Nemaska prices; Hearthside, Valeant join calendar; MDC tanks; funds add $0.76 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 10 – The domestic high-yield primary market was comparatively quiet on Thursday after pricing $3.2 billion on Wednesday. Nemaska Lithium, Inc. sold $350 million of 11¼% five-year callable senior secured notes Thursday.

Two issuers joined the forward calendar with Hearthside Food Solutions planning to start a roadshow on Monday for a $375 million offering of eight-year senior notes (S&P: CCC+).

Valeant Pharmaceuticals International, Inc. announced on Thursday that it intends to issue $750 million of senior secured notes and $750 million of unsecured notes as part of a $6.52 billion debt refinancing package.

Meanwhile, Wednesday’s deals were in focus in the secondary space.

Centene Corp.’s newly priced 5 3/8% senior notes due 2026 (Ba1/BB+) and WPX Energy, Inc.’s newly priced 5¾% senior notes due 2026 (B1/BB-) dominated the secondary market, accounting for more than 25% of the total trading volume.

Springleaf Finance Corp.’s 7 1/8% senior notes due 2026 (B1/B) were also active. All three deals put in strong secondary market performances and were trading above their issue price.

However, Springleaf traded the highest, which sources attributed to “a yield grab.”

MDC Partners Inc.’s 6½% senior notes due 2024 continued the downward spiral that began on Wednesday when the company reported a large earnings miss and revised forward guidance in its first quarter earnings report.

The notes have dropped about 6 points since Wednesday’s open, market sources said.

Revlon Consumer Products Corp.’s 5¾% senior notes due 2021 were volatile on Thursday and ended the day with losses after it also reported a large earnings miss in its first quarter earnings report.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – continued their recent back and forth swings in the latest week, losing $0.755 billion of cash in the week to May 9, according to fund-flow statistics generated by AMG Data Services Inc.

Nemaska prices

Nemaska Lithium priced $350 million of 11¼% five-year callable senior secured notes on Thursday.

The deal came at the high end of the anticipated $300 million to $350 million size range, according to a market source. The 11¼% rate came in the middle of the 11% to 11½% talk.

Clarksons Platou Securities and Pareto Securities were the joint lead managers.

The Quebec City-based mine and chemical company plans to use the proceeds for capital expenditures, operating expenses and financing costs associated with the development of its Whabouchi mine and Shawinigan plant.

Hearthside starts Monday

Hearthside Food Solutions plans to start a roadshow on Monday in New York for a $375 million offering of eight-year senior notes (S&P: CCC+).

Joint bookrunner Barclays will bill and deliver. Goldman Sachs, Credit Suisse, Jefferies, Nomura and RBC are also joint bookrunners.

Proceeds will be used to support the pending acquisition of the Downers Grove, Ill.-based bakery, nutrition bar, snack and packaged food producer by Charlesbank Capital Partners and Partners Group.

Valeant to price

Valeant Pharmaceuticals announced in a Thursday press release that it intends to issue $750 million of senior secured notes and $750 million of unsecured notes as part of a $6.52 billion debt refinancing.

Goldman Sachs and JP Morgan are each expected to lead a tranche of the notes, according to a market source.

The refinancing also includes $5.02 billion of credit facilities, which are scheduled to launch at a bank meeting on Monday.

Volume leaders

Centene’s 5 3/8% senior notes due 2026 and WPX Energy’s 5¾% senior notes due 2026 dominated the secondary market on Thursday, accounting for more than 25% of the day’s total trading volume, market sources said.

Centene’s 5 3/8% notes were up about ¼ point on Thursday to trade at par ¾, a market source said. The new notes were trading between par 1/8 to par 7/8 with the bulk of prints between par ¾ to par 7/8.

Centene priced the upsized $1.8 billion issue of 5 3/8% notes at par in a Wednesday drive-by.

The yield printed at the tight end of the 5 3/8% to 5½% yield talk and inside initial guidance in the 5¾% area.

The deal was upsized from $1.7 billion.

More than $97.25 million of the bonds traded on Thursday.

