Fairstone, Hannon Armstrong, Springleaf tap price; Sirius Computer on deck; Antero Midstream lags

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 26 – Following Monday and Tuesday sessions that saw a combined $7.36 billion of new issuance, the hard charging domestic high-yield primary market hit cruise control on Wednesday, printing just $950 million of new bonds in three tranches.

Hannon Armstrong Sustainable Infrastructure Capital Inc. priced an upsized $350 million issue of green eligible five-year senior notes (BB+/BB+) at par to yield 5¼%.

Fairstone Financial Inc. priced a $300 million issue of 7 7/8% five-year senior notes (B1/B) at 99.484 to yield 8%.

Springleaf Finance Corp. priced a $300 million add-on to its 6 1/8% senior bullet notes due March 15, 2024 (Ba3/BB-) at 107.00.

Virtu Financial was expected to price a $525 million offering in a drive-by. However, the deal was heard to be held over.

The forward calendar remains robust with Sirius Computer Solutions, Inc. expected to price its $300 million offering of eight-year senior notes (Caa1/CCC+) on Thursday.

While the market awaits official word on Allied Universal Holdco LLC’s $1.55 billion two-tranche offering, it was heard to be following a similar trajectory as other deals with secured and unsecured tranches.

Meanwhile, the secondary space started the day strong but grew weaker as the session progressed, a market source said.

New paper remained in focus with several of the recent deals continuing to trade at a premium to their issue price.

Parkland Fuel Corp.’s 5 7/8% senior notes due 2027 (B1/BB), Hexion Inc.’s 7 7/8% senior notes due 2027 (Ba3/B-) and Avon International Capital plc’s 6½% senior notes due 2022 (Ba1/BB-) remained above their issue price in secondary trading although some of the notes were coming in from their highs.

However, Antero Midstream Partners LP’s 5¾% senior notes due 2028 (Ba3/BB+) continued to trade down with the notes more than 1 point below their issue price.

Hannon upsized and inside talk

Coming with a green deal, Hannon Armstrong got a notable execution as it managed to upsize and price through talk.

The Annapolis, Md.-based mortgage real estate investment trust priced an upsized $350 million issue of green eligible five-year senior notes (BB+/BB+) at par to yield 5¼%.

The issue size increased from $300 million.

The yield came 12.5 basis points inside of yield talk in the 5½% area.

Wells Fargo was the left bookrunner.

Hannon Armstrong plans to use the proceeds to pay down its existing secured borrowings and for general corporate purposes, including new investments in green eligible projects.

The additional proceeds resulting from the $50 million upsizing of the deal will be used as cash on the balance sheet.

Hannon Armstrong invests in climate change solutions by providing capital to the leading companies in the energy efficiency, renewable energy and other sustainable infrastructure markets.

Fairstone prices tight

Fairstone Financial priced a $300 million issue of 7 7/8% five-year senior notes (B1/B) at 99.484 to yield 8%.

The yield printed at the tight end of the 8% to 8¼% yield talk and inside of initial guidance in the low 8% area.

Citigroup, NBC and RBC were the joint bookrunners for the debt refinancing deal.

Springleaf Finance taps 2024 notes

Springleaf Finance priced a $300 million add-on to its 6 1/8% senior bullet notes due March 15, 2024 (Ba3/BB-) at 107.00.

The reoffer price came on top of price talk as well as initial guidance.

The add-on notes have a 4.284% yield to worst and a 4.456% yield to maturity.

Goldman Sachs was the left lead bookrunner.

The Evansville, Ind.-based consumer finance company plans to use the proceeds for general corporate purposes, which may include debt repurchases and repayments.

Virtu delayed

Virtu Financial was expected to price $525 million of seven-year first lien senior secured notes in a quick-to-market trade following a late-morning conference call with investors.

Initial price talk is in the 5½% area.

However, by late Wednesday afternoon there was no further word on the deal.

The buzz in the market was the Virtu Financial book was only half-done heading into mid-afternoon, a trader said.

Sirius Computer talk 10½ to 10¾

Looking to the Thursday session, Sirius Computer Solutions is on deck with a $300 million offering of eight-year senior notes (Caa1/CCC+).

On Wednesday, talk came out at 10½% to 10¾%, well wide of initial price talk in the 10% area, a trader said.

Document changes are expected.

Citigroup is the left bookrunner.

