Downsized Garda prices; new Sugarhouse busy but little changed; funds gain $291 million

By Paul Deckelman and Paul A. Harris

New York, April 27 – Garda World Security Corp. was heard by syndicate sources to have priced a downsized $500 million issue of eight-year notes during Thursday’s session. Traders did not immediately report any initial aftermarket activity in the Canadian business services company’s new deal.

But they saw considerable activity in the new Sugarhouse Casino eight-year secured notes which came to market on Wednesday. However, they said that the gaming company’s new paper did not budge far from its par issue price.

Away from the deals which have actually priced, primaryside sources were expecting oil and natural gas operator Covey Park Energy LLC’s eight-year notes to price on Friday.

The euro-denominated segment of the junk market meantime saw pricings Thursday from Senvion Holding GmbH and Travelex Financing plc.

Away from the new deals, United States Steel Corp. notes were in retreat for a second consecutive session Thursday after that company reported disappointing first-quarter earnings.

Statistical market performance measures were better on Thursday, their third upturn in the last four trading days. They had turned mixed on Wednesday after being higher across the board on Monday and again on Tuesday.

Another numerical indicator – the flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – turned modestly positive in the latest reporting week after spending two weeks before that on the downside, according to numbers released on Thursday.

Some $291 million more came into the weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, a gain which followed two consecutive net outflows totaling $710 million – the $362 million cash loss reported week and before that, a $348 million outflow recorded during the week ended April 12 (see related story elsewhere in this issue).

Garda prices at discount

The Thursday session in the dollar-denominated new issue market saw Garda World Security price a downsized $500 million issue of 8¾% eight-year senior notes (Caa2/CCC+/B-) at 99.278 to yield 8 7/8%.

The amount was decreased from $630 million with the shift of $100 million of proceeds to the term loan, and the potential issuance of additional senior unsecured debt and/or equity depending on participation in a concurrent change of control offer.

The yield printed in the middle of the 8¾% to 9% yield talk.

Global coordinator Citigroup was the left bookrunner. Global coordinator Barclays was a joint bookrunner. Macquarie, SG and TD were also joint bookrunners.

The Montreal-based cash logistics and security solutions provider plans to use the proceeds from the sale of the new eight-year notes to refinance debt and for general corporate purposes, including a dividend to fund a stock repurchase.

Covey Park talk 7½% to 7¾%

Covey Park Energy LLC and Covey Park Energy Finance Corp. talked a $450 million offering of eight-year senior notes (B3/B) to yield 7½% to 7¾%.

The offering, via left bookrunner Goldman Sachs, is set to price on Friday. Wells Fargo, Capital One, Deutsche Bank, BMO, Citigroup and BofA Merrill Lynch are joint bookrunners.

PPD PIK toggle deal

Pharmaceutical Product Development, LLC plans to price $550 million of five-year PIK toggle holdco notes (expected ratings Caa1/CCC+) on Friday via issuing vehicle Eagle Holding Co. II LLC.

JP Morgan is leading the sale.

Initial guidance is 7½% to 7¾%.

Proceeds will be used to help fund a recapitalization of the Wilmington, N.C.-based contract research company.

Senvion prices tight

Senvion Holding GmbH priced a €400 million issue of 5.5-year senior secured fixed-rate green bonds (B2/B+) at par to yield 3 7/8%.

The yield printed at the tight end of yield talk that had been set in the 4% area.

Joint global coordinator and joint physical bookrunner Deutsche Bank will bill and deliver for the debt refinancing deal. JPMorgan was also a joint global coordinator and joint physical bookrunner.

BNP Paribas and Credit Agricole CIB were joint global coordinators and joint bookrunners.

BayernLB, Citigroup, Natixis, RBI, RBC, Santander and SEB were joint bookrunners.

Travelex yields 8%

Travelex Financing plc priced a €360 million issue of five-year senior secured notes (B3/B-) at par to yield 8%.

The yield printed in the middle of yield talk announced in the 8% area.

Global coordinator and bookrunner JP Morgan will bill and deliver for the debt refinancing deal. Barclays and BofA Merrill Lynch were also global coordinators and bookrunners.

Deutsche Bank and Goldman Sachs were joint bookrunners.

Wednesday inflows

Daily cash flows for dedicated high-yield bond funds were positive on Wednesday, the most recent session for which data was available at press time.

High-yield ETFs saw $84 million of inflows on the day.

Actively managed funds saw $40 million of inflows on Wednesday.

News of Wednesday’s daily flows foreshadowed the report from Lipper US Fund Flows that the high-yield funds saw $291 million of inflows during the week to Wednesday’s close.

