CommScope prices; American Airlines, United Mileage on deck; Eldorado/Caesars notes in focus

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 22 – While the domestic high-yield primary market only saw one deal price during Monday’s session, the stage is set for a busy week.

CommScope, Inc. priced a $700 million issue of eight-year senior notes (B3/B-) in a Monday drive-by.

American Airlines, Inc. is on deck with a $1.5 billion offering of five-year senior secured bullet notes (expected ratings Ba3/B+/BB-), which is expected on Wednesday.

And United Mileage Plus is set to refinance its $5 billion bridge loan with the refinancing expected to include at least $2 billion in junk.

The European primary market was also active with Ardonagh Midco 2 plc, ams AG, Engineering and Profine Group marketing offerings.

Meanwhile, it was a quiet Monday in the secondary space with the trading volume light and the market largely unchanged, sources said.

New issues continued to dominate the tape with Colt Merger Sub, Inc.’s three-tranche megadeal backing the acquisition of Caesars Entertainment Corp. by Eldorado Resorts, Inc. in focus.

The tranches had mixed performances with the secured notes trading with a premium while the unsecured notes fell flat.

CommScope’s outstanding 5½% notes due 2024 jumped in active trading on Monday with proceeds from the company’s new offering to be used to take the notes out.

American Airlines preps $1.5 billion

Dealers on both sides of the Atlantic set the table for an active June 22 week on Monday.

American Airlines disclosed plans to price $1.5 billion of five-year senior secured bullet notes (expected ratings Ba3/B+/BB-) on Wednesday.

Initial guidance has the deal coming to yield in the 12% area, a bond trader said.

Elsewhere, United Mileage Plus is set a Tuesday launch a $2 billion term loan to help refinance a $5 billion bridge loan disclosed last week.

The refinancing will also include $3 billion of other secured debt, which is expected to include at least $2 billion of junk, a trader said.

Meanwhile in Monday drive-by action, CommScope priced a $700 million issue of eight-year senior notes (B3/B-) at par to yield 7 1/8%.

The yield printed in the middle of the 7% to 7¼% yield talk, and in line with initial guidance in the low 7% area.

European new issue news

News volume from the European high-yield primary market ratcheted up on Monday.

London-based Ardonagh Midco 2 plc will unveil an uncharacteristically aggressive deal structure to European junk investors when it kicks off a $500 million offering of 6.5-year senior PIK toggle notes on Tuesday.

The deal is expected to be in the market through Thursday.

Austrian sensor manufacturer ams AG started a virtual roadshow on Monday for a €1 billion equivalent offering of five-year senior notes (expected ratings Ba3/BB-/BB-) to be sold in dollar-denominated and euro-denominated tranches.

Italian information technology services provider Engineering plans to commence a telephone roadshow on Tuesday for a €640 million two-part offering of six-year senior secured notes (expected ratings B2/B/BB-).

The deal is coming in a €240 million tranche of floating-rate notes and a €400 million tranche of fixed-rate notes.

And Germany's Profine Group began marketing its debut high-yield offering, a €330 million five-year senior secured notes (B3), on Monday.

Initial talk has the deal coming to yield in the low-to-mid 9% area.

Megadeal mixed

Colt Merger Sub.’s three tranches backing the acquisition of Caesars by Eldorado Resorts were mixed in active trading in the secondary with the secured notes trading with a premium while the unsecured notes fell flat.

Eldorado’s 6¼% senior secured notes due 2025 (B1/B) were trading in the par ¾ to 101 context late Monday afternoon, according to a market source.

The notes were among the most actively traded issue in the secondary space with $114 million in reported volume.

Caesars 5¾% senior secured notes due 2025 (B1/B+) were largely wrapped around 101 with about $42 million in reported volume.

Eldorado’s 8 1/8% senior unsecured notes due 2027 (Caa1/CCC+) were changing hands in a range of 99 5/8 to par ¼ on Monday with the final prints between 99 7/8 and par, a source said.

The 8 1/8% notes had more than $99 million in reported volume.

The megadeal backing Eldorado’s acquisition of Caesars was “a strange deal from a capital structure perspective,” a source said.

While the acquisition was a merger from an equity perspective, the credit side left the two entities more or less intact with Eldorado able to “milk Caesars cash flow” without having to guarantee its debt, the source said.

Colt Merger priced a massive $6.2 billion in three tranches last Friday.

The deal included a $3.4 billion tranche of Eldorado’s 6¼% notes, a $1.8 billion tranche of Eldorado’s 8 1/8% notes and a $1 billion tranche of Caesars 5¾% notes – all of which priced at par.

The massive deal was heard to have played to massive demand with the secured tranches playing to more than $8 billion in orders and the unsecured tranche playing to more than $6 billion in orders.

CommScope trades up

CommScope’s 5½% senior notes due 2024 jumped in active trading on Monday as the company prepped its latest offering.

The 5½% notes gained almost 4 points to traded up to 101 7/8 in the late afternoon.

The 5½% notes traded up to their call price, which was 101.833, a market source said.

Proceeds from the new offering will be used to retire the $650 million outstanding of the 5½% notes.

$136 million Friday outflows

The dedicated high-yield bond funds sustained $136 million of net outflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $381 million of outflows on the day.

However actively managed high yield funds posted positive numbers on Friday, seeing $245 million of inflows on the day, the source said.

Indexes mixed

Indexes launched the week as they closed the last – mixed.

The KDP High Yield Daily index was down 11 points to close Monday at 65.98 with the yield now 6.06%.

The index saw a cumulative gain of 20 bps on the week last week.

The ICE BofAML US High Yield index shaved off 4.5 bps with the year-to-date return now negative 3.261%.

The index saw a cumulative gain of 82.7 bps on the week.

The CDX High Yield 30 index gained 5 bps to close Monday at 100.3.

The index posted a cumulative loss of 59 bps on the week last week.

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