LPL Financial plans notes; new notes trade; PG&E continues upward; Frontier varies

By James McCandless and Paul A. Harris

San Antonio, Oct. 30 – The overall quiet high-yield primary market heard one issuer announce plans for new notes on Wednesday as the secondary market continued to focus on new issues amid shifts in the utilities and telecom spaces.

LPL Financial Holdings Inc. announced that it intends to sell $400 million of senior notes due 2027.

New notes from TransDigm Inc., BBA Aviation plc and Royal Bank of Scotland Group plc were active after freeing to trade.

Meanwhile, PG&E Corp.’s issues moved higher, further pushing away from recent lows as a Northern California wildfire weakens.

Telecom name Frontier Communications Corp.’s paper varied amid news that a hedge fund is pushing the company to file for bankruptcy.

Quiet primary

The new issue market, now in the throes of an earnings blackout period during which prospective issuers must report fresh financial numbers before selling bonds, remained mostly quiet on Wednesday.

LPL Financial Holdings announced plans to sell $400 million of senior notes due 2027.

Morgan Stanley will be on the left.

The notes are part of a debt refinancing effort that also includes a $1.07 billion seven-year term loan set to kick off at a Thursday lender meeting.

Meanwhile Wesco Aircraft Holdings, Inc. is in the market with $1,575,000,000 of high-yield notes.

The deal includes $1 billion of seven-year senior secured notes (B3/B), with early guidance high 7% area, and $575 million of eight-year senior unsecured notes (Caa2/CCC+), with early guidance in the 350 basis points area behind secured notes.

However talk on the Wesco deal could be headed north, according to a trader who heard high 7% to low 8% area on the secured notes.

The roadshow is set to run into the Friday session.

And Blackboard Inc. continues to market $243 million of second lien notes (Caa2/CCC) and a $500 million bank loan, sources say.

Recent talk has the bonds coming with an 11%-handle yield, a trader said.

Tuesday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Tuesday, according to a market source.

High-yield ETFs saw $29 million of inflows on the day.

Actively managed high-yield funds saw $75 million of inflows on Tuesday, the sources said.

With only Wednesday's daily fund flow numbers remaining to go into the tally the combined funds are tracking $996 million of outflows on the week ending Wednesday.

New notes trade

New Tuesday issuance became free to trade in Wednesday’s session, traders said.

Cleveland-based aircraft component producer TransDigm’s new 5½% senior subordinated notes due 2027 landed at 99¾ bid.

The Tuesday drive-by was upsized to $2.65 billion, pricing at par.

The deal was increased from $2.15 billion.

Elsewhere, London-based aviation services provider BBA Aviation’s new 4% senior notes due 2028 finished at 99½ bid.

The $650 million issue also priced at par on Tuesday.

Edinburgh, Scotland financial services name RBS’ new 3.754% fixed-to-fixed-rate reset subordinated paper due 2029 was lifted to 100½ bid.

Pricing at par, the deal came to market at $750 million.

PG&E higher

Meanwhile, PG&E’s notes continued to push higher, market sources said.

The 6.05% notes due 2034 rose 9 points to close at 101 bid. The 3½% senior notes due 2020 picked up 4 points to close at 94½ bid.

On Monday, the 6.05% notes jumped up 5½ points.

Over the last two trading sessions, the San Francisco-based bankrupt electric utility’s structure was rising off of a drop as negative headlines plague the name.

Wildfires that have spread across California have seen partial containment over the past few days as the market worries that the name may have had a hand in starting one of the blazes.

In bankruptcy court on Tuesday, a judge ordered mediation between the company and other parties in order to finalize a restructuring plan.

Frontier varies

In telecom, Frontier’s issues were seen varying throughout the day, traders said.

The 10½% senior notes due 2022 gained ½ point to close at 48½ bid. The 11% senior notes due 2025 held level at 47½ bid.

News broke on Wednesday that hedge fund Discovery Capital Management is pushing for the Norwalk, Conn.-based wireline telecom name to file for bankruptcy as soon as possible.

The firm, representing some investors, argued that no action would limit access to liquidity.

Earlier in the year, Aurelius Capital argued that a bankruptcy would not be in the best interest of stakeholders.

The company is due to start restructuring talks with creditors in the near future.

Indexes lower

Three high-yield indexes ended Wednesday on weaker footing.

The KDP High Yield Daily index dived 17 bps on Wednesday, settling at 71.20 with the yield moving up to 5.45%.

The index tacked on 2 bps on Tuesday, picked up 3 bps on Monday and hopped up 7 bps on Friday.

The ICE BofAML US High Yield index declined by 13.2 bps with the year-to-date return now at 11.975%.

The index shed 1.2 bps on Tuesday, improved by 4.8 bps on Monday and gained 9.5 bps on Friday.

The CDX High Yield 30 index fell 33.33 bps to 107.3789.

The index dropped 33.23 bps on Tuesday, garnered 33.02 bps on Monday and improved by 33.18 bps on Friday.

© 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.