Three deals price in busy Friday; new Frontier, Penney active, Sprint dominates trading

By Paul A. Harris and James McCandless

San Antonio, March 9 – The high-yield primary market saw three deals price in the United States for a little under $2 billion in total.

The busy U.S. Friday session was mirrored in Europe where two deals priced.

Travelport Worldwide Ltd. led the activity with an upsized $745 million issue of eight-year senior secured notes followed close behind in size by USA Compression Partners, LP with $725 million of eight-year senior notes in a deal that jumped significantly when it began trading.

Also pricing Friday was a $400 million offering of eight-year notes from CNX Midstream Partners LP.

The high-yield secondary market ended the week muted, traders said, as new and recent issues from popular names took up most of the volume.

Frontier Communications Corp. has been filling up volume after its $1.6 billion issue of eight-year second-lien secured notes were priced on Thursday.

Another company that priced new paper Thursday and traded actively on Friday was J. C. Penney Co., Inc., which sold $400 million issue of seven-year senior secured second priority notes.

And the $1 billion pricing from Sprint Corp. has taken up much of the volume in the secondary market over the last few weeks.

The week saw more heavy volume in Intelsat SA and Northern Oil and Gas Inc.

Travelport upsizes

A busy Friday session in the primary market saw Travelport Worldwide price an upsized $745 million issue of eight-year senior secured notes (B1/B+) at par to yield 6%.

The offering was increased from $650 million. The additional $95 million of proceeds were shifted from the concurrent term loan financing, which was downsized to $1.4 billion from $1.5 billion

The yield for the new notes printed in the middle of yield talk that was set in the 6% area.

That official talk came at the tight end of initial guidance for a yield in the low 6% area, a trader said.

Citigroup was the left lead bookrunner for the debt refinancing deal.

Buyers chase USA Compression

USA Compression Partners priced a $725 million issue of eight-year senior notes (B3/B+/BB-) at par to yield 6 7/8% and the deal jumped to 101¾ bid, 102 1/8 offered on the break, a trader said.

Investors who fared poorly on allocations appeared ready to chase the deal, a market source said.

The yield on USA Compression’s transaction printed in the middle of the 6¾% to 7% final price talk.

However that talk was 25 basis points below where the deal was shopped earlier in the week in a rate context of 7 1/8% to 7 3/8%, sources said.

JP Morgan and Barclays managed the acquisition financing.

It was a week for tight pricing deals in the high-yield market, sources said Friday.

However not all of them performed as well as USA Compression.

On Thursday, Frontier Communications priced a $1.6 billion issue of eight-year second lien secured notes (B2/B+/BB) at par to yield 8½%.

That deal came at the tight end of the 8½% to 8 ¾% official price talk and well below initial guidance in the 9% area.

The buzz in the market on Thursday had Frontier playing to a $5 billion book.

However market sources called that notable level of demand into question on Friday since by late afternoon the new Frontier notes were trading at 98 5/8 bid, 99 1/8 offered. Traders were excoriating the deal heading into the weekend.

Another source noted the volume of activity in the secondary, Norwalk, Conn.-based wireline telecom name’s new deal.

The 8½% notes due 2026 were last traded at 99½ bid, according to this source, better but still below issue.

CNX prices tight, trades well

Back in Friday’s action, CNX Midstream Partners LP and CNX Midstream Finance Corp. priced a $400 million offering of eight-year notes (B3/BB-) at par to yield 6½%.

The yield printed at the tight end of the 6½% to 6¾% yield talk.

The new 6½% notes were performing well on the break at par 7/8 bid, 101¼ offered, a bond trader said.

J.P. Morgan, Credit Suisse, PNC, MUFG, BofA Merrill Lynch, TD and Capital One Securities were the bookrunners for the acquisition financing.

Husky whispered at 7¼% to 7½%

Looking to the week ahead, Husky Injection Molding Systems is in the market with a $750 million offering of eight-year senior notes (Caa2/CCC+) being whispered at 7¼% to 7½%.

The deal backing the leveraged buyout of the company by Platinum Equity from Berkshire Partners and Omers Private Equity is expected to price on March 16.

BofA Merrill Lynch is leading.

