Cheniere, Encompass Health, Triumph, Toll Brothers price; WeWork drops; Yum Brands lifts

By Cristal Cody and James McCandless

Tupelo, Miss., Sept. 9 – Junk bond supply included more than $3 billion of notes priced over Monday’s session.

Cheniere Energy Partners, LP, Encompass Health Corp., Triumph Group, Inc., Plains All American Pipeline, LP and PAA Finance Corp., Toll Brothers Finance Corp. and International Game Technology plc all brought deals in the Monday session.

The high-yield primary market is expected to be busy this week after issuers brought more than $4.5 billion of bonds last week, sources report.

Several loan and bond combination deals and BB-rated bond offerings are anticipated.

In the secondary, WeWork Cos. Inc.’s notes dropped after the company cut its valuation ahead of an initial public offering and the company received pressure from its largest investor to stop the IPO altogether.

And elsewhere, Yum! Brands, Inc.’s new $800 million eleven-year issues pushed higher.

Monday brings $3 billion

Cheniere Energy Partners, LP led volume with an upsized $1.5 billion offering of 10-year senior notes that priced at par to yield 4½%, tighter than talk in the 4 5/8% to 4 7/8% area.

Encompass Health Corp. tapped the high-yield primary market with an upsized $1 billion two-tranche registered offering of senior notes.

The company sold $500 million of senior notes due Feb. 1, 2028 at par to yield 4½%, on the tight side of talk in the 4½% to 5% area.

The company’s $500 million of senior notes due Feb. 1, 2030 priced at par to yield 4¾%, in line on the low end of talk in the 4¾% to 5% area.

Triumph Group, Inc. brought $525 million of five-year second-lien notes to the market on Monday at par to yield 6¼%, with initial price talk in the low 7% area.

Plains All American Pipeline, LP and PAA Finance Corp. sold $1 billion of 3.55% 10-year split-rated senior notes at a spread of 195 basis points over Treasuries, a source said. Initial price talk was in the low 200 bps over Treasuries spread area.

Toll Brothers Finance Corp. priced an upsized $400 million split-rated offering of 10-year senior notes at par to yield 3.8%, tighter than initial talk in the 4.125% area.

International Game Technology plc placed €500 million of 2 3/8% senior secured notes due 2028 in a Rule 144A- and Regulation S-eligible offering during the session.

Coming soon

In other junk bond market action on Monday, Patrick Industries, Inc. held investor calls for a $300 million offering of senior notes due 2027. The issue is expected to price Thursday.

Additionally, KeHE Distributors LLC marketed a $200 million Rule 144A and Regulation S offering of senior secured second lien notes due 2026.

Also on Monday, Tegna Inc. announced plans to price $900 million of 10-year senior notes in a Rule 144A and Regulation S transaction.

Advanced Drainage Systems, Inc. plans to price new senior notes and expects to issue $1.05 billion of credit facilities to help fund its $1.08 billion acquisition of Infiltrator Water Technologies, LLC.

On Tuesday, Inmarsat plc has a bank meeting set as part of its debt financing plans, which includes $1,125,000,000 of senior secured notes and $3.3 billion of credit facilities to fund its acquisition by a consortium that includes Apax, Warburg Pincus, Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan Board.

“Technicals are now officially entering a seasonally active period, with coming months featuring potentially strong calls/maturities and new issues,” according to a BofA Merrill Lynch high-yield market note released Monday.

WeWork drops

In the high-yield secondary market, WeWork’s notes saw a drop amid negative headlines on Monday, traders said.

The 7 7/8% senior notes due 2025 lost 2 points to close at 100¾ bid.

The notes saw about $22 million trading by the close.

Over the weekend, news broke that the New York City-based coworking company’s valuation may be cut ahead of a potential initial public offering.

The company had valued itself at $47 billion, though investors have talked down the number to $20 billion.

“I think the question now is ‘who is going to want this,’” a trader said. “It seems like the ground shifts on it every day.”

After the close on Monday, reports indicated that the company’s largest investor has reportedly asked it to set aside the IPO.

Yum! higher

In the restaurant space, Yum’s new issues pushed higher, traders said.

The 4¾% senior notes due 2030 rose ½ point to close at 103 bid.

$22 million of the notes were on the tape by the end of the afternoon.

The Louisville, Ky.-based restaurant name priced the upsized $800 million senior notes last Wednesday.

PG&E higher

Utilities name PG&E Corp.’s paper trended higher, traders said.

The 6.05% paper due 2034 shifted up ½ point to close at 109 bid.

On Friday, the San Francisco-based bankrupt electric utility announced that it had received and rejected a $2.5 billion offer from the city of San Francisco for the company’s electric equipment within the city.

The company said that it rejected the offer because it believed that it did not represent the best interests of its customers.

It also turned down a $116 million bid for assets in a central California irrigation district.

The name continues to maintain that it prefers an internal solution to its bankruptcy and exiting it.

After the close on Monday, news broke that the company had filed its anticipated restructuring plan in bankruptcy court.

The plan calls for as much as $40 billion in debt and equity to cover liabilities stemming from wildfires and an emergence from bankruptcy next year.

Oil names rise

As oil futures rose, distressed energy names followed suit, market sources said.

Futures were better after the new Saudi Arabian energy minister said that he would continue the country’s policy of helping prices by limiting crude oil output.

West Texas Intermediate crude oil futures for October delivery rose $1.33 to settle the day at $57.85 per barrel.

North Sea Brent crude oil futures for November delivery finished at $62.59 per barrel after a $1.05 gain.

Denver-based independent oil and gas producer Antero Resources Corp.’s notes moved up.

The 5 1/8% senior notes due 2022 gained ¾ point to close at 91 bid.

The notes saw $12 million on the tape by the close.

Denver-based producer Whiting Petroleum Corp.’s issues were also improving.

The 5¾% senior notes due 2021 gained 1¾ points to close at 95¼ bid. The 6¼% senior notes due 2023 shot up 2¾ points to close at 79¼ bid.

Fort Worth-based peer Range Resources Corp.’s paper followed the sector’s trend.

The 5% senior paper due 2023 added ½ point to close at 89½ bid.

Indexes better

Three high-yield indexes started a new week on better footing.

The KDP High Yield Daily index rose 4 basis points to end Monday at 71.82 with the yield contracting to 5.33%.

The index gained 4 bps on Friday, added 5 bps on Thursday and fell 6 bps on Wednesday.

The ICE BofAML US High Yield index improved by 12.8 on Monday with the year-to-date return now at 11.576%.

The index has now spent three weeks above the 10% threshold.

The CDX High Yield 30 index gained 32.60 bps to close Monday at 107.2938.

The index garnered 32.72 bps on Friday, improved by 33.27 bps on Thursday and moved up 34.24 bps on Wednesday.

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