Primary quiet, but Plantronics slates; new Energizer heavily traded; new Bellatrix busy

By Paul A. Harris and Paul Deckelman

New York, May 18 –The high-yield primary sphere began the new week on Monday on a quiet note, with syndicate sources reporting no new junk-rated, dollar-denominated issues from domestic or industrialized-country borrowers having priced.

That was down from Friday, when two tranches of such paper totaling $850 million came to market, and way down from Thursday, when the new-issue tally zoomed to $5.9 billion from seven issuers in nine tranches, one of the busiest days of the year so far in Junkbondland.

The primary was not completely without any news, however, as the sources said that electronics manufacturer Plantronics, Inc. was getting ready to hit the road Tuesday to market a $500 million offering of eight-year notes to potential investors.

With no new deals having priced during the session, the secondary market remained largely focused on the deals that had gotten done over the previous several sessions.

Friday’s 10-year note offering from a soon-to-be spun-off unit of Energizer Holdings Inc. behaved a little like the battery manufacturer’s iconic advertising mascot – the seemingly unstoppable pink wind-up toy bunny continually banging its drum and outlasting everything – in that the issue just kept trading...and trading...and trading, easily outpacing all other bonds and racking up the heaviest volume of the day.

There was also brisk activity – though nowhere near Energizer’s volume – seen in Friday’s other deal, from Canadian energy company Bellatrix Exploration Ltd.

Both of those offerings traded a little above their respective issue prices.

And, as had been the case on Friday, there was busy trading in some of the slew of new deals that had priced on Thursday, including Restaurant Brands International Inc., Spectrum Brands, Inc. and PPL Energy Supply, LLC.

Traders said the overall junk market seemed a little easier on the session.

Statistical market performance indicators were lower across the board on Monday after having been higher all around on Friday and mixed on Wednesday and Thursday.

Plantronics roadshow

The pre-Memorial Day week got off to a slow start in the primary market on Monday.

No deals were priced.

Plantronics plans to roll out a $500 million offering of senior notes due May 31, 2023 at an investor lunch set for Tuesday in New York.

The deal is expected to price Thursday.

Morgan Stanley and Goldman Sachs are the joint bookrunners.

Deutsche Bank Securities Inc. is the senior co-manager.

The Santa Cruz, Calif.-based electronics company plans to use the proceeds for general corporate purposes including share repurchases and repayment of debt under its revolver.

Thin calendar

Plantronics takes a position on a thin calendar of roadshow deals expected to clear the market before a recommended early close on Friday, heading into the three-day Memorial Day weekend.

The calendar also includes Paramount Resources Ltd., which was scheduled to start a roadshow on Monday for a $400 million offering of eight-year senior notes (B3/BB-).

The deal, via joint global coordinators Barclays and RBC and bookrunners BMO, HSBC and Scotia is in the market with preliminary guidance in the low 7% yield context and is expected to price Thursday, according to a market source.

Also on the road is Blue Coat Holdings, Inc. with a downsized offering of eight-year senior notes (Caa2) via Jefferies.

Last week the buyout deal was downsized to $470 million from $570 million when the Sunnyvale, Calif.-based cyber security company shifted $100 million of financing to its term loan, upsizing it to $1.15 billion from $1.05 billion.

Preliminary guidance on the notes is 8% to 8¼%, according to a market source.

European industrial deal

The European primary market, which was quiet through most of last week, remained quiet on Monday.

There was just one news item.

An investor lunch is scheduled to take place on Tuesday in London for a possible high-yield deal from the European industrial sector.

Credit Agricole CIB, HSBC Bank and SG CIB will lead the event.

Positive flows

Cash flows of the dedicated high-yield funds were positive on Friday, the most recent session for which data was available at press time, according to a trader.

High-yield exchange-traded funds saw $209 million of inflows on Friday.

Actively managed funds saw $50 million of inflows.

Aggregate flows for the first two sessions of the present one-week reporting period, Thursday and Friday, are plus-$166 million, the source added.

Energizer tops Most Actives

In the secondary realm, traders saw Energizer SpinCo Inc.’s 5½% notes due 2005 as easily the busiest issue on the day Monday; one of them said that Trace volume in the new bonds was over $83 million, far outdistancing their next nearest rival, and noted that even that figure might be low, given that any trade larger than $1 million is simply recorded as “$1MM+.”

He called the bonds “pretty active,” and at 100½ bid, in from where they had started the day by about ½ point.

A second trader saw the credit trading most of the day in a 100 3/8-to-100 5/8 bid context before going home between 100¼ and 100½ bid.

