West Corp. in focus; Goodyear gains as ATD drops; Altice, Eclipse Resources active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 28 – The domestic primary market was again dormant on Tuesday with all eyes on September when new deal volume is expected to reach $25 billion.

With no new paper entering the space since Aug. 14, the secondary space continued to see light trading volume.

West Corp.’s 8½% senior notes due 2025 were the most actively traded of the day with the notes seeing slight gains after the company announced a new chief operating officer.

Goodyear Tire & Rubber Co.’s junk bonds also saw slight improvement on Tuesday as American Tire Distributors, Inc.’s 10¼% senior notes due 2022 continued to drop.

The movement in the notes was attributed to an expanded tire distribution partnership between Amazon and Sears.

Altice France SA’s 7 3/8% senior notes due 2026 were also active on the tape although the notes were largely unchanged on the day.

While Eclipse Resources Corp.’s 8 7/8% senior notes due 2023 were unchanged from Tuesday’s close, the notes were up 4 points on the week after the company announced it will merge with Blue Ridge Mountain Resources.

Diebold Inc.’s struggling 8½% senior notes due 2024 were up again on Tuesday in the wake of news it had secured financing for a new term loan.

The primary

The major currencies new issue market was dormant and is expected to remain so until the Labor Day weekend concludes on Sept. 4, whereupon a substantial pipeline of deals is expected to begin coming to market.

Syndicate bankers continue to project September new issue volume around $25 billion.

September might see an early ramp-up, a syndicate banker said on Tuesday. However, the likelihood is that the primary market will not be running full bore until the Sept. 10 week.

The Nordic new issue market remains open, heading into summer's end.

Ship Finance International Ltd. was scheduled to begin a series of meetings with fixed income investors on Tuesday, ahead of an expected five-year krone-denominated senior unsecured bond.

West Corp in focus

West Corp.’s 8½% senior notes due 2025 were the most actively traded of the day with $11 million of the bonds on the tape. The notes were up about ¾ point, a market source said.

They were seen trading up to 91¼ after closing Monday at 90½.

Management changes triggered the activity, a market source said.

The telecommunications service provider announced changes to its executive team on Tuesday.

Stephen Cadden joined the company as chief operating officer after serving as chief operating officer for TSYS’s Merchant Services division, according to a company release.

The company president also switched positions to serve as chief strategy officer with the chief executive officer taking on the additional title of president.

Tire talk

Goodyear’s 5 1/8% senior notes due 2023 were active and making slight gains on Tuesday after Sears and Amazon announced they were expanding their tire distribution partnership.

The 5 1/8% notes were up ½ point to 99½ bid, 99¾ offered, according to a market source.

While Goodyear was making gains on the news, ATD’s 10¼% senior notes due 2022 continued to sink.

The notes were seen at 33½ bid, 34½ offered on Tuesday, according to a market source. They closed last week around 38½, according to Trace data.

Sears announced it expanded its ship-to-store tire installation and balancing services for customers who purchase tires on Amazon.

While Goodyear, who sells tires through Amazon, was up on the news, it was another blow to struggling tire distributor ATD.

ATD’s notes have plummeted since April after the company lost its contract to distribute Goodyear tires and certain tires of Bridgestone Americas.

Prior to losing their contract with Goodyear in April, ATD’s 10¼% senior notes were trading around 97½.

Altice active

While largely unchanged on the day, Altice France’s 7 3/8% senior notes due 2026 were among the volume leaders of Tuesday’s session with about $10 million of the bonds on the tape, according to a market source.

The notes were seen trading at 98 7/8 and were largely unchanged on the day, sources said.

News broke on Tuesday that Altice France is exploring financing for its FTTH deployment plans in France. The company instructed asset management firm Lazard to help it secure investors, Le Figaro reported.

Eclipse’s merger

Eclipse Resources’ 8 7/8% senior notes due 2023 were also volume movers with about $9 million of the bonds on the tape.

The notes were unchanged on the day and continued to trade around 101½.

However, the notes are up 4 points on the week. They jumped on Monday after the natural gas driller announced its merger with Blue Ridge Mountain Resources in an all-stock deal.

The merger values the combined company at $1.4 billion, including debt, with Blue Ridge shareholders to receive 4.4259 shares of Eclipse Resources for each share they own.

Diebold up again

Diebold’s struggling 8½% senior notes due 2024 continued to see gains after a large jump on Monday. The notes were seen at 68½ bid, 69½ offered on Tuesday, according to one source. Another source saw the notes trading up to 70 ½.

The 8½% notes were continuing to benefit from news the ATM company had secured commitments for $650 million in financing to be distributed through a term loan.

The notes were up about 5 points on Monday after the financing was announced.

The financing “buys them some time,” a market source said.

The term loan still requires the approval of Diebold’s principal lenders for an amendment that will enable the company to expand its leverage covenant.

“If it gets approved, there’ll be a little more of a pop,” a market source said.

Monday inflows

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

High-yield ETFs saw $303 million of inflows on the day.

Actively managed funds saw $15 million of inflows on Monday, the trader added.

With numbers in for the first two sessions of the most recent weekly tracking period, set to conclude at Wednesday's close, the dedicated high-yield funds saw $266 million of net inflows week-to-date, the source added.

Indexes mixed

Three benchmarks for the high-yield secondary market were mixed on Tuesday with one flat, one up slightly and one down slightly after all saw a strong start to the week.

The KDP High Yield Daily index was flat at 70.54 with the yield continuing to be 5.78%. The index was up 6 basis points on Monday and gained 9 bps last week.

The Merrill Lynch High Yield index’s climb continued on Tuesday although the gains were modest. The index was up 1.9 bps on Tuesday with the year-to-date return 1.975%.

The index was up 9.8 bps on Monday and is zeroing in on 2% year-to-date returns after a long stretch in the red.

The index has seen a solid upward momentum since it crossed into the black on July 6.

The CDX High Yield 30 index was down 2 bps to close Tuesday at 107.15. The index was up 18 bps on Monday after a 27 bps gain last week.

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