EG, CDK, Teekay price; AssuredPartners trades up; energy names drop; funds add $21 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 2 – The high-yield primary market saw an active session on Thursday with the stage set for a large finish to the week.

UK-based filling station operator EG Group priced an upsized, restructured €1.64 billion equivalent amount of senior secured notes (B2/B/B+) in three tranches.

CDK Global, Inc. priced a $500 million issue of 10.5-year senior notes (Ba1/BB+) at par to yield 5% in a Thursday drive-by.

Teekay Corp. priced a downsized $250 million of restructured 3.5-year senior secured notes (B2/B+) at par to yield 9¼%.

And Drax Finco plc priced a $200 million add-on to its 6 5/8% senior secured notes due Nov. 1, 2025 (BB+/BB+) at 101.5.

Friday also promises to be an active session with Altice Luxembourg SA on deck with a €2.8 billion equivalent two-part offering of eight-year senior notes (Caa1/B-) and Twin River Worldwide Holdings, Inc. set to price its $350 million offering of eight-year senior notes (B3/B).

Ausdrill Finance Pty Ltd. is also heard to be in the market with a $500 million offering of seven-year senior notes (Ba2/BB).

Meanwhile, the secondary space was soft on Thursday with the energy sector leading the market lower.

California Resources Corp.’s 8% senior notes due 2022, Whiting Petroleum Corp.’s 6 5/8% senior notes due January 2026 and Chesapeake Energy Corp.’s 8% senior notes due 2027 were among the issues in the energy sector that were “taking a beating,” a market source said.

While the overall secondary space was soft on Thursday, new paper continued to perform well.

Teekay’s newly priced 9¼% notes soared after hitting the secondary space.

AssuredPartners, Inc.’s 8% senior notes due 2027 (Caa2/CCC+) were trading at a slight premium to their issue price in high-volume activity.

Tesla Inc.’s 5.3% senior notes due 2025 were also among the outperformers of Thursday’s session with the notes jumping after the electric car manufacturer announced a new capital raise.

Meanwhile, high-yield mutual funds and exchange-traded funds returned to the positive over the past week.

Funds saw a modest inflow of $21 million for the week ended May 1 after an outflow of $521 million in the previous week.

EG prices €1.64 billion

A busy Thursday session in the new issue market saw UK-based filling station operator EG Group price an upsized, restructured €1.64 billion of senior secured notes (B2/B/B+) in three tranches.

In a tranche added subsequent to the roadshow start, the Blackburn, U.K.-based company priced €300 million of notes due Feb. 7, 2024 at par to yield 3 5/8%.

The yield printed 12.5 basis points inside of the 3¾% to 4% yield talk. Initial talk was in the 4% area.

The debt refinancing deal also included €670 million of notes due Feb. 7, 2025 which priced at par to yield 4 3/8%.

The yield printed at the tight end of yield talk in the 4½% area. Initial price talk was in the 4¾% area. Early guidance was in the 5% area.

The sole dollar-denominated tranche came as a $750 million tranche of notes due Feb. 7, 2025, which priced at par to yield 6¾%, at the tight end of the 6¾% to 7% yield talk.

Initial talk was in the 7% area. Early guidance was in the low 7% area.

The deal was upsized from €1,355,000,000.

Left global coordinator Barclays will bill and deliver.

CDK Global drives through

In drive-by action, CDK Global priced a $500 million issue of 10.5-year senior notes (Ba1/BB+) at par to yield 5¼%.

The yield printed in the middle of yield talk in the 5¼% area.

Wells Fargo Securities LLC was the left bookrunner for the debt refinancing deal.

Downsized, restructured Teekay

Teekay priced a downsized $250 million of restructured 3.5-year senior secured notes (B2/B+) at par to yield 9¼%.

Earlier in the week the offer was downsized from $300 million, and the maturity was decreased to 3.5 years from five years.

Pricing indications had the downsized, revamped deal coming with a yield in the low 9% area. Pricing on the previous five-year structure was 10% to 10¼%.

J.P. Morgan Securities LLC managed the debt refinancing deal.

The new paper skyrocketed after hitting the secondary space. The notes were seen changing hands around 102, a market source said.

Drax prices tap

Drax Finco priced a $200 million add-on to its 6 5/8% senior secured notes due Nov. 1, 2025 (BB+/BB+) at 101.5.

The execution renders a 6.191% yield to worst, and a 6.338% yield to maturity.

The debt refinancing deal came rich to initial guidance in the 100.5 area, a trader said.

Left global coordinator BofA Merrill Lynch will bill and deliver.

