Primary, secondary quiet pre-holiday; Wind Tre bonds skyrocket; McClatchy, California Resources active

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 3 – The primary market was quiet ahead of the mid-week Independence Day holiday in the United States, as expected, with no new deals joining the forward calendar.

Two euro-denominated deals from Autodis SA and K+S AG and one dollar-denominated deal from Enterprise Development Authority remain in the market.

The secondary space was also quiet ahead of Tuesday’s early close with trading volume one-third of what it normally is, a market source said.

However, Wind Tre SpA’s 5% senior secured notes due 2026 were in focus and jumped more than 13 points in high-volume trading after Hong Kong-based conglomerate CK Hutchison announced it was buying out Veon Ltd.’s stake in the company.

McClatchy Co.’s recently priced 9% senior secured notes due 2026 (B1/B-) remained active in the secondary space with the notes gaining strength.

California Resources Corp.’s 8% senior notes due 2022 were also among the most actively traded of the day as the barrel price of West Texas intermediate crude oil again saw a volatile trading session.

However, the notes closed the day largely unchanged.

Vedanta Resources plc’s 6 1/8% senior notes due 2024 dropped about 2½ points in active trading on Tuesday as founder Anil Agarwal’s plan to take the company private encounters resistance.

The forward calendar

There are two euro-denominated deals in the market.

Paris-based Autodis started a roadshow on Monday for a €175 million offering of Euribor plus 437.5 basis points senior secured floating-rate notes due May 2022 (expected ratings B2/B).

Initial price talk is 99.25 to 99.5.

The roadshow wraps up Wednesday.

Left lead bookrunner BNP Paribas will bill and deliver.

Elsewhere in the euro-denominated high yield primary, Germany-based chemical manufacturer K+S AG was scheduled to begin meeting with fixed income investors on Monday ahead of a proposed €300 million minimum notes offer.

The notes would come with a six- or seven-year maturity.

Deutsche Bank, DZ Bank, Goldman Sachs and HSBC have the mandate.

In the dollar-denominated market, Tribal gaming concern Enterprise Development Authority is believed to still be in the market with a $440 million offering of five-year senior secured notes (S&P: expected B-), a capital expenditures deal via Wells Fargo.

The roadshow wrapped up in the middle part of the June 25 week.

Wind Tre skyrockets

Wind Tre’s 5% senior secured noted due 2026 dominated trading activity in the secondary space on Tuesday with more than $57 million of the bonds on the tape before the market’s early close.

The notes jumped more than 13 ½ points after CK Hutchinson announced it was buying out Veon’s stake and consolidating ownership of the company.

The 5% notes were seen trading at 92. They traded at 78 on Monday, sources said.

Wind Tre was formed in a joint venture between CK Hutchinson and Veon in 2016.

News broke Tuesday that CK Hutchinson would acquire Veon’s 50% stake in the Italian mobile telecommunications and data service provider for €2.45 billion.

The deal is still subject to regulatory approval. It is expected to close in the third or fourth quarter, Reuters reported.

McClatchy improves

McClatchy’s recently priced 9% senior notes due 2026 continued to see activity in the secondary space.

The notes were gaining strength on Tuesday after they were largely unchanged on Monday.

They were quoted at 99¼ bid, 99¾ offered early Tuesday, according to a market source. Another source pegged the notes at 99½ bid.

The 9% notes were seen up about 5/8 point to trade at 99¾. The notes were seen at 98 5/8 bid, 99 1/8 offered on Monday.

McClatchy priced a $310 million issue of the 9% notes at 97.242 to yield 9½% on June 29. The notes have been the most active in the secondary space out of the flurry of new deals to price last week.

California Resources active

California Resources 8% senior notes also saw some action in the secondary market as the price of crude oil was again on the rise after spiking past $75 a barrel early Tuesday.

The 8% notes were quoted at 90¼ bid, 90¾ offered on Tuesday, according to a market source.

While the notes traded as high as 91 in intraday trading on Tuesday, they closed the day largely unchanged at 90¼, a source said.

More than $11 million of the bonds were on the tape shortly before the market close.

As California Resources 8% notes spiked then settled, so too did the barrel price of West Texas intermediate crude oil.

Crude oil saw a volatile session on Tuesday.

It traded to a high of $75.20 early Tuesday, its highest price since 2014, and dropped to a low of $72.79 before settling around $74.20.

The ricocheting oil prices were fueled by expected supply pressures caused by decreasing U.S. inventories and production declines from Libya, Iran and Venezuela, UPI reported.

Vendanta down

Vendanta’s 6 1/8% senior notes due 2024 dropped about 2½ point on Tuesday after plans to take the metal and mining company private encounters resistance.

The notes were seen trading at 86.45 with about $10 million of the bonds on the tape shortly before the market close.

The notes were previously trading north of 89, according to Trace data.

Founder Anil Agarwal announced plans Monday to take the London Stock Exchange listed company private in a $1 billion bid to acquire the 33.5% of the company not owned by Agarwal’s family trust Volcan.

A large minority shareholder plans to raise concerns about the bid, which they said undervalues the company, Reuters reported.

Indexes mixed

Three benchmarks for the high-yield secondary market were mixed on Tuesday after all posted losses on Monday.

The KDP High Yield index was down 11 basis points to close Tuesday at 70.19 with the yield now 5.96%.

The index was down 9 bps on Monday. Tuesday marks the seventh consecutive trading day the index has been down.

The Merrill Lynch High Yield index was up 13.1 bps on Tuesday with the year-to-date return now negative 0.097.

The index dropped 28.6 bps on Monday sinking back into negative territory after a brief foray into positive territory on June 29.

The CDX High Yield 30 index was up 20 bps to 105.843 bid, 105.933 offered on Tuesday. The index was down 9 bps on Monday.

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