Morning Commentary: Lennar brings $500 million bullet in drive-by; Cumberland Farms deal rockets

By Paul A. Harris

Portland, Ore., April 19 – Ultra-familiar junk issuer Lennar Corp. showed up Wednesday with a $500 million seven-year bullet deal, which comes with early guidance of 4½% to 4 5/8%.

The Miami-based homebuilder brings the deal to address its 12¼% senior notes due 2017 and/or the 6 7/8% senior notes due 2021.

Meanwhile the new Cumberland Farms, Inc. 6¾% senior notes due May 1, 2025 (B3/B) rocketed into the secondary, according to a trader, who was marking them at 102¾ bid, 103¼ offered at midmorning.

The $300 million issue came at par on Tuesday.

Junk was on reasonably firm footing at mid-morning. The SPDR Blmbg Barclays High Yield Bd ETF (JNK) was up 0.2%, or 7 cents, at $36.88 per share.

Bonds of Cleveland-based military supplier TransDigm continue to be buffeted by headlines alleging that the company is reaming the Pentagon.

The story is getting a little long in the tooth, the trader remarked, adding that TransDigm's bonds were down half a point early Wednesday, then rebounded and were down ¼ point at midmorning.

Big back half

As has become customary in recent weeks, the final two sessions of the present week look to be busy ones in the high-yield primary market.

Trilogy International Partners Inc. is on the road with a $345 million offering of five-year senior secured notes (//B-).

The deal comes with initial guidance of 9% to 9½%, and pricing is expected Friday.

The Tempo Acquisition LLC $730 million eight-year notes offering – backing Blackstone’s acquisition of Aon plc's technology-enabled benefits and human resources platform – is playing to a nice book, a trader said.

The Barclays deal has unofficial guidance in the 7% area, has $1 billion of orders in the book and is expected to price Thursday, the trader said.

Also teed up for Thursday is Booz Allen Hamilton Inc. with $350 million of eight-year senior notes being whispered in the mid 5% area, the source said.

Tuesday outflows

The daily cash flows of the dedicated high-yield bond funds were flat to modestly negative on Tuesday.

High-yield ETFs sustained $13 million of outflows on the day.

Actively managed funds saw $50 million of outflows on Tuesday.

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