At another desk, those bonds were quoted going out at 100½ bid, down as much as 1¼ points from their earlier peak levels.

St. Louis-based Energizer priced $600 million of the notes at par on Friday as a regularly scheduled forward calendar offering, with the proceeds slated to be used to help fund the spin-off of the company’s household products operations, including its namesake battery business; that split will leave the soon-to-be-renamed parent company as a maker of personal-care products such as razor blades, shaving cream, feminine and infant-care products and sun tan lotion.

The issue came to market too late in the day for much of a real aftermarket at that time, traders said.

Busy trading in Bellatrix

There was also a fair amount of trading in the new 8½% notes due 2020 from Bellatrix Exploration, a Calgary, Alta.-based oil and natural gas exploration and production company.

“They were somewhat active in the Street,” a trader said, pegging the volume at some $11 million and locating the notes in a 98 1/8-to-98½ context.

A second market source also saw more than $11 million of the notes traded, quoting them at 98 1/8 bid.

A third had them at 98¼ bid.

The company priced $250 million of the notes on Friday at 98.03 to yield 9% in a regularly scheduled deal that appeared too late in the session for much aftermarket activity at that time.

Thursday bonds stay busy

For a third straight day, there was robust aftermarket activity in many of the bonds that had priced during Thursday’s big session.

One of the traders said that Restaurant Brands International’s 4 5/8% senior secured first-lien notes due 2022 “seemed to hang around” in a par-to-100¼ context.

A second trader quoted the bonds unchanged at 100 1/8 bid, while a third had them at 100¼, likewise unchanged.

More than $17 million of the notes traded – sufficient to put the issue well up on the day’s Most Actives list, although that slackened from the more than $145 million of the notes that had traded in initial aftermarket dealings on Thursday and the $51 million that changed hands on Friday.

The trading has all been centered at or just a little above the par price at which the Oakville, Ont.-based restaurant company – owner of the Burger King and Tim Hortons quick-service chains – had priced that $1.25 billion of notes in a regularly scheduled deal.

Spectrum Brands’ 5¾% notes due 2025 “did a little better today,” one of the traders said, pegging the Middleton, Wis.-based consumer products maker’s issue around the 102 bid level for most of the day.

A second trader also had the bonds going home at 102 bid, which he called up ¼ point, on more than $17 million traded.

The company priced that quick-to-market $1 billion offering at par on Thursday; the bonds had moved up by ½ point in initial secondary dealings of more than $31 million, and then had jumped about another 1¼ points on Friday to the 101¾ offered level, with more than $53 million of those bonds having changed hands by the close.

PPL Energy Supply’s 6½% notes due 2025 were trading at 101½ bid on Monday, up 1/8 point on the session, on volume of over $10 million.

The Allentown, Pa.-based power generating company priced $600 million of the notes on Thursday at par in a regularly scheduled deal; the bonds immediately jumped to the 101 5/8 bid level, with more than $63 million of initial turnover. The bonds had retreated about ¼ point on Friday before bouncing back on Monday.

Easier market seen

One of the traders opined that Monday’s secondary market was “fairly muted.”

“It was kind of a quiet session,” he said.

With no new deals slated to price on Monday, “It kind of made for a lackluster day.”

“Some of the higher-quality names were a little weaker, because they trade with Treasuries, and Treasuries sold off a little,” he added.

The government bonds surrendered most of the gains notched during their rally Friday, with the yield on the benchmark 10-year issue widening out to 2.23% from 2.14% on Friday.

“As a general statement, the market generically looks a little weaker,” the trader concluded.

Indicators off on session

Statistical market performance indicators turned lower across the board on Monday after having been higher all around on Friday and mixed on Wednesday and Thursday.

The KDP High Yield Daily index dipped by 2 basis points Monday to end at 71.46, after having gained 5 bps on Friday. Monday’s downturn was its second loss in the previous three sessions and third loss in the last five trading days.

Its yield, meantime, was unchanged on Monday at 5.24% – its second steady reading in the past three sessions – after having come in by 2 bps on Friday.

The Markit Series 24 CDX North American High Yield retreated by 3/16 point on Monday to close at 107 1/32 bid, 107 1/16 offered, after having risen the two previous sessions, including Friday’s 7/32 point gain.

The Merrill Lynch North American Master II high yield index was also lower on the day, by 0.024%. That broke a three-session winning streak, including Friday’s 0.127% improvement, which had also been its fifth rise in the previous six sessions.

Monday’s setback cut its year-to-date return to 3.886% from 3.91% on Friday; the latter reading had remained a little below its peak level for the year of 3.952%, set on April 27.

© 2015 Prospect News.
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