Cable & Wireless prices; Staples, Golden Entertainment on tap; JBS trades up; AmeriGas jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 2 – The domestic and European high-yield primary market were again active with each seeing one deal price during Tuesday’s session.

The domestic primary market also saw two deals join the active forward calendar including Staples, Inc.’s highly anticipated $2.13 billion two-tranche offering.

Less than a week after pricing an add-on, Cable & Wireless Communications Ltd. returned to price a $400 million issue of 5¾% senior secured notes due Sept. 7, 2027 (Ba3/BB-/BB-) in a Tuesday drive-by.

Staples began a roadshow on Tuesday for its $2,125,000,000 two-part offering.

Golden Entertainment Inc. also started a roadshow for a $375 million offering of seven-year senior notes (existing ratings Caa1/CCC+).

In the European primary market, France-based Elis SA priced a €500 million issue of five-year senior notes (S&P: BB+/Fitch: BB) at par to yield 1¾%.

Meanwhile, the secondary space was again oddly uneventful, a market source said.

Trading volume was again light with the cash market largely unchanged.

JBS’ 6½% senior notes due 2029 (Ba3/BB-) were putting in a strong performance in the secondary space with the notes trading up to 1 point above their issue price.

Rite Aid Corp.’s 6 1/8% senior notes due 2023 were under pressure in the secondary space with the notes trading down on headline news and fears about a slowdown in the sector after disappointing earnings from Walgreens.

AmeriGas Partners, LP’s 5 5/8% senior notes due 2024 jumped in high-volume activity on news it would be bought out by UGI Corp.

Cable & Wireless returns

Just five days after it priced an upsized $300 million unsecured add-on deal, London-based Cable & Wireless Communications returned to the dollar-denominated primary market with a $400 million issue of new 5¾% senior secured notes due Sept. 7, 2027 (Ba3/BB-/BB-).

The debt refinancing deal, which came as a Tuesday drive-by, priced at 99.195 to yield 5 7/8%.

The yield printed at the tight end of yield talk in the 6% area and inside of initial guidance in the low 6% area.

Citigroup was the left lead bookrunner.

Sable International Finance Ltd., a subsidiary of Cable & Wireless Communications, issued the new bonds.

The new notes were seen up ½ point in the aftermarket after breaking for trade. They were changing hands at 99½, a market source said.

Staples roadshowing $2.13 billion

The Tuesday session saw a substantial buildup in the active forward calendar.

Staples started a roadshow on Tuesday for a $2,125,000,000 two-part offering of high-yield notes.

The deal features $750 million of seven-year senior secured notes (B1/B+) with initial guidance in the mid-to-high 7% area.

It also features $1,375,000,000 of eight-year senior unsecured notes (B3) whispered in the high 9% to low 10% area.

Goldman Sachs is the left lead.

The Framingham, Mass.-based business supplies distributor plans to use the proceeds, together with borrowings under its term loan and ABL facility, to repay debt and fund a distribution to shareholders.

Golden Entertainment starts roadshow

Golden Entertainment started a roadshow on Tuesday for a $375 million offering of seven-year senior notes (existing ratings Caa1/CCC+).

Initial guidance has the deal coming with a yield in the 8% area.

The debt refinancing deal is expected to price on Monday.

JP Morgan, Credit Suisse, Macquarie, Capital One, Citizens Bank and Fifth Third Bank are the joint bookrunners.

Elis prints at 1¾%

In the euro-denominated market, France-based Elis SA priced a €500 million issue of five-year senior notes (S&P: BB+/Fitch: BB) at par to yield 1¾%.

The yield printed 12.5 basis points below the tight end of the 1 7/8% to 2% yield talk.

The deal was heard to be playing to €3 billion of orders, a source said.

Global coordinator HSBC will bill and deliver. BNP Paribas and ING were also global coordinators.

The Saint-Cloud, France-based provider of work uniforms and related services plans to use the proceeds to refinance part of the €800 million 3% notes due 2022 that are outstanding.

JBS trades up

JBS’ newly priced 6½% senior notes due 2029 were putting in a strong performance in the secondary space on Tuesday.

The notes were up about 3/8 point from Monday’s close. They were quoted at 101 bid, 101 3/8 offered, according to a market source.

However, the notes were largely wrapped around 101 in active trading with few buyers willing to go above that threshold, a market source said.

More than $40 million of the bonds had changed hands by the late afternoon.

JBS priced an upsized $1 billion issue of the 6½% senior notes in a Monday drive-by.

The issue size was increased from $650 million.

The yield printed at the tight end of yield talk in the 6 5/8% area.

Rite Aid under pressure

Rite Aid’s 6 1/8% senior notes due 2023 were under pressure on Tuesday after getting hit with negative headline news and warnings about a slowdown in the sector.

The 6 1/8% notes dropped about ¾ point in high-volume activity on Tuesday, according to a market source.

They were changing hands at 81.625 in the late afternoon. More than $46 million of the bonds were on the tape during Tuesday’s session.

News broke on Monday that a whistleblower lawsuit alleging Rite Aid had overbilled government insurance companies would be allowed to proceed.

The negative news was compounded by disappointing earnings from Walgreens and fears about a slowdown for the retail pharmacy sector, a market source said.

After what Walgreens described as the most difficult quarter since its founding, the retail pharmacy chain slashed its forward guidance with earnings for 2019 expected to be flat versus.

The previous forecast was for growth of 7% to 12%, MarketWatch reported.

AmeriGas jumps

AmeriGas’ 5 6/8% senior notes due 2024 jumped in high-volume activity on Tuesday on news of a buyout.

The 5 6/8% notes rose 3¼ points to 105¼, according to a market source. More than $21 million of the bonds were on the tape by the late afternoon.

UGI and AmeriGas announced on Tuesday an agreement for UGI to purchase the remaining 69.2 million shares of AmeriGas that it does not already own in a cash and stock deal valued at $2.44 billion.

UGI already owns 26% of the propane company.

Under the terms of the agreement, AmeriGas would become a wholly owned subsidiary of UGI, the companies said in a joint press release.

The deal is subject to shareholder approval. It is expected to close in the fourth quarter of 2019.

Monday inflows

The daily cash flows of the dedicated high-yield bond funds were substantially positive on Monday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs saw $209 million inflows on the day.

Actively managed high-yield funds saw $260 million of inflows on Monday, the source said.

With the cash flows of two sessions remaining to be tallied, the combined funds are tracking $2 billion of weekly inflows for the five-day interval that will conclude with Wednesday's close, according to the trader.

Indexes mixed

Indexes were mixed on Tuesday after launching the week on firm footing.

The KDP High Yield Daily index was up 2 bps on Tuesday although the yield was unchanged at 5.81%.

The index was mixed throughout last week but closed with a cumulative loss of 3 bps on the week.

The ICE BofAML US High Yield index was up 3.6 bps with the year-to-date return now 7.636%.

The index gained 22 bps on Monday.

The index saw a cumulative gain of 42.8 bps on the week last week, surpassing 7% returns on March 26.

The index initially crossed the 7% threshold on March 21 but sank below it the following day.

The index just recently passed 6% year-to-date returns on March 11.

The CDX High Yield 30 index was down 17 bps to close Tuesday at 10683. The index gained 35 bps on Monday after a cumulative gain of 54 bps on the week last week.

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