Primary market prices $4.01 billion in seven deals; calendar grows; Michaels, Talen Energy weaken

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 24 – The domestic high-yield primary market blazed into the first week of summer with seven issuers pricing $4.01 billion in single tranches.

All of Monday's business came at the drive-through window, three of the seven tranches were upsized, and five of the seven tranches priced at the tight end of talk.

Herc Holdings Inc. priced an upsized $1.2 billion issue of eight-year senior notes (B3/B+) at par to yield 5½%.

Post Holdings, Inc. priced an upsized $750 million issue of 10.5-year senior notes (B2/B+) at par to yield 5½%.

NextEra Energy Operating Partners, LP priced a $700 million issue of five-year senior bullet notes (Ba1/BB/BB+) at par to yield 4¼%.

Catalent Pharma Solutions Inc. priced a $500 million issue of eight-year senior notes (B3/B+) at par to yield 5 1/8%.

William Lyon Homes Inc. priced a $300 million issue of eight-year senior notes (S&P: B+) at par to yield 6 5/8%.

Boyne USA, Inc. priced a $60 million add-on to its 7¼ % senior secured second lien notes due May 1, 2025 (B1/B) at 108.25 to yield 4.423%.

Icahn Enterprises LP and Icahn Enterprises Finance Corp. priced an upsized $500 million add-on to their 6¼% senior notes due 2026 (existing ratings Ba3/BB+) at 101.383 to yield 6%.

The forward calendar also grew on Monday with three new deals joining an already robust calendar.

Parkland Fuel Corp. is expected to price a $500 million offering of eight-year senior notes (existing ratings B1/BB) on Tuesday.

Fairstone Financial Inc. began a brief roadshow for a $300 million offering of five-year senior notes (expected ratings B1/B) with pricing expected late Tuesday or Wednesday.

Avon International Capital plc started a roadshow for a $350 million offering of senior secured notes due Aug. 15, 2022 (existing ratings Ba1/BB-/BB+).

Hannon Armstrong set an investor conference call to roll out a $300 million offering of five-year senior notes (/BB+/BB+).

Meanwhile, all eyes were on the primary with little activity outside of the new deals in the secondary space, sources said.

The new notes from Catalent Pharma and Herc were making gains after breaking for trade.

However, the deals to price during Friday’s session were losing steam.

Michaels Stores, Inc.’s 8% senior notes due 2027 (B1/B) lost their premium in high-volume activity on Monday with the notes, at times, lagging their issue price.

While still trading above their issue price on Monday, Talen Energy Supply, LLC’s 6 5/8% senior notes due 2028 (Ba3/BB) were also coming in.

Herc Rental upsizes

Herc Holdings priced an upsized $1.2 billion issue of eight-year senior notes (B3/B+) at par to yield 5½%.

The issue size increased from $1 billion.

The yield printed at the tight end of yield talk and early guidance, both of which had been set in the 6 5/8% area.

The debt refinancing deal was playing to $1.8 billion of orders early Monday afternoon, a market source said.

JP Morgan, Goldman Sachs, Credit Agricole and Capital One were the joint bookrunners.

Post upsized and tight

Post Holdings priced an upsized $750 million issue of 10.5-year senior notes (B2/B+) at par to yield 5½%.

The issue size increased from $500 million.

The yield printed at the tight end of yield talk and initial talk, both of which were 5½% to 5¾%.

Morgan Stanley, Barclays, Citigroup, Credit Suisse, Goldman Sachs and JP Morgan were the joint bookrunners.

The St. Louis-based cereal, food and nutrition company plans to use the proceeds for general corporate purposes including financing acquisitions and repaying debt.

NextEra five-year bullet

NextEra Energy priced a $700 million issue of five-year senior bullet notes (Ba1/BB/BB+) at par to yield 4¼%.

The yield printed at the tight end of yield talk in the 4 3/8% area and inside of initial guidance in the 4½% area.

Citigroup was the lead bookrunner.

The Juno Beach, Fla.-based power generator plans to use the proceeds to pay off the outstanding $450 million balance under its revolving credit facility.

Any remaining proceeds are expected to be used for general partnership purposes, which may include the purchase of up to approximately $240 million of Genesis Solar Funding, LLC's 5.6% senior secured notes.

Catalent drives by

Catalent Pharma priced a $500 million issue of eight-year senior notes (B3/B+) at par to yield 5 1/8%.

The yield printed on top of yield talk, and in line with initial guidance in the low 5% area.

JP Morgan, RBC and BofA were the joint bookrunners.

The Somerset, Franklin Township, N.J.-based pharmaceutical technology company plans to use the proceeds to repay its term loan due in 2024 and for general corporate purposes.

Icahn doubles tap size

Icahn Enterprises intended to price an upsized $500 million add-on to its 6¼% senior notes due 2026 (existing ratings Ba3/BB+) at 101.383 to yield 6%.

The reoffer price came rich to the 101.035 price talk. The yield came on top of yield talk.

Jefferies is the sole bookrunner for the debt refinancing deal.