Meanwhile daily cash flows for dedicated bank loan funds were also positive on Wednesday, according to the trader, who added that the loan funds saw $75 million of inflows on the day. Of the total, $74 million flowed into bank loan ETFs, the trader added.

Sugarhouse little changed

In the secondary realm, a trader said that the new Sugarhouse HSP Gaming Prop Mezz LP/Sugarhouse HSP Gaming Finance Corp. 5 7/8% senior secured notes due 2025 “were pretty active – but pretty much range-bound.”

He pegged the Philadelphia-based casino operator’s new paper around 100¼ bid on Thursday afternoon, versus the par level at which that $300 million regularly scheduled forward calendar offering had priced late in the session on Wednesday.

A second trader said that the bonds had been at 100¼ bid, 100 5/8 offered after they started trading around on Thursday morning.

At another desk, a market source said the bonds were finishing the session having only edged up by around 1/8 to ¼ point.

He said that more than $38 million had changed hands, topping the Most Actives list for the session.

Bill Barrett activity shrinks

Bill Barrett Corp.’s new 8¾% notes due 2025 had occupied that same position on Wednesday, leading the way volume-wise with almost $40 million traded.

But on Thursday, he said, “there was only light volume in it.

“Sugarhouse took over that role” as the most actively traded junk credit.

He saw the Bill Barrett issue “about unchanged” at 100 3/8 bid on Thursday.

A second trader saw those bonds down 1/8 point on the session at 100 1/8 bid, 100½ offered.

The Denver-based energy exploration and production company had priced its regularly scheduled $275 million issue at par late in the day on Tuesday and they had traded up to a 100¼ to 100½ bid context in busy dealings on Wednesday.

Recent deals move up

Elsewhere, the 7 1/8% notes due December 2024 issued by Uniti Group Inc./Uniti FiberHoldings Inc./CSL Capital, LLC were trading at 101¾ bid, 102 offered, which a trader called about unchanged on the day.

The Little Rock, Ark.-based communications-oriented real estate investment trust’s quick-to-market $200 million offering had priced at 100.5 on Monday to yield 7.013%.

They had moved up to around the 101 bid area later that same session and then had firmed to around a 101¾ to 102 bid context on Tuesday, staying there after that.

But going back a little further, a trader quoted Trilogy International Partners Inc.’s 8 7/8% senior secured notes due 2022 at 103½ bid, 104¼ offered, calling them up ¾ point on the session.

The Bellevue, Wash.-based provider of wireless service to Latin America, the Caribbean and New Zealand had priced its $350 million scheduled forward calendar offering at 99.506 last Friday. The new bonds had moved up to around 102 bid when they began trading on Monday and continued to firm as the week went on.

At that same shop, the new Clearwater Seafoods Inc. 6 7/8% notes due 2025 were seen up ¾ point at 103½ bid, 104 offered.

The Bedford, N.S.-based seafood harvester, processor and distributor had priced its regularly scheduled $250 million issue at par last Friday. They had initially surged to above the 102 bid mark in active trading later that same session, and then firmed to around the 103 bid area on Monday.

U.S. Steel struggle continues

Away from the new deals, traders saw U.S. Steel’s paper continuing under pressure after the Pittsburgh-based metals giant reported disappointing quarterly results.

A trader saw its 7½% notes due 2022 down ½ point, locating those bonds at 101¾ bid. The notes had fallen by 5/16 point on Wednesday.

More than $10 million of those notes changed hands.

The company posted a loss of 83 cents per share, wider than the 30 cents per share of red ink Wall Street had expected.

It saw revenue figures of $2.73 billion, off from the expected $2.9 billion.

Indicators show improvement

Statistical market performance measures were better on Thursday, their third upturn in the last four trading days. They had turned mixed on Wednesday, after being higher across the board on Monday and again on Tuesday.

The KDP High Yield Daily Index rose by 2 basis points on Thursday to end at 72.16, its fifth consecutive gain after seven losses in a row before that. On Tuesday, it had jumped by 10 bps, on top of Tuesday’s 9 bps surge.

Its yield came in by 1 bp on Thursday to 5.16%, its fifth straight tightening.

The Markit CDX Series 28 Index was unchanged on Thursday, holding steady at 107 19/32 bid, 107 5/8 offered, having eased by around 1/16 point on Wednesday. That followed Tuesday’s gain of 5/16 point.

The Merrill Lynch North American High Yield Index made it seven successive sessions on the upside on Thursday, advancing by 0.11%, on the heels of Wednesday’s 0.122% upturn.

Thursday’s improvement lifted the index’s year-to-date return to 3.721%, its fourth straight new year-to-date high point, surpassing the previous 2017 peak of 3.71%, set on Wednesday.

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