Morning Commentary: Tidewater launches C$100 million notes; new Whiting Petroleum bonds trade up

By Paul A. Harris

Portland, Ore., Dec. 13 – In an otherwise quiet primary market Tidewater Midstream and Infrastructure Ltd. launched C$100 million of five-year notes at 7%, plus or minus 1/8%.

The unrated deal, via bookrunner CIBC, is set to price on Wednesday.

Elsewhere the lately torrid high-yield primary is slipping into year-end mode, sources say.

One U.S. dollar-denominated deal is on deck as Wednesday business.

Cooke Omega Investments Inc. plans to price a $330 million restructured offering of senior secured notes (B3/B+) via bookrunner BMO.

The acquisition deal was restructured into five-year notes that are non-callable for 2.5 years from an original offering of eight-year notes that were non-callable for three years. The notes are talked at a to-be-determined discount to yield 9¼%.

The only other U.S. dollar-denominated deal on the active calendar is Mattel, Inc.'s $1 billion offering of eight-year senior notes (Ba2/BB-/BB). The market awaits official talk; however, early guidance has it shaping up with a 6¾% to 7% yield and pricing at the end of the present week.

Mattel could be the last deal of 2017, a trader said on Wednesday morning, and added that market participants appear to be staging for vacation time encompassing all or part of the Dec. 18 week.

However, there is apt to be at least one more deal from the energy sector, according to a sellside source, who added that it won't be big, and Wells Fargo is expected to be involved.

Whiting notes trade up

Secondary market liquidity is beginning to thin as traders focus on getting things done before lunchtime, anticipating that late-year afternoon markets will thin out, a trader said.

The new Whiting Petroleum Corp. 6 5/8% senior bullet notes due Jan. 15, 2026 (B3/BB-) were turning in a strong secondary market performance on Wednesday morning, trading at 101½ bid, 102 offered, the trader added.

The $1 billion issue, upsized from $750 million, priced Tuesday at par, on the tight end of yield talk in the 6¾% area.

Elsewhere, bonds priced Tuesday by Churchill Downs Inc. were wrapped around their new issue price, the source said.

The 4¾% senior notes due Jan. 15, 2028 came at par in a $500 million issue, upsized from $300 million.

Looking back to some early December new issue business, the fact that Valeant Pharmaceuticals International, Inc. demonstrated it could access the capital markets gave a healthy boost to the company’s entire complex of bonds, which are up 1 point to 2 points in the past week to 10 days, the trader said.

The recently minted Valeant 9% senior notes due Dec. 15, 2025 (Caa1/B-) were 102 bid on Wednesday. They priced at 98.611 to yield 9¼% on Dec. 4 in a $1.5 billion issue that was upsized from $1 billion.

The 9% notes priced cheap, and people were happy, the trader said, adding that in the wake of the early December bond sale it's been better buyers, where Valeant is concerned.

Tuesday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Tuesday, the trader said.

High-yield EFTs sustained $267 million of outflows on the day.

Actively managed high yield funds were generally flat, at negative-$50 million on Tuesday.

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