WPX Energy’s 5¾% notes were down about ¼ point in high volume trading on Thursday.

The notes were seen trading at par 5/8 later in the afternoon. They have largely traded in a par ¼ to par ¾ context, a market source said. More than $89.25 million of the bonds traded during Thursday’s session.

WPX Energy priced the upsized $500 million issue of 5¾% notes at par in a drive-by on Wednesday.

The yield printed at the tight end of the 5¾% to 5 7/8% yield talk and inside initial talk in the 6% area.

The offering was increased from $400 million.

“Accounts are focused on the calendar and the new paper,” a market source commented.

Springleaf trades high

Springleaf’s 7 1/8% senior notes due 2026 traded the highest out of Wednesday’s deals.

The 7 1/8% notes were quoted at 100 7/8 bid, 101 7/8 offered on Thursday and were seen largely unchanged on the day with trades at 101 1/8, sources said.

While trading activity paled in comparison to WPX Energy and Centene, Springleaf was also active with $41.79 million of the bonds traded on Thursday.

Springleaf’s trading levels were attributed to the high coupon.

“It’s a yield grab. That’s what’s garnering the attention,” a market source said.

While the coupon is attractive “there’s probably a reason for it,” the source said.

OneMain/Springleaf priced an upsized $900 million issue of the 7 1/8% notes at par in a drive-by on Wednesday.

The yield printed in the middle of yield talk in the 7 1/8% area and in-line with initial talk in the low 7% area.

The sale was increased from $500 million.

Proceeds will be used to redeem the remaining $400 million of OneMain Financial Holdings, LLC’s 7¼% senior notes due 2021.

MDC Partners tanks

MDC Partners’ 6½% senior notes due 2024 continued their downward spiral on Thursday after the advertising and marketing holding company reported a large earnings miss and revised its forward guidance on Wednesday.

The 6½% notes “were all over the place,” on Thursday with trades between 87¼ and 90, a market source said.

The notes closed the day down 1½ points at 88¼, a market source said. The notes opened Wednesday with a 93 handle but traded “down, down, down,” after MDC’s earnings announcement, the source said.

The company reported that EBITDA fell dramatically in the most recent quarter, compared to the same quarter last year.

The company’s adjusted EBITDA for the first quarter of 2018 was $7.8 million versus $35.8 million for the first quarter of 2017.

MDC reported a loss per share of 56 cents for the first quarter, which missed analyst expectations of a loss per share of 44 cents.

The company’s performance in March and April was disappointing, chairman and chief executive officer Scott Kauffman said in a company news release.

Kaufmann cited the combination of select client cutbacks and a slower conversion of the company’s new business pipeline as reasons for the update to its 2018 financial targets.

Revlon volatile

Revlon’s 5¾% senior notes due 2021 were volatile during Thursday’s session after the company reported a large earnings miss prior to the market open.

The 5¾% notes traded between 66 and 72 on Thursday before closing the day at 71. The notes were off about 2 points on the day, a market source said.

“But it was definitely volatile in decent trading volume,” a market source said. More than $31 million of the bonds traded during Thursday’s session.

The 5¾% notes were previously trading in a 73 to 74 context.

Revlon reported an adjusted loss per share of $1.43 versus analyst expectations of 91 cents per share.

Indexes gain again

Three benchmarks for the high-yield secondary market saw gains for their second consecutive trading day on Thursday.

The KDP High Yield index was up 5 basis points on Thursday with the yield now 5.8%.

The index was up 4 basis points on Wednesday after a 1 bp dip on Tuesday.

The Merrill Lynch High Yield index also saw another day of gains with the year-to-date return closing in on positive territory.

The index was up 9.8 basis points on Thursday with the negative year-to-date return now 0.087%.

The index broke into positive territory after a long run of negative year-to-date returns on April 12.

However, the year-to-date return dropped back into negative territory on April 23.

The CDX High Yield 30 index saw the most significant gains on Thursday. The index was up 35 bps to close the day at 107.25 after closing Wednesday at 106.9.

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