Allied eyed

Meanwhile, pending official word from the dealers, the Allied Universal Holdco $1.55 billion deal, featuring secured and unsecured notes, is shaping up consistently with other similarly structured recent two-part deals.

Demand was falling heavily upon the secured tranche, a trader said.

The $500 million tranche of seven-year senior secured notes (B3/B-/BB-), with initial talk 6¾% to 7%, is heard to be two-times oversubscribed.

The $1.05 billion eight-year senior unsecured notes (Caa2/CCC/CCC+), with initial talk at 250 bps to 300 bps behind secured notes, is heard to have a book that is right around the tranche size.

Proceeds from the concurrent term loan may end up being shifted to the secured notes tranche, the trader added.

Parkland in focus

Parkland Fuel’s 5 7/8% senior notes were among the most actively traded issues in the secondary space on Wednesday.

The notes continued to trade at a premium to their issue price and were seen switching hands at par ½ bid, par ¾ offered in the late afternoon, according to a market source.

The bonds saw more than $74 million in reported volume heading into the market close.

Parkland Fuel priced a $500 million issue of the 5 7/8% notes at par on Tuesday.

The yield printed in the middle of the 5¾% to 6% yield talk and tight to initial talk in the 6% area.

Hexion comes in

Hexion’s 7 7/8% senior notes due 2027 maintained a premium to their issue price on Wednesday. However, the notes were coming in from their highs.

The 7 7/8% notes were seen at par ½ bid, par ¾ offered in the late afternoon, according to a market source.

More than $56 million was on the tape by the late afternoon.

While holding onto a premium, the notes were coming in from the heights reached after breaking for trade.

The notes closed Tuesday around par ¾ bid, 101 offered.

Hexion priced a $450 million issue of the 7 7/8% notes at par on Tuesday.

The yield printed at the tight end of yield talk in the 8% area and inside of the 8% to 8¼% early guidance.

Proceeds from the new offering will be used to support its reorganization plan and help the company emerge from bankruptcy.

Hexion filed for bankruptcy in mid-April after missing the interest payment on its 6 5/8% senior notes due 2020.

Prior to its bankruptcy filing, there had been an ongoing struggle between the specialty chemical makers’ first- and second-lien noteholders.

Avon active

Avon International’s 6½% senior notes due 2022 were also holding onto a slight premium in the secondary space.

The notes were trading at par 3/8 bid, par 5/8 offered in the late afternoon with more than $41 million on the tape, according to a market source.

Avon International priced an upsized $400 million issue of 6½% notes at par to yield 6.503%.

The issue size was increased from $350 million.

Antero tanks

While most of the deals to price during Tuesday’s session were trading at a premium to their issue price, Antero Midstream’s 5¾% senior notes due 2028 sank further below their issue price.

The notes were seen at 98¾ bid, 99 offered in the late afternoon. They traded as low as 99 3/8 soon after breaking for trade on Tuesday.

Antero priced an upsized $650 million issue of the 5¾% senior notes at par in a Tuesday drive-by.

The yield printed at the wide end of the 5 5/8% to 5¾% yield talk but in the middle of initial talk in the 5¾% area.

Mixed Tuesday flows

The daily cash flows to the dedicated high-yield bond funds were mixed on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $123 million of outflows on the day.

However, actively managed high-yield funds saw $50 million of inflows on Tuesday, the source said.

Although the daily flows have been flattish over the past two sessions, inflows to the combined funds during the first two sessions of the present reporting period were massive: $1.2 billion on Thursday and $1.29 billion on Friday, the source said.

With only Wednesday's fund flow numbers remaining to be tallied, the combined funds are tracking $3.13 billion of net inflows for the present week, the source added.

Indexes mixed

Indexes were again mixed on Wednesday after all posted losses on Tuesday.

The KDP High Yield Daily index dropped 2 bps to close Wednesday at 70.79 with the yield now 5.48%.

The index was down 3 bps on Tuesday and shaved off one point on Monday.

The ICE BofAML US High Yield index sank below the 10% year-to-date returns threshold after a brief stint above.

The index was down 4.2 bps with the year-to-date return now 9.967%.

The index dropped 18.3 bps on Tuesday and gained 5.5 bps on Monday.

The index shot past 10% returns on June 20.

The CDX High Yield 30 index gained 18 bps to close Wednesday at 107.18. The index was down 15 bps on Monday after gaining 153 bps on the week last week.

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