Ready Cap does small add-on; Brand, BevMo!, Oppenheimer on tap; oil slide continues; funds up $198 million

By Paul Deckelman and Paul A. Harris

New York, June 15 – The high-yield primary sphere remained fairly quiet on Thursday; syndicate sources reported that after two straight sessions in which absolutely no U.S. dollar-denominated and fully junk-rated new paper had come to market, a smallish add-on offering of 2022 notes from real estate investment trust ReadyCap Holdings, LLC, managed to squeeze through.

But Brand Energy & Infrastructure Services Inc.’s planned $700 million of eight-year notes, expected to appear on Thursday, was instead heard to have been pushed off till Friday.

That session could also see alcoholic beverage retailer Beverages & More’s $190 million five-year secured issue get done, along with financial services company Oppenheimer Holdings Inc.’s $200 million of five-year secured notes.

In the secondary realm, traders said that continued weakness in oil and natural gas credits, driven by falling crude oil prices, was the big story of the day.

Among the names seen lower on the session were reliable sector bellwether California Resources Corp., as well as Whiting Petroleum Corp., Chesapeake Energy Corp. and Oasis Petroleum Inc.

Recently priced Hertz Corp. and NOVA Chemical Corp. tranches were among the most actively traded names on the day.

Statistical market performance measures turned lower across the board on Thursday, after having been mixed on Wednesday and higher all around on Monday and again on Tuesday.

However, another numerical gauge – the flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, considered a reliable barometer of overall junk market liquidity trends – extended their gains this week, posting a third consecutive weekly upturn after having recently stumbled, according to numbers released on Thursday. Some $198 million more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, June 14, on top of net inflows of $586 million last week and $521 million for the week ended May 31.

NTV upsizes

Milan, Italy-based railroad operator NTV priced Thursday's sole deal, an upsized €550 million issue of Euribor plus 350 basis points six-year senior secured floating-rate notes (B1//BB) at par.

The issue size was increased from €500 million.

Banca IMI and Credit Suisse were global coordinators and joint bookrunners for the debt refinancing deal. Goldman Sachs was also a joint bookrunner.

NTV left one European issuer – a big one – in its wake.

Sweden-based Intrum Justitia AB is expected to wrap up the roadshow on Friday for the biggest amount of euro-denominated issuance to hit the market thus far in 2017, a €3 billion equivalent amount of senior notes (Ba2/BB+/BB) in four tranches.

The deal features €300 million minimum of five-year floating-rate notes, €300 million equivalent minimum of Swedish kroner-denominated five-year floating-rate notes, €500 minimum of five-year fixed-rate notes and €500 million minimum of seven-year fixed-rate notes.

It could be in the market over the weekend, a source said on Thursday.

BevMo! talk

In the dollar-denominated market the stage was set for a comparatively busy Friday.

Beverages & More, Inc. (BevMo!) talked its $190 million offering of five-year senior secured notes (Caa1/B-) to yield 12%, including approximately two points of OID.

Books close at noon ET on Friday.

Jefferies is the bookrunner.

Also expected to price on Friday is the Brand Energy & Infrastructure Services, Inc. $700 million offering of eight-year senior notes (S&P: CCC+).

The deal was talked on Wednesday in the 8% area, but is expected to come at 8½%, with some concessions – in the form of covenant changes – to investors, according to a buyside source who is following the deal.

Prior to Wednesday's official talk early guidance was in the high 7% to low 8% area, the buysider recounted.

At 8½% the book order book is likely full, the source added.

Meanwhile Oppenheimer Holdings Inc. talked its $200 million offering of five-year senior secured notes to yield 6¾% to 7%.

Official talk comes wide of earlier guidance in the 6½% area, a trader said.

The deal is expected to price on Friday.

Oppenheimer is running the books for its own deal, sources say.

The New York-based financial institution plans to use the proceeds to redeem its 8¾% senior secured notes due April 15, 2018 in full, with the remaining proceeds to be used for general corporate purposes, which may include acquisitions.

Mixed Wednesday flows

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

High-yield ETFs saw $206 million of inflows on the day.

However actively managed funds sustained $50 million of outflows on Wednesday.

The market is skittish, right now, an investor said late Thursday, noting that the barrel price of West Texas Intermediate crude oil had plummeted through $45 resistance to trade at $44.36 late Thursday.

