Scotts Miracle-Gro prices; newer notes diverge; Aramark lower; PG&E gains; WeWork drops

By James McCandless and Paul A. Harris

San Antonio, Oct. 8 – In a light Tuesday high-yield primary market Scotts Miracle-Gro Co. priced an upsized $450 million issue of 10-year senior notes at par to yield 4½% in a quick-to-market trade, while the secondary market remained fixed on newer issues and newsmakers.

The final three sessions of the Oct. 7 week figure to be active ones, as dealers work through a calendar festooned with multi-tranche, multi-currency deals.

Meanwhile, recent notes from AerCap Holdings NV and CSC Holdings LLC were active but took diverging directions.

Meanwhile, Aramark’s issues were trending lower a day after the company announced a new chief executive officer.

In utilities, PG&E Corp.’s paper trended higher as the company, creditors and other stakeholders argue over its restructure plan.

Real estate name WeWork Cos. Inc.’s notes dropped as continual negative headlines dogged the name.

Oversubscribed Scotts comes tight

In a light Tuesday news flow Scotts Miracle-Gro priced an upsized $450 million issue of 10-year senior notes (B1/B+) at par to yield 4½% in a quick-to-market trade.

The deal, which was upsized from $400 million, played to $2.25 billion of demand, a bond investor said.

The yield printed at the tight end of the 4½% to 4¾% yield talk, and inside of initial guidance in the 4¾% area (see related stories in this issue).

Sizable calendar

The final three sessions of the Oct. 7 week figure to be active ones, as dealers work through a calendar festooned with multi-tranche, multi-currency deals.

The market heard early guidance in EG Group's €1.26 billion equivalent offering of six-year senior secured notes (B2/B/B+).

The deal comes in tranches of dollar-denominated notes with early guidance in the 8% area and euro-denominated notes with early guidance in the 6% area.

Elsewhere Netherlands-based producer of fertilizers and chemicals OCI NV was scheduled to start a roadshow on Tuesday for its $1.1 billion equivalent cross-border offering of five-year senior secured notes (Ba3/BB/BB).

The deal comes in dollar-denominated and euro-denominated tranches.

Initial talk on the dollar-denominated tranche has those notes coming to yield in the low 5% area.

Meanwhile a $775 million offering of notes backing Bain Capital's acquisition of a stake in Kantar, a London-based interdisciplinary networking services provider, is expected to price before the end of the week.

The deal comes in two tranches, one secured, the other unsecured.

Summer (BC) Holdco B Sarl offers $250 million equivalent of euro-denominated seven-year senior secured notes (B1/B) while Summer (BC) Holdco A Sarl offers $525 million equivalent of euro-denominated eight-year senior unsecured notes (Caa1/CCC+).

And England's Merlin Entertainments plc expects to price £635 million equivalent of eight-year senior notes (Ba3) before the end of the week.

The deal comes in tranches of dollar-denominated notes with initial price talk in the low 8% area and euro-denominated notes with initial talk low 8% area.

Texas-based Viper Energy Partners LP is on a roadshow for a $400 million offering of eight-senior senior notes (B1/BB+/BB-).

Initial talk has the notes coming to yield in the mid-to-high 5% area.

And TruckPro LLC was scheduled to roadshow through Tuesday for a $300 million offering of seven-year senior secured notes due 2026 (B3/B-), with early guidance in the 10% area.

Monday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $55 million of outflows on the day.

Actively managed high-yield funds saw $35 million of outflows on Monday, the source said.

With three of the present reporting week's five sessions in the tally the combined funds are tracking a hefty $1.54 billion of outflows for the week that will conclude with Wednesday's close.

Although that number is almost certain to change, one way or another, in the ensuing two sessions – Tuesday and Wednesday – it presently represents the largest amount of net outflows from the dedicated high-yield bond funds since early August, the source commented.

Recent notes diverge

Recent notes were active in Tuesday’s session, diverging in direction, traders said.

Dublin-based aircraft leasing company AerCap’s recent resettable junior subordinated notes due 2079 gained ½ point to close at 103 bid.

About $35 million of the notes changed hands.

The $750 million deal came to market on Oct. 3.

New York-based telecom name CSC’s 5¾% senior notes due 2030 shaved off ¼ point to close at 103¼ bid.

The notes were bolstered by a $1.25 billion add-on on Sept. 23 in a quick-to-market trade.

Aramark lower

Food name Aramark’s issues were trending lower, market sources said.

The 5% senior notes due 2028 fell ¼ point to close at 103½ bid.

On Monday, the Philadelphia-based food and facilities services provider announced that it had named former executive John Zillmer as CEO.

His prior tenure at the company culminated in his position as president of global food and support services before taking the top roles at Allied Waste and Univar.

The move comes weeks after previous CEO Eric Foss announced his retirement following an activist investor push.

Before the departure, investment company Mantle Ridge disclosed that it owned a 20% stake in the name.

PG&E higher

In the utilities space, PG&E’s paper trended higher, traders said.

The 6.05% paper due 2034 gained ¾ point to close at 110 bid.

About $17 million was on the tape by the close.

As a judgment on whether the San Francisco-based bankrupt electric utility gets to keep the exclusive right to move forward on a restructuring plan draws near, a competing plan sponsored by various stakeholders seeks to challenge the name on how much it owes wildfire victims.

The company’s proposal would cap victim payouts at $8.4 billion, while a group comprising creditors, wildfire victims and others are pushing for $13.5 billion.

Last Friday, PG&E said that it was ready to enact its restructuring plan with $34.35 billion in debt financing commitments.

A judge in bankruptcy court will decide on whether to terminate the company’s exclusive right later in the month.

WeWork drops

Real estate name WeWork’s notes saw a drop, market sources said.

The 7 7/8% senior notes due 2025 declined by 1¼ points to close at 82½ bid. 82½ bid.

In the aftermath of the New York-based co-working company’s failed IPO and CEO resignation, reports of coming layoffs have dragged its notes further downward.

More headlines of the company seeking more financing from backer SoftBank and others as it seeks to trim staff weighed heavily on the structure.

Indexes negative

Three high-yield indexes saw a negative shift.

The KDP High Yield Daily index fell 12 basis points on Tuesday, ending the session at 70.97 as the yield moved up to 5.61%.

The index gained 4 bps on Monday, shed 1 bps on Friday and lost 16 bps on Thursday.

The ICE BofAML US High Yield index declined by 17.6 bps with the year-to-date return now at 10.878%.

The index rose 5.1 bps on Monday, gained 15.8 bps on Friday and shaved off 9.7 bps on Thursday.

The CDX High Yield 30 index lost 36.75 bps to 105.8841.

The index declined by 36 bps on Monday, picked up 35.68 bps on Friday and moved lower by 36.75 bps on Thursday.

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