Sirius XM megadeal, Weatherford add-on drive by; Hertz higher on Apple link-up; Arconic off on Grenfell news

By Paul Deckelman and Paul A. Harris

New York, June 26 – The high-yield primary market started off the new week – the last in June – with a bang on Monday, pricing some $2.25 billion of new U.S. dollar-denominated and fully junk-rated paper in three tranches.

It was the most new notes priced in three weeks.

Satellite broadcaster Sirius XM Radio Inc. had the big deal of the day, an upsized and quickly shopped $2 billion offering of five- and 10-year notes.

Traders said that the new Sirius securities firmed slightly when they hit the aftermarket.

Oilfield services provider Weatherford International Inc. had Monday’s other new issue, a quick-to-market $250 million add-on to its existing 9 7/8% notes due 2024 that it sold last November.

They did not immediately report any initial aftermarket dealings in those notes.

Some of last week’s new issues, including those from cloud services provider j2 Cloud Services, LLC, and ladder manufacturer Werner Co., were seen clinging to the solidly higher levels to which they rose in initial trading after their respective pricings.

Away from the new deals, Hertz Corp. paper was up on news reports that the car-rental company will partner with Apple Inc. as the latter attempts to develop a self-driving car.

Energy issues such as Continental Resources Inc. were better as crude oil prices rose for a third consecutive session Monday.

On the downside, Arconic Inc. bonds fell amid news reports that the aluminum products company formerly known as Alcoa Inc. had supplied flammable aluminum panels used in the construction of Grenfell Tower, the London high-rise building that was the scene of a disastrous fire on June 14 in which at least 79 people were killed.

Statistical market performance measures were higher across the board for a second consecutive session on Monday; they had turned stronger on Friday, after having been mixed on Thursday and lower all around for the two sessions before that.

SiriusXM, upsized and tight

Two issuers, bringing a combined three tranches, raised $2.25 billion during news heavy Monday in the high-yield primary market.

Both issuers came with a.m.-to-p.m. drive-bys.

Sirius XM Radio Inc. priced an upsized $2 billion amount of senior notes (Ba3/BB) in two tranches in a transaction that saw both tranches grow by $250 million each and price at the tight ends of talk.

The deal included $750 million of five-year notes which priced at par to yield 3 7/8%. The tranche size was increased from $500 million. The yield printed at the tight end of yield talk in the 4% area. Initial guidance was in the low 4% area.

A $1.25 billion amount of 10-year notes priced at par to yield 5%. The tranche size was increased from $1 billion. The yield printed at the tight end of the 5% to 5¼% yield talk. Initial guidance was in the low 5% area.

JP Morgan was the lead bookrunner for the debt refinancing deal.

Weatherford taps 9 7/8% notes

Weatherford International Ltd. priced a $250 million add-on to its 9 7/8% senior bullet notes due Feb. 15, 2024 (Caa1/B) at 101.00 to yield 9.657%.

The reoffer price came on top of price talk. Initial talk was in the 101 area.

Morgan Stanley was the sole bookrunner for the bank debt refinancing deal.

Talking the deals

Dealers set the stage for an active Tuesday in the new issue market.

Exela Technologies Inc. set price talk in its $825 million two-part offering of notes.

A $525 million tranche of six-year senior secured notes (B2/B+) is talked to yield 7¼% to 7½%. RBC is the left bookrunner for the secured notes.

A $300 million tranche of seven-year senior unsecured notes (Caa2/CCC+) is talked to yield in the 11% area. Credit Suisse is the left bookrunner for the unsecured notes.

Elsewhere Capital Services talked its $515 million offering of eight-year senior secured notes (B3/B) to yield in the 7¾% area.

UBS is the lead left bookrunner.

Order books for Exela and Capital Services are scheduled to close Tuesday.

Venator starts roadshow

The active forward calendar, which seemed to spend the early and middle parts of June nearly empty, had some heft by Monday's close.

In addition to the Exela and Capital Services deals, Huntsman Corp. and Venator Materials plc began a roadshow on Monday in New York for a $350 million offering of eight-year senior notes (B2/BB-).

Citigroup is the left bookrunner for the spinoff deal. BofA Merrill Lynch, JP Morgan, Barclays, HSBC, PNC, RBC, Goldman Sachs and SunTrust are the joint bookrunners.

Commercial Metals starts Tuesday

Commercial Metals Co. plans to start a roadshow on Tuesday for a $300 million offering of 10-year senior notes.

Citigroup is the left bookrunner for the debt refinancing deal from the Irving, Texas-based manufacturer, recycler and marketer of steel and metal products. Wells Fargo, BofA Merrill Lynch, BBVA and PNC are the joint bookrunners.

Banijay launches €350 million

In the European market Banijay Group SAS launched a €350 million offering of five-year senior secured notes to investors on Monday.

Natixis is leading the offer.

