Primary returns to action; Burford, Perrigo, Global Infrastructure on deck; Twitter tops par; Talen gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 4 – The high-yield forward calendar reactivated on Monday with three junk issuers announcing deals.

Global Infrastructure Solutions Inc. plans to price a $300 million offering of 10-year senior notes (B1/BB-).

Bruford Capital Global Finance LLC plans to market a $350 million offering of eight-year senior notes (expected ratings Ba2/BB-).

Perrigo Investments, LLC and Perrigo Investments Capital, Inc. started a roadshow for a $500 million offering of eight-year senior notes (expected ratings Ba2/BB-/BB+).

In a cross-over trade, Entegris Escrow Corp. is marketing a $1 billion offering of seven-year senior secured bullet notes (expected ratings Baa3/BB+/BBB-) with an $800 million offering of unsecured notes expected to follow.

Meanwhile, it was a strong day in the secondary space with the market up about ½ point as buyers returned to the space.

While the tone in the secondary space improved on Monday, the Treasury market continued to send warning signals with the yield curve inverted, sources said.

Topical news remained a driver for trading activity in the space.

In a carry-over from the previous week, Talen Energy Supply LLC’s senior notes remained in focus with the notes on the rise after plummeting to historic lows following speculation about a bankruptcy filing.

Twitter, Inc.’s 5% senior notes due 2030 (Ba2/BB+) again topped par in active trading as the company’s capital structure jumped following news Tesla Inc. chief executive officer Elon Musk had taken a sizeable position in the company.

Primary calendar grows

The high-yield forward calendar reactivated as the April 4 week got underway.

Three junk issuers showed up with deals that are all expected to price before the end of the week.

Global Infrastructure Solutions plans to price a $300 million offering of 10-year senior notes (B1/BB-) on Tuesday.

The deal is in the market with initial guidance in the low-to-mid 7% area.

Bruford Capital Global Finance plans to market a $350 million offering of eight-year senior notes (expected ratings Ba2/BB-) on a Monday-Tuesday roadshow.

The deal – in the market with initial guidance in the 7% area – is set to price on Wednesday.

Also, Perrigo Investments started a roadshow for a $500 million offering of eight-year senior notes (expected ratings Ba2/BB-/BB+), in the market with guidance in the high 5% to 6% area and scheduled to price later this week.

Meanwhile, Entegris is expected to be in the market overnight with a $1 billion offering of seven-year senior secured bullet notes (expected ratings Baa3/BB+/BBB-) expected to come in a high-grade execution, with initial guidance at a spread to Treasuries in the 200 basis points area.

Entegris is expected to follow on with an $800 million offering of unsecured notes which are expected to come in a high yield execution, a sellside source said.

However, details on the unsecured tranche are pending.

Monday's modest build-up of the active calendar notwithstanding, the outlook for 2022 issuance continues to dwindle, a market source said on Monday.

Two more dealers slashed their forecasts for the year's gross issuance.

Citigroup cut its forecast to $250 billion from $400 million.

Goldman Sachs cut its 2022 forecast to $225 billion from $325 million.

Those revisions follow one that BofA made last week, decreasing its forecast by $55 billion, now looking for $340 billion of gross issuance to clear by the end of 2022, the source recounted.

Whereas year-to-date issuance in the dollar-denominated high-yield bond market is down around 40%, year-over-year, sources working in the euro-denominated junk bond new issue bourse have lately taken to calling that market “frozen.”

Euro-denominated high-yield issuance is down a jaw-dropping 91%, year-over-year, according to a London-based sell-side source who was making reference to information contained in a report that Goldman Sachs made to its clients.

Meanwhile euro-denominated investment-grade bond issuance is down 10%, year-over-year, the source added, again referencing the Goldman report.

Talen in focus

Talen Energy’s senior notes were on the rise in active trading on Monday after plummeting to historic lows the previous week on speculation about a forthcoming bankruptcy financing.

Talen’s 6½% notes due 2025 (Caa2/CCC) jumped 4½ points.

The notes were changing hands in the 27½ to 28½ context heading into the market close, according to a market source.

The notes closed the previous session at 23½.

Talen’s 7¼% senior secured notes due 2027 (B1/B) rose 1 point to trade in the 94¼ to 94½ context heading into the market close.

It was the highest level for the notes in 2022.

Talen’s capital structure has been in focus since late last week.

Speculation the company was considering a bankruptcy filing was confirmed by news reports that the company was seeking debtor-in-possession financing.

Talen announced that it was appointing a new independent director to its board on Monday to oversee its balance sheet restructuring process.

Twitter gains

Twitter’s 5% senior notes due 2030 again topped par with the social media company’s capital structure receiving a boost from news Elon Musk had taken a sizeable position in the company.

The 5% senior notes rose 1 point to a par-handle.

They were changing hands in the par 3/8 to par 5/8 context heading into the market close.

While the notes briefly topped par in mid-March as the secondary space rallied strongly following the Federal Reserve meeting, they have traded on a 99-handle for the past two weeks.

However, Twitter’s capital structure made strong gains on Monday with stock up 27% following news Musk has a 9.2% ownership stake in the company.

Musk’s ownership stake has resulted in speculation that a takeover may be on the horizon, sources said.

Indexes

The KDP High Yield Daily index gained 13 points to close Monday at 61.37 with the yield now 5.47%.

The index posted a cumulative gain of 20 points on the week last week.

The CDX High Yield 30 index rose 52 bps to close Monday at 105.97.

The index posted a cumulative gain of 15 bps on the week last week.

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