Clearway Energy, Global Aircraft add-on price; Twitter on deck; Fair Isaac trades up; Chesapeake gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 4 – The domestic high-yield primary market remained active on Wednesday with one new deal and one add-on pricing and two more joining the forward calendar.

Clearway Energy Operating LLC priced a $600 million issue of 8.25-year green senior notes (Ba2/BB) and Global Aircraft Leasing Co., Ltd. priced a $200 million add-on to its 6½% (cash)/7¼% (PIK) cash contingent senior PIK toggle notes in a Wednesday drive-by.

Dycom Industries, Inc. announced a roadshow for a $300 million offering of eight-year senior notes.

And AmWINS Group, Inc. plans to begin marketing a $250 million add-on to its 7¾% senior notes due July 1, 2026 (existing ratings B3/B-).

The deals join Twitter, Inc. on the active forward calendar. Twitter is set to price its $600 million offering on Thursday with the yield talk heard to be tightening.

Meanwhile, the secondary space firmed on Wednesday with markets rebounding on renewed optimism about a U.S.-China trade deal.

Fair Isaac Corp.’s newly priced 4% senior notes due 2028 (Ba2/BB+) were trading at a large premium to their issue price in the secondary space.

Outside of new paper, Chesapeake Energy Corp.’s junk bonds were rebounding from November’s sell-off following news the company amended its credit agreement and was addressing its debt load.

Pacific Gas & Electric Co.’s junk bonds were active following news the utility was zeroing in on a deal with wildfire victims.

Green Clearway oversubscribed

Amid steady Wednesday news flow in the primary market, Clearway Energy priced a $600 million issue of 8.25-year green senior notes (Ba2/BB) at par to yield 4¾% in a drive-by.

The yield printed at the tight end of the 4¾% to 4 7/8% yield talk and inside of initial guidance in the 5% area.

The deal was heard to be playing to $2.5 billion of orders, according to a trader who had the new Clearway Energy 4¾% green bonds trading actively at 101 3/8 bid, 101 5/8 offered, two-by-two.

Prospect News inquired of another New York-based trader as to whether the “green” deal attracted a novel class of investors.

Environmental Social Governance (ESG) “pockets” have become common among the high-yield accounts, the trader replied, and added that accounts in the deal appeared to be comprised mainly of investors who had been active in other parts of the company's capital structure, and appeared keen to gain increased exposure to the name by means of this bond issue.

Elsewhere, Global Aircraft Leasing priced a $200 million add-on to its 6½% (cash)/7¼% (PIK) cash contingent senior PIK toggle notes due Sept. 15, 2024 (expected Ba2) at 100.5 to yield 6.37% in a drive-by.

The issue price came at the rich end of the 100 to 100.5 price talk.

The calendar

The early December active forward calendar took aboard a couple of passengers on Wednesday.

Dycom Industries plans to run a Thursday-Friday roadshow for its $300 million offering of eight-year senior notes.

The deal is set to price on Friday.

And AmWINS Group plans to begin marketing a $250 million add-on to its 7¾% senior notes due July 1, 2026 (existing ratings B3/B-) on a Thursday investor conference call.

The deal is set to price during the week of Dec. 9.

Meanwhile, Twitter is on deck for Thursday with its high-yield bond debut, a $600 million offering of eight-year senior bullet notes (Ba2/BB+).

Pricing is heard to be tightening, sources said.

Guidance, which began in the mid-4% area, has been whittled down to 4 1/8%, a trader said.

However, another trader said that 4% is the number, adding that the deal is doing pretty well, and it would not be terribly surprising if Twitter ultimately got done in the threes.

Fair Isaac trades up

Fair Isaac’s newly priced 4% senior notes due 2028 were putting in a strong performance in the secondary space.

While volume was light on Wednesday, the 4% notes continued to gain and traded up to 101¼.

The 4% notes saw a strong break and climbed as high as 101 after pricing on Tuesday.

While the pricing of the small issue was tight, the deal was heard to be heavily oversubscribed.

Fair Isaac priced an upsized $350 million issue of the 4% notes at par in a Tuesday drive-by.

The yield printed at the tight end of the 4% to 4¼% yield talk.

The issue was upsized from $300 million and the order book was heard to be as much as three-times oversubscribed.

Chesapeake Energy gains

Chesapeake Energy’s junk bonds were in focus on Wednesday with the notes posting gains after the company announced an amendment to its credit facility and plans to address its debt load.

Chesapeake’s 8% senior notes due 2027 climbed 10 points to close Wednesday at 58 with more than $40 million of the bonds on the tape.

The 8% senior notes due 2025 rose about 5 points to close the day at 55.

The energy company announced on Wednesday it had amended its credit agreement to lift its secured debt limits.

In addition to amending its credit agreement, Chesapeake announced plans to obtain a $1.5 billion loan package, buy back $700 million of its 2025 notes and swap other bonds for new securities, Bloomberg reported.

Chesapeake Energy’s junk bonds have spiraled downward since early November when a concern about its future viability was mentioned in its third-quarter earnings report.

The 8% senior notes due 2027 and 8% notes due 2025 were in the high 60s prior to the sell-off that was sparked by the earnings report.

Chesapeake would need oil prices around $60 a barrel and natural gas prices around $2.75 MMBtu to generate free cash flow, Bloomberg reported.

Wednesday was a strong day for the energy sector with the barrel price of WTI crude oil for January delivery jumping to settle at $58.35, an increase of $2.25, or 4.01%.

Crude oil prices surged on Wednesday on news of the largest drop in U.S. stockpiles since September.

Pacific Gas active

Pacific Gas & Electric’s junk bonds remained active in the secondary space with a fresh round of headlines spurring trading activity.

However, the notes were mixed on the news.

Pacific Gas’ 6.05% senior notes due 2034 were weaker in high-volume activity.

The notes traded off about ¾ point to close the day at 105.

The 3.5% notes due 2020 traded up ½ point to close the day at par ½.

News broke Wednesday that Pacific Gas is zeroing in on a $13.5 billion deal with wildfire victims. The deal is key to resolving its bankruptcy, Bloomberg reported.

$304 million Tuesday inflows

The dedicated high-yield bond funds saw $304 million of daily net inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

In the breakdown, high-yield ETFs saw $244 million of inflows, and actively managed high-yield funds saw $60 million of inflows on Tuesday, the source added.

Indexes

Indexes posted gains on Wednesday, paring their losses from Monday’s and Tuesday’s sessions.

The KDP High Yield Daily index rose 6 bps to close Wednesday at 70.84 with the yield now 5.22%.

The index was down 5 bps on Tuesday and 7 bps on Monday.

The ICE BofAML US High Yield index jumped above the 12% return threshold on Wednesday. The index gained 28.5 bps with the year-to-date return now 12.179%.

The index was down 8.8 bps on Tuesday and 8.7 bps on Monday.

The CDX High Yield 30 index gained 23 bps to close Wednesday at 107.59. The index was down 10 bps on Tuesday.

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