Morning Commentary: GFL, Weatherford, Pilgrim's Pride lead primary; Tuesday deals near issue prices

By Paul A. Harris

Portland, Ore., Feb. 21 – The high-yield new issue machine, which fired into action with a pair of big drive-by deals on Tuesday, continued to cruise on Wednesday with the announcements of three quick-to-market offerings (four tranches) totaling $1.4 billion.

Weatherford International plc came with a $600 million offering of seven-year bullet notes (Caa1/B-).

Initial guidance has the deal coming to yield in the 10¼% area.

Deutsche Bank is leading the debt refinancing deal.

Pilgrim’s Pride Corp. plans to price $400 million of senior notes in two add-on tranches.

The drive-by deal, which was scheduled to be shopped on a mid-morning conference call with investors, features add-ons to the 5¾% senior notes due March 15, 2025, initially guided at 98.5 to 99.25, and to the 5 7/8% senior notes due Sept. 30, 2027, initially guided at 97.25.

Tranche sizes remain to be determined.

Barclays is the left bookrunner for the deal, which Pilgrim's Pride is bringing in an effort to refinance the Moy Park (Bondco) 6¼% senior notes due 2021, of which £298.8 million are outstanding.

And GFL Environmental Inc. plans to price a $400 million offering of five-year senior notes.

Initial guidance has the deal coming with a yield in the 5½% context.

The company is well-liked, and the deal should go well, a trader said.

Barclays is also leading GFL's deal, which is coming for the purposes of bank debt repayment and general corporate purposes.

Meanwhile in a deal now running a roadshow, Bristow Group Inc. is expected to price $300 million of five-year senior secured notes Friday afternoon.

The Credit Suisse deal is in the market with early guidance of 9% to 9½%, a trader said.

Rammin' and Jammin'

The market's digestion of a pair of big Tuesday deals, which came at the end of the extended Presidents Day holiday weekend following a week in which the primary market had been sidelined by volatility, was less than graceful, a trader said on Wednesday.

Both of Tuesday's drive-by deals played to significantly oversubscribed order books, were upsized and saw price talk grind tighter and tighter during the brief hours they were in the market, the source said.

The Sprint Corp. 7 5/8% senior notes due 2025 (B3//B+), which priced at par, struggled on the break, getting as low as 99¾ bid, par offered.

They recovered to par 1/8 bid, par 3/8 offered on Wednesday morning, the trader said.

Sprint upsized its Tuesday deal to $1.5 billion from $1 billion.

Meanwhile the new First Quantum Minerals Ltd. senior notes (B), which came in two tranches in a deal that was upsized to $1.85 billion from $1.5 billion, were both straddling new issue prices on Wednesday morning.

The First Quantum 6½% notes due March 2024 and the 6 7/8% notes due March 2026 were both 99 7/8 bid, par 1/8 offered on Wednesday, after getting as low as 99 5/8 bid on Tuesday.

Both tranches, $850 million of the 6½% notes and $1 billion of the 6 7/8% notes, priced at par.

The market, having been dormant for an extended period during which there had been news of massive cash outflows from the dedicated junk funds, may not have been ready to be bombarded with big drive-by deals being jammed into the market, then upsized while price talk kept grinding lower and lower, the trader said.

“It's as though the dealers can't help themselves, and I'm not sure it was the right thing to do,” the source added.

DISH drops, post-earnings

News that DISH Network Corp. missed its projected revenues for the fourth quarter of 2017, and that the number of subscribers for its pay-TV services fell during 2017 caused the Colorado-based direct-broadcast satellite service provider's bonds to drop ½ point to ¾ point on Wednesday, a trader said.

The DISH DBS Corp. 7¾% senior notes due 2026 were 99 7/8 bid, par 5/8 offered on Wednesday morning, the trader said.

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