The Paris-based media company plans to use the proceeds, together with a €60 million senior term loan, to pay off its existing senior credit facilities, repay a portion of shareholder debt, and fund the acquisition of Castaway Television Productions Ltd.

Wagamama roadshowing £225 million

Wagamama Ltd. is roadshowing a £225 million offering of five-year senior secured notes through Wednesday.

Morgan Stanley and KKR are managing the debt refinancing deal.

Elsewhere in the European primary market, it was radio silence Monday on the Manutencoop Facility Management SpA €420 million offering of five-year senior secured notes, a sellside source said just after the London close on Monday.

JP Morgan is leading the Italian facilities management company's debt refinancing deal, which had been expected to price last week, the source recounted.

Biggest session in three weeks

Monday’s two deals totaled $2.25 billion of new dollar-denominated and fully junk-rated paper from domestic or industrialized-country issuers.

According to data compiled by Prospect News, this was the most new paper priced in three weeks, since June 5, when $5.08 billion of new junk bonds got done in seven tranches, the second-biggest total seen so far this year.

That session was led by Dallas-based hospital operator Tenet Healthcare Corp.’s $3.78 billion four-part offering – the biggest new deal seen in Junkbondland so far this year.

Time to get Sirius

Among the day’s new deals, a trader said saw both tranches of Sirius XM’s new issue at 100¼ bid, versus the par level at which both the five-year and the 10-year notes had priced.

Another trader quoted both halves of the New York-based satellite radio broadcasting company’s new deal in a 100 1/8-to-100½ bid context.

The traders did not immediately report any initial dealings in the new bonds from Weatherford, a Houston-based oilfield services company.

Recent deals hold gains

A trader said that there was “some trading” in the new Werner Co. 8¾% notes due 2025, seeing the bonds anchored around 101½ bid.

That was the level at which those notes had finished on Friday, after the Greenville, Pa.-based maker of ladders, scaffolding and other industrial climbing equipment had priced its $265 million issue at par as a regularly scheduled forward calendar offering.

He also saw j2 Cloud’s new 6% notes due 2025 still at 102½, the level to which those bonds had moved on Friday.

The Los Angeles-based provider of internet cloud services priced $600 million of the notes at par on Thursday, after upsizing the regularly scheduled deal from an originally announced $550 million.

Hertz heads higher

Away from the new deals, traders saw the bonds of Hertz Corp. at higher levels, given a boost by news reports that the Estero, Fla.-based car-rental giant is teaming up with Apple as the latter company attempts to develop software for self-driving vehicles.

Apple is starting out small, renting six Hertz cars for its experiments.

A trader saw Hertz’s 5 7/8% notes due 2020 up more than 2¼ points, finishing at 96 1/16 bid, with over 413 million traded.

Hertz’s 6¼% notes due 2022 firmed by 1 7/8 points to close at 85 7/8 bid.

Arconic trades off

A trader saw Arconic Inc.’s 5 7/8% notes down 1½ points on the session, ending at 105 1/8 bid, on “pretty good volume,” in line with a slide in the New York-based aluminum products company’s shares on news reports that the former Alcoa Inc. had supplied flammable panels for use at London's Grenfell Tower – despite a public warning that they posed a risk.

In the aftermath of the fire at the skyscraper earlier this month which claimed dozens of lives, Arconic said that it is not up to the company to decide what is compliant with local building regulations.

But it announced that it was suspending further sales of the panels.

More than $29 million of the notes changed hands Monday.

Energy credits firmer

A third straight session of firmer oil prices helped oil and gas paper, such as Continental Resources’ 5% notes due 2022, up ½ point to 97 bid, with over $18 million traded.

August-delivery West Texas Intermediate crude closed up 37 cents on the NYMEX on Monday, settling at $43.38 per barrel.

Indicators continue rise

Statistical market performance measures were higher across the board for a second consecutive session on Monday; they had turned stronger on Friday, after having been mixed on Thursday and lower all around for the two sessions before that.

The KDP High Yield Daily index rose by 7 basis points on Monday to end at 72.08, its second consecutive gain after three straight losses before that; on Friday, it had edged up by 1 bp, after having nosedived by 16 bps on Thursday.

Its yield came in by 3 bps on Monday to an even 5.00%, after having been unchanged on Friday. Before that, the yield had risen over three straight sessions, including on Thursday, when it widened out by 6 bps.

The Markit CDX Series 28 High Yield index firmed more than 3/32 point on Monday to end at 107 5/32 bid, 107 3/16 offered, its third successive improvement following two straight losses; on Friday, the index had gained almost 9/32 point.

And the Merrill Lynch North American High Yield index posted a second consecutive rise on Monday after three sessions in a row before that on the downside. It advanced by 0.152%, on top of Friday’s 0.071% upturn, which stood in contrast to Thursday’s 0.042% retreat.

Monday’s move up raised the index’s year-to-date return to4.759% from Thursday’s 4.6% finish, though it remained below its high point for the year to date of 5.173%, recorded on June 14.

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