morning, the trader said.

The $500 million issue priced at par on Wednesday, playing to a book that was at least four times oversubscribed, market sources said.

The Tenet Healthcare Corp. 6¼% senior secured second-lien notes due February 2027 (Ba3/B-) were trading at 101 on Thursday.

Two days ago you couldn't give that paper away, the trader remarked.

The $1.5 billion issue priced at par on Jan. 22.

Away from recent issues, the Charter Communications Operating, LLC/Charter Communications Operating Capital Corp. 5¾% senior secured notes due April 2048 were up 2 points Thursday morning, trailing the cable giant's earnings report.

The notes were 99 5/8 bid in active trading at mid-morning, the trader said.

Wednesday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Wednesday, a trader said.

High-yield ETFs saw a hefty $543 million of inflows on the day.

Actively managed high-yield funds saw $30 million of inflows on Wednesday, the trader said.

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