William Lyon Homes eight-year deal

William Lyon Homes priced a $300 million issue of eight-year senior notes (S&P: B+) at par to yield 6 5/8%.

The debt refinancing deal came tight to early guidance and official price talk, both of which were set in the 6¾% area.

JP Morgan, Citigroup and Credit Suisse were the joint bookrunners.

Boyne prices at 108.25

Boyne USA priced a $60 million add-on to its 7¼% senior secured second lien notes due May 1, 2025 (B1/B) at 108.25 to yield 4.423%.

The reoffer price came on top of price talk.

Wells Fargo was the sole bookrunner.

The Boyne Falls, Mich.-based ski resort owner and operator plans to use the proceeds to redeem its subordinated shareholder notes and for general corporate purposes including capital expenditures.

Parkland Fuel expected Tuesday

Parkland Fuel is expected to price a $500 million offering of eight-year senior notes (existing ratings B1/BB) on Tuesday.

Initial talk has the debt refinancing deal coming to yield in the 6% area, a trader said.

JP Morgan, BofA, CIBC, RBC and Wells Fargo are the joint bookrunners.

Avon starts roadshow

Avon International started a roadshow for a $350 million offering of senior secured notes due Aug. 15, 2022 (existing ratings Ba1/BB-/BB+).

Initial guidance has the debt refinancing deal coming to yield 6¾% to 7%, a trader said.

Goldman Sachs is the left bookrunner.

Brief roadshow for Fairstone Financial

Fairstone Financial began a brief roadshow on Monday for a $300 million offering of five-year senior notes (expected ratings B1/B).

Initial guidance has the deal coming to yield in the low 8% area.

The offer is expected to price Tuesday afternoon or Wednesday morning.

Citigroup, NBC and RBC are the joint bookrunners.

The London, Ontario-based financial services company plans to use the proceeds to retire its senior secured term loan, as well as to pay accrued interest on a shareholder loan and repay a portion of the shareholder loan, and to pay down its securitization facilities.

Hannon Armstrong green deal

Hannon Armstrong set an investor conference call for 12:30 p.m. ET Tuesday to roll out a $300 million offering of five-year senior notes (/BB+/BB+).

The company asserts that the deal is green eligible.

Pricing is set for later in the June 24 week.

Wells Fargo is the left bookrunner.

The Annapolis, Md.-based mortgage real estate investment trust (REIT) plans to use the proceeds to pay down its existing secured borrowings and for general corporate purposes including new investments in green eligible projects.

New paper

The primary market was the focus of Monday’s session with little activity outside of the new deals.

Catalent Pharma’s newly priced 5 1/8% notes were active and making large gains after breaking for trade.

The notes traded as high as 101 5/8 and were 101¼ bid, 101½ offered in the late afternoon, a market source said.

More than $92 million of the notes were on the tape by the late afternoon.

Sources were surprised to see the notes trade so high, given the low coupon for the single B credit.

Herc’s new 5½% senior notes were also trading at a slight premium to their issue price soon after breaking for trade.

The notes traded as high as par 7/8 soon after pricing, a source said.

Michaels struggles

Michaels’ 8% senior notes due 2027 lost their premium in the secondary space on Monday with the notes, at times, lagging their issue price.

The 8% notes were seen at 99½ bid, par ¼ offered in the early afternoon. They were hovering around par headed into the market close, sources said.

More than $43 million of the bonds were on the tape by the late afternoon.

The 8% notes closed Friday at par ¾.

The deal was heard to have experienced pushback but was able to price after widening yield talk and revising covenants.

Michaels priced a $500 million issue of the 8% senior notes at par on Friday.

The yield printed in the middle of yield talk in the 8% area but well wide of initial talk in the low 7% area.

Talen comes in

While Talen Energy’s 6 5/8% senior notes due 2028 continued to trade at a premium to their issue price, they were also coming in on Monday.

The 6 5/8% senior notes shaved off about 3/8 point to change hands around par 3/8, according to a market source.

More than $41.5 million of the bonds were on the tape by the late afternoon.

Talen priced a $470 million issue of the 6 5/8% notes at par in a Friday drive-by.

Initial guidance was for a yield in the high 6% to 7% area.

Actively managed funds see big inflow

Actively managed high-yield bond funds saw a whopping $1.2 billion of daily cash inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $91 million of inflows on Friday.

With just two of the present week's five sessions tallied, the combined high yield funds are already tracking $3.19 billion of inflows for the week that will conclude with Wednesday's close, the source said.

Indexes mixed

Indexes were up slightly, flat, or down slightly on Monday after strong gains in the previous week.

The KDP High Yield Daily index shaved off one point to close Monday at 70.84. However, the yield was flat at 5.46%.

The index was up 63 bps on the week last week.

The ICE BofAML US High Yield index gained 5.5 bps with the year-to-date return now 10.192%.

The index saw cumulative gains of 113.7 bps on the week last week, and shot past 10% returns last Thursday after crossing the 9% threshold last Tuesday.

The CDX High Yield 30 index was down 15 bps to close Monday at 107.49.

The index gained 153 bps on the week last week.

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