Altice talk

Looking to the Friday session, Altice Luxembourg will be on deck with a €2.8 billion equivalent two-part offering of eight-year senior notes (Caa1/B-).

The offering is coming in dollar-denominated notes which are talked to yield in the 10½% area, and euro-denominated notes talked to yield 225 to 250 basis points inside of the dollar-denominated notes.

Tranche sizes remain to be determined.

Altice is playing to heavy demand, a trader said.

Market sources say that orders came to $2 billion to $2.5 billion and €3 billion on Thursday, respectively.

Twin River talk 6¾% to 7%

Twin River Worldwide Holdings talked its $350 million offering of eight-year senior notes (B3/B) to yield 6¾% to 7%.

Official talk comes tight to initial guidance in the 7% area, a trader said.

The deal was playing to $600 million of demand at 7%, a trader said on Thursday.

JPW talks 9% coupon, OID 90 area

JPW Industries talked its $60 million offering of notes which mirror its 9% senior secured notes due Oct. 1, 2024 (B3/B) with a 9% coupon, at an original issue discount in the 90 area.

Books closed at the end of the day on Thursday, the source added.

Ausdrill brings $500 million

Ausdrill Finance Pty is heard to be in the market with a $500 million offering of seven-year senior notes (Ba2/BB).

Goldman Sachs, Deutsche Bank, Standard Chartered and HSBC are joint bookrunners.

The Australia-based provider of natural resource exploration services plans to use the proceeds to redeem all $350 million of the outstanding senior secured notes due 2022 issued by its wholly owned subsidiary, Barminco Finance Pty Ltd.

Energy drops

The secondary space was soft on Thursday with the energy sector dragging down the market as crude oil futures and several energy names got hammered.

“What goes up must come down,” a market source said.

California Resources’ bellwether 8% senior notes due 2022 dropped 2¼ points in high-volume activity.

The notes were quoted at 73½ bid, 74 offered early in the session with crude oil futures down about 4% according to a market source.

The notes rose as crude oil futures pared their losses into the afternoon and closed the day at 74¼, sources said.

Whiting Petroleum’s 6 5/8% senior notes due 2026 dropped more than 1 point to 97 with more than $32 million of the bonds on the tape.

Chesapeake Energy’s 8% senior notes due 2027 dropped 1 3/8 points to 96½ with more than $25 million in reported volume.

“They’re getting beaten,” a source said of the energy names.

Crude oil futures sank on Thursday with crude oil inventories greater than anticipated. The barrel price of WTI crude oil for June delivery settled at $61.81, a decrease of $1.79 or 2.8%.

Crude oil futures dropped as much as 4% in intraday trading, a source said.

AssuredPartners trades up

AssuredPartners’ newly priced 8% senior notes due 2027 were trading at a slight premium to their issue price in high-volume activity on Thursday.

The 8% notes saw an odd lot trade as high as 101½, which was early in the session and may have been before the market started to go south. However, the majority of trades were between par 3/8 and par 5/8, a market source said.

More than $75 million of the bonds were on the tape by the late afternoon.

AssuredPartners priced a $475 million issue of the 8% notes at par on Wednesday.

The yield printed 12.5 basis points lower than price talk in the 8¼% area and well inside of initial guidance in the mid-to-high 8% area.

Tesla jumps

Tesla’s 5.3% senior notes due 2025 jumped in high-volume activity on Thursday on the heels of a new capital raise.

The notes gained 1½ points to trade in the 97 area, a market source said.

More than $55 million of the bonds were on the tape by the late afternoon.

The senior notes were making gains following Tesla’s announcement that it would price $1.35 billion of five-year convertible notes and a $630 million, or 2,723,198 shares, common stock offering after the market close on Thursday.

The convertible notes were talked to yield 1.5% to 2% with an initial conversion premium of 27.5% to 32.5%.

The capital raise was a positive for Tesla’s capital structure with its outstanding convertible notes and stock also rising on the news.

Indexes drop

Indexes posted losses on Thursday after a mixed week.

The KDP High Yield Daily index was down 10 bps to close Thursday at 70.29 with the yield now 5.8%.

The index was flat on Wednesday after slipping 1 basis point on Tuesday and 1 basis point on Monday.

The ICE BofAML US High Yield index dropped 19.7 bps with the year-to-date return now 8.758%.

The index gained 5.1 bps on Wednesday, 5.5 bps on Tuesday and 9.8 bps on Monday.

The CDX High Yield 30 index dropped 7 bps to close Thursday at 107.39.

The index dropped 18 bps on Wednesday, rose 5 bps on Tuesday and dropped 11 bps on Monday.

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