Truck Hero, Adient on tap; GFL, Vizient, NRP, Gogo trade up; funds add $1.1 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 18 – The primary market was quiet during Thursday’s truncated pre-holiday session. However, the week ahead may be an active one, sources said.

Truck Hero, Inc. plans to start a roadshow on Monday for a $335 million offering of seven-year first-lien senior secured notes with pricing expected late in the April 22 week.

Adient US LLC is also expected to roll out its $750 million offering of seven-year senior secured notes (Ba2/BB-) during the post-Easter week.

Meanwhile, volume was light in the secondary space during Thursday’s truncated session with many starting the holiday weekend early.

However, the paper to price during Wednesday’s session was in focus with new paper from Natural Resource Partners LP, Vizient, Inc., Gogo Inc. and GFL Environmental Inc. trading well above their issue prices.

Pent-up demand for new paper was driving the trading levels of the notes with investors looking to put money to work, a market source said.

Meanwhile, junk mutual funds and ETFs saw their sixth consecutive week of inflows with $1.1 billion entering the space for the week through Wednesday’s close, according to fund-flow statistics generated by AMG Data Services Inc.

The week ahead

Amid low market liquidity on Thursday, with players looking to holiday plans ahead of an early close in the bond market heading into the extended Easter weekend, the primary market remained generally quiet.

Truck Hero disclosed plans to start a roadshow on Monday for a $335 million offering of seven-year first-lien senior secured notes.

The deal, via sole bookrunner Jefferies LLC, is expected to price late in the post-Easter week.

Truck Hero is bringing an acquisition deal, representing net new issuance, as opposed to refinancing deals in which investors are taken out of old paper which is replaced with new bonds.

The Ann Arbor, Mich.-based supplier of branded aftermarket accessories for pickup trucks, jeeps and sports utility vehicles plans to use the proceeds to fund a portion of the acquisition of Lund International, Inc., a Buford, Ga.-based accessories supplier.

Elsewhere, Adient US LLC, Adient plc’s wholly owned subsidiary, is expected to roll out its $750 million offering of seven-year senior secured notes (Ba2/BB-) during the post-Easter week.

BofA Merrill Lynch is expected to run the books for the debt refinancing deal, which comes with early guidance in the mid-7% area.

Beyond Truck Hero and Adient, the post-Easter week should be somewhat more active than the holiday-abbreviated pre-Easter week, a syndicate banker said on Thursday.

However, numerous prospective issuers are winding their ways through earnings blackout season, and must post earnings for the first quarter of 2019 prior to bringing deals, the banker said.

Look for early May to see a big pickup in new issue business, market sources say.

GFL active

GFL Environmental’s 8½% senior notes due 2027 (Caa2/CCC+) were among the most active of the new paper in the secondary space on Thursday.

The new paper was seen at 101 7/8 bid, 102 3/8 offered and was changing hands at 101 7/8, sources said.

GFL Environmental priced an upsized $600 million of the 8½% notes at par in a Wednesday drive-by.

The issue size was increased from $500 million.

The yield printed at the tight end of the 8½% to 8¾% yield talk.

Vizient gains continue

Vizient’s 6¼% senior notes due 2027 continued to post gains on Thursday.

The notes were quoted at 102½ bid, 102 7/8 offered and were changing hands between 102 5/8 and 102¾, sources said.

The notes were off to a strong start after breaking for trade on Wednesday.

They rose 2½ points in active trading to close the day just north of 102½, a market source said.

Vizient priced a $300 million issue of the 6¼% notes at par on Wednesday.

The yield printed 12.5 basis points inside of yield talk in the 6½% area. Initial guidance was in the high 6% area.

NRP trades up

Natural Resource’s 9 1/8% senior notes due 2026 soared more than 3 points above their issue price in the aftermarket.

The notes rose 2 points on Thursday although volume was light, a market source said.

The 9 1/8% notes were quoted at 103 bid, 103½ offered and were changing hands between 103¼ and 103½, according to a market source.

They closed Wednesday around 101½ bid, 101¾ offered.

However, the notes only saw about $7.5 million on the tape shortly before the market’s early close, a source said.

Natural Resource Partners priced an upsized $300 million issue of the 9 1/8% notes at par on Wednesday, according to market sources.

The initial size of the deal was $275 million.

The yield printed in the middle of the 9% to 9¼% yield talk and in line with initial guidance in the 9% area.

Prior to pricing, the deal underwent covenant changes bearing upon how the company may incur additional debt.

Gogo quiet

While Gogo’s 9 7/8% senior notes due 2024 were trading at a premium to their issue price, the notes saw light trading volume, making their true value difficult to determine, a market source said.

The notes were quoted at par ½ bid, 101½ offered. However, only about $2 million were on the tape shortly before the early close.

Gogo priced $905 million of the 9 7/8% notes at 99.512 to yield 10%.

The yield printed at the wide end of the 9¾% to 10% yield talk.

Initial guidance was in the high 9% to 10% area.

Mixed Wednesday flows

The daily cash flows of the dedicated high-yield bond funds were flat on Wednesday, the most recent session for which data was available at press time, according to an investor.

High-yield ETFs sustained $60 million of outflows on the day.

Actively managed high-yield funds saw $35 million of inflows on Wednesday.

As the market awaited a report on the cash flows of the combined funds for the week to Wednesday's close, expected Thursday afternoon from Lipper US Fund flows, the funds are tracking $925 million of net inflows during that period, the trader said.

The weekly inflow, should it materialize as anticipated, would represent the 13th positive weekly flow in the past 15 weeks, the source added.

Indexes mixed

Indexes closed out the week mixed.

The KDP High Yield Daily index rose 4 basis points to close Thursday at 70.62 with the yield 5.71%.

The index slid 1 basis point on Wednesday, was flat on Tuesday and gained 5 bps on Monday for a cumulative gain of 8 bps on the week.

The ICE BofAML US High Yield index slid 5.2 bps with the year-to-date return now 8.553%. The index dipped 6.6 bps on Wednesday, rose 7.7 bps on Tuesday and was up 1.9 bps on Monday.

The index was down 2.2 bps on the week.

The index shot past 8% year-to-date returns on April 8 after only recently surpassing the 7% threshold on March 26 and passing 6% year-to-date returns on March 11.

The CDX High Yield 30 index rose 8 bps to close Thursday at 107.64. The index dropped 9 bps on Wednesday and 8 bps on Tuesday after gaining 4 bps on Monday.

The index closed the week flat from last Friday’s close.

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