Also the 10-year Treasury was yielding 2.16% at the Thursday close, higher on the day but 10 bps lower than it was before the FOMC announced a 0.25% increase in the Fed Funds rate on Wednesday.

Meanwhile, with the composite yield of the J.P. Morgan Global High Yield Index at 5.92%, the market is by no means cheap.

New ReadyCap not seen

In the secondary market, traders did not immediately report any initial aftermarket activity in Ready Cap Holdings’ add-on to its existing 7½% notes due 2022.

The New York-based real estate investment trust, which originates, acquires, finances, services and manages SBC loans and Small Business Administration loans, priced $65 million of those notes, on top of the original $75 million which had been sold in February.

Proceeds are earmarked for general corporate purposes.

Hertz, NOVA stay busy

Among recently priced names, Estero, Fla.-based car-rental giant Hertz Corp.’s 7 5/8% senior secured second-lien notes due 2022 saw active trading of around $13 million, a market source said, pegging the notes down 7/8 point at 98½ bid.

The upsized $1.25 billion offering had priced at par on May 31 and struggled from the get go, eventually skidding into the mid-90s before seeming to get some traction over the previous several sessions and come back almost to their par issue price.

Calgary, Alta.-based NOVA Chemical Corp.’s 5¼% notes due 2027 were seen down around 5/16 point on Thursday, ending at just under 101 bid with over $10 million having changed hands.

The company had priced $1.05 billion of those notes at par on May 25 as part of a $2.1 billion two-part offering that also included a tranche of seven-year paper.

Energy retreat continues

A trader said that the junk market’s real focus on Thursday seemed to be in the energy sphere, which was getting hammered for a second consecutive day in response to lower crude oil prices.

Leading the way, as usual, was sector benchmark credit California Resources Corp.’s 8% notes due 2022 –down another 1¼ point on the day, on top of the 3-point slide those bonds suffered on Wednesday.

A trader saw the Los Angeles-based exploration and production company’s notes ending around 64¾ bid, with over $38 million having traded, topping the Most Actives list.

Other sector names seen heading lower included Denver-based Whiting Petroleum’s 5¾% notes due 2021, down nearly a deuce ion the day at 93 bid, on volume of over $16 million.

Oklahoma City-based natural gas and oil operator Chesapeake Energy’s 8% notes due 2025 were seen down 3/8 point, at 98 7/8 bid, with over $19 million of volume, while Houston-based Oasis Petroleum’s 6 7/8% notes due 2022 were down by ¼ point at 98¼ bid, with over $10 million traded.

Those energy credits and other paper in the sector lost ground as crude fell for a second straight session.

July contract West Texas Intermediate ended off by 27 cents per barrel in Thursday trading on the New York Mercantile Exchange, settling in at $44.46 per barrel, while North Sea Brent crude eased by 8 cents a barrel on the London ICE Futures Exchange, to $46.92.

Both of those crude grades had plunged by $1.72 per barrel on Wednesday, after a new U.S. federal government report showed an unexpected rise in stores of stockpiled gasoline, indicating slow and sluggish demand for the fuel.

Indicators turn lower

Statistical market performance measures turned lower across the board on Thursday, after having been mixed on Wednesday and higher all around on Monday and again on Tuesday.

The KDP High Yield Daily index slid by 12 basis points on Thursday to close at 72.43, its first loss after having finished unchanged on Wednesday and higher for two straight sessions before that, edging up by 1 bp on Tuesday after having jumped by 10 bps on Monday – its first advance after four consecutive setbacks last week.

Its yield rose by 1 bp to 4.91%, after having come in by that same 1 bp in each of the previous three sessions.

The Markit CDX Series 28 High Yield index saw its second loss in a row, dropping by nearly ¼ point Thursday to 107 15/32 bid, 107½ offered. On Wednesday, it had posted its first loss after three straight better sessions before that, retreating by 3/32 point.

And the Merrill Lynch North American High Yield index also stumbled, losing 0.131%, its first setback after four straight gains, including Wednesday’s 0.039% rise.

Thursday’s retreat cut the index’s year-to-date return to 5.035% from Wednesday’s close at 5.173%, which had been its second consecutive new 2017 year-to-date peak level.

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