Morning Commentary: Clarios on deck, heard to tighten to 6 7/8%; Altice lags issue price

By Paul A. Harris

Portland, Ore., April 20 – With a substantial calendar of high-yield bond deals expected to price before Friday’s close, dealers appeared to have shipped oars in the early going on Thursday, sources said.

While the market awaited official word, pricing on the Clarios Global LP/Clarios US Finance Co., Inc. $500 million offering of five-year senior secured notes (B1/B+/B+) is heard to have tightened to the 6 7/8% area from initial talk in the low-to-mid 7% area, a trader said.

The deal, heard to be oversubscribed, having been driven into the market on reverse inquiry that was greater than the deal size, is expected to price on Thursday.

Meanwhile, the market awaits word on a dollar-denominated tranche from European lottery operator Allwyn, which is in the market with a €1.3 billion equivalent three-part offering of Allwyn Entertainment Financing (UK) plc senior secured notes (expected ratings BB/BB-).

The tranche of six-year fixed-rate dollar notes has initial guidance in the low-to-mid 8% area.

The deal also features euro-denominated seven-year fixed-rate notes, initial talk in the mid-to-high 7% area, and euro-denominated six-year floating-rate notes, in the market with initial spread talk in the Euribor plus the mid-400 basis points area, and discount talk of 1 point to 1.5 points.

And Italy-based Kedrion Biopharma is in the market with a $790 million offering of Kevlar SpA 6½% senior secured notes due Sept. 1, 2029 (B3/B).

Initial talk has the notes coming at OID of 84 to yield approximately 10%.

Both of those deals are expected to price ahead of Friday's close.

In new issue news from London, CABB Group set tranche sizes and finalized price talk in its €670 million two-part offering of Monitchem Holdco 3 SA five-year senior secured notes (B3/B).

A €420 million tranche of fixed-rate notes that come with two years of call protection is talked to yield 8¾% to 9% versus initial talk in the 9% area.

A €250 million tranche of floating-rate notes that come with one year of call protection is talked with a 525 bps spread to Euribor, which is on top of initial spread talk. Price talk on the floating-rate notes is 97 to 97.5, rich to the 96 to 97 initial price talk.

That deal is set to price later on Thursday.

And Travelodge Hotels Ltd. set initial price talk in its £550 million equivalent two-part offering of TVL Finance plc five-year senior secured notes.

The deal features a sterling-denominated tranche of fixed-rate notes with initial price talk 10¾% to 11%.

The offering also features a euro-denominated tranche of floating-rate notes with initial talk of Euribor plus 550 bps at OID of 96 to 97.

Tranche sizes remain to be determined.

Pricing is set for Friday.

Among recently priced issues, the Altice USA, Inc./CSC Holdings, LLC 11¼% senior guaranteed notes due May 2028 (B1/B) were lagging their issue price on Thursday at 99½ bid, par offered, the trader said.

The $1 billion issue priced at par on Tuesday.

The Lindblad Expeditions Holdings, Inc. 9% senior secured notes due May 2028 (B3/B) were par ¼ bid, par ¾ offered, the trader said, noting that those bonds traded actively on Wednesday.

The $275 million issue priced at par on Monday.

The broad high-yield bond market was off ¼ of a point to ½ of a point on Thursday morning, the source said.

With the Dow Jones industrial average down 0.4% at mid-morning, the Shares iBoxx $ High Yield Corporate Bd (HYG) share price was absolutely flat at $74.83.

Fund flows

High-yield ETFs saw $186 million of daily cash inflows on Wednesday, according to a market source.

The actively managed high-yield funds saw $45 million of inflows on the day.

As the market awaits a Thursday report on the weekly fund flows of the various asset classes from fund-tracker Refinitiv Lipper, the combined junk funds are tracking a very hefty $3.2 billion of net inflows on the week to Wednesday’s close, according to the market source.

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