Elsewhere Iridium Communications Inc. plans to price a $360 million offering of five-year senior notes during the March 12 week.

Deutsche Bank is leading the debt refinancing and general corporate purposes deal.

And Norway-based REC Silicon ASA mandated Arctic Securities and DNB Markets to arrange a series of fixed-income investor meetings commencing on Monday ahead of a possible $110 million offering of five-year senior secured fixed-rate notes, subject to market conditions.

Away from those announced offerings there are deals to be done, sources said on Friday.

However much of the business in the pipeline explicitly hinges on the health of the market, a trader said.

Peugeot prints 2% coupon

Friday also saw activity in the European primary market.

Paris-based automobile manufacturer Peugeot SA priced an upsized €650 million issue of 2% seven-year senior notes (Ba1/BB+) at 99.677 to yield 2.05%.

The size was increased from an expected amount of €500 million.

Price talk was in the 2 1/8% area.

Global coordinator and active bookrunner BNP Paribas will bill and deliver.

Hertz’s five-year deal

Hertz Holdings Netherlands BV priced a €500 million issue of five-year senior notes (B3/BB-) at par to yield 5½%.

Physical bookrunner Credit Agricole-CIB will bill and deliver.

The Netherlands-based wholly owned subsidiary of vehicle rental company Hertz Global Holdings, Inc. plans to use the proceeds to redeem all of its outstanding 4 3/8% senior notes due 2019 and to repay borrowings under its European revolving credit facility.

Thursday outflows

Daily cash flows for dedicated high-yield bond funds were negative on Thursday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs had both feet squarely in the red, sustaining $292 million of outflows on the day.

Actively managed funds sustained $55 million of outflows on Thursday.

The Thursday daily flows trail a Thursday afternoon report that dedicated high-yield funds sustained $525 million of net outflows in the week to Wednesday’s close, according to Lipper US Fund Flows.

It was the eighth consecutive negative weekly flow, according to a Prospect News analysis of the data.

Issuance still lags 2017

With Friday’s three deals adding $1.87 billion to the tally, the week’s total of junk issuance in the U.S. market came to $8.27 billion.

Despite the vigorous activity of the last few sessions, the year-to-date figure is now $46.54 billion, lagging substantially behind the $65.14 billion at the comparable point of last year, a 28.6% decline. The nearest comparable week from last year, the period starting March 5, saw $17.53 billion of issuance, according to data compiled by Prospect News.

J.C. Penney active

Another new issue active on the day was the recent deal from Plano, Texas-based retailer J. C. Penney.

It priced an upsized $400 million issue of seven-year senior secured second priority notes on Thursday at an 8 5/8% yield.

“For a while it looked like everyone wanted into it, it was so overbought,” a trader said. “But it’s coming back to earth.”

A trader said that it was spotted trending downward in the secondary, landing at 100¾ bid, lower than Thursday’s close but still above its par issue price.

Traders contacted on Thursday saw the bonds going home at 101 bid and also active between 100 7/8 and 101 1/8 bid.

Sprint continues activity

Overland Park, Kan.-based wireless company Sprint’s recent $1 billion new issue continues to be a high volume favorite in the secondary, a trader confirmed.

The company announced Friday that it would be lay off 500 people working in its headquarters in the coming weeks.

The 7 5/8% notes due 2026 dropped about 2½ points to close near 99 bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat remained a favorite in the telecom space, as a market source confirmed that the name was still trending positively after comments made about the United States’ 5G network that could potentially benefit satellite firms.

The Intelsat Jackson Holdings SA 5½% paper due 2023 edged down slightly but remained at about 83 bid. The 7¼% paper due 2020 rose ¼ point to close at 94¼ bid.

Meanwhile Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% debt due 2020 traded down about ¼ point to close at 92 bid.

Indexes end week higher

The KDP High Yield Daily Index picked up 8 basis points to end the week at 70.56. Its yield fell 3 bps to end at 5.78%.

The Merrill Lynch High Yield Index also gained on Friday, building on Thursday’s improvement.

For Friday, the index added 0.074%, trimming its year-to-date loss to 0.448%. The index had gained 0.033% on Thursday and has now moved higher in four out of the last five trading days.

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