Providence prices; Dave & Buster’s, Ingevity at a premium; Restaurant Brands flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 21 – The new issue market remained active on Wednesday, with Providence Service Corp. pricing a $500 million issue of 5 7/8% five-year senior notes (B2/B+) inside of talk, and J.B. Poindexter & Co., Inc. with a tap of its 7 1/8% senior notes due April 15, 2026.

There is still a lot of wood to chop – $3.6 billion from eight prospective issuers – in the final two sessions of the Oct. 19 week, including two PIK toggle holdco dividend deals (see forward calendar in this issue).

Meanwhile, it was a sidewise day in the secondary space as stimulus headlines continued to whipsaw equity markets.

While the market tone is far from euphoric, the high-yield space has held steady amid the volatility in equities with the market largely shrugging off concerns about a stimulus deal and the election, a source said.

“People are in wait-and-see mode,” the source said.

New issues remained the focus of secondary market activity although their performances were mixed.

Dave & Buster's Entertainment, Inc.’s 7 5/8% senior secured notes due 2025 (Caa1/B-) and Ingevity Corp.’s 3 7/8% senior notes due 2028 (Ba3//BB) were both trading with the large premiums in high-volume activity.

However, Restaurant Brands International Inc.’s 3½% secured notes due 2029 (Ba2/BB+) fell flat in active trading.

Dave & Buster’s in focus

Dave & Buster’s 7 5/8% senior secured notes due 2025 were putting in a strong performance in the secondary space with the notes continuing to gain after a strong break.

The 7 5/8% notes were changing hands in the 101½ to 102 context throughout Wednesday’s session.

The bonds saw more than $93 million in reported volume heading into the market close.

The notes were marked at 101½ bid, 101¾ offered soon after breaking for trade on Tuesday, a source said.

While the Dallas-based restaurant and entertainment company is a Caa1-rated credit, the notes played to heavy demand, a source said.

“People liked the coupon and the maturity,” a source said.

The company may be on the weaker side of the credit spectrum, but investors were focused on whether or not they could stay afloat until the reopening, the source said.

Dave & Buster’s priced an upsized $550 million, from $500 million, issue of the 7 5/8% notes at par on Tuesday.

The yield printed at the tight end of revised yield talk in the 7¾% area. Earlier talk was 8% to 8¼%. Initial talk was in the mid-to-high 8% area.

Ingevity gains

Ingevity’s 3 7/8% notes due 2028 were also trading with a healthy premium in the aftermarket.

The notes were marked at 101¼ bid, 101¾ offered in the late afternoon, a source said.

There was more than $60 million in reported volume during Thursday’s session.

While the notes priced tight, the specialty chemicals company is a solid BB-credit, a source said.

The sector is also considered resilient to any Covid-19-related economic downturn.

Ingevity priced a $550 million issue of the 3 7/8% notes at par on Tuesday.

The yield printed at the tight end of the 3 7/8% to 4% yield talk. Initial talk was in the 4% area.

Restaurant Brands flat

Restaurant Brands’ 3½% senior secured notes due 2029 fell flat in the aftermarket.

While the notes were trading with a slight premium after breaking for trade on Tuesday, they gave up their early gains on Wednesday.

The notes were trading in a tight range of par to par ¼, a source said.

They were marked at par ¼ bid, par ½ offered after breaking for trade on Tuesday.

While the notes were not performing well in the aftermarket, they played to heavy demand during bookbuilding, a source said.

Restaurant Brands priced an upsized $750 million, from $500 million, issue of the 3½% notes at par on Tuesday.

The yield printed in the middle of yield talk in the 3½% area. Initial guidance was in the 3½% to 3¾% area.

The 3½% notes were the Toronto-based quick service restaurant company’s second offering of secured notes in as many weeks.

The company priced a $1.5 billion add-on to its 1011778 BC ULC/New Red Finance Inc. 4% senior secured second-lien notes due 2030 (B2/B+) at par on Oct. 14.

While both notes were secured, the 3½% notes are first-lien, placing them in a higher position in the capital structure, and are backed by better assets, a source said.

Restaurant Brands’ 4% notes have also been largely wrapped around par since the add-on priced.

$378 million Tuesday inflows

The dedicated high-yield bond funds saw $378 million of daily net inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $268 million of inflows on the day.

Actively managed high-yield funds saw $110 million of inflows on Tuesday, the source said.

Indexes mixed

Indexes were again mixed on Wednesday with some posting minor losses and other minor gains.

The KDP High Yield Daily index slipped 3 basis points to close Wednesday at 66.74 with the yield now 5.39%.

The index was flat on Tuesday and gained 2 bps on Monday.

The ICE BofAML US High Yield index shaved off 3.2 bps with the year-to-date return now 1.171%.

The index gained 2.8 bps on Tuesday and 10.1 bps on Monday.

The CDX High Yield 30 index rose 3 bps to close Wednesday at 105.63.

The index gained 27 bps on Tuesday after dropping 41 bps on Monday.

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