Enterprise Development on tap; Dish gains; Micron weakens; PHI drops again as refinancing struggles

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 6 – While the primary market has been quiet surrounding the mid-week July 4th holiday, new issue activity is expected to reactivate in the July 9th week.

Tribal gaming concern Enterprise Development Authority is expected to price its $440 million offering of five-year senior secured notes early next week, a market source said, and other issuers are expected to step forward.

Trading volume remained relatively light in the secondary space with no issues to spur trading activity.

Dish Corp.’s 5% senior notes due 2023 were among the major gainers on Friday with the notes up about 1 point. Dish’s 7¾% senior notes due 2026 were also up in active trading after sister corporation EchoStar dropped a $3.2 billion bid for Inmarsat.

Micron Technology Inc.’s 5½% senior notes due 2025 were more active than usual in the secondary space and were quoted down about 2 points after China temporarily banned the chipmaker from selling 26 products in the country.

PHI Inc.’s 5¼% senior notes due 2019 were quoted down about 3 points on Friday. The early tender of the 5¼% notes was expected to settle on Friday.

However, settlement was contingent on the completion of a new term loan to finance the tender offer, a market source said.

The term loan has yet to price.

Primary becalmed

In the wake of Wednesday's Independence Day holiday celebration, the new issue market remained dormant on Friday.

However, new issue bourse is expected to reactivate in the week ahead, according to a syndicate source who declined to furnish any issuer names.

In the dollar-denominated market, one deal is expected to price early in the week ahead, a source said.

Tribal gaming concern Enterprise Development Authority is expected to price its $440 million offering of five-year senior secured notes (S&P: expected B-), a capital expenditures deal via Wells Fargo.

No change has been heard in the price talk: 10½% coupon at 98 to yield 11%, the trader said.

The Enterprise Development Authority roadshow wrapped up in the middle part of the June 25 week, and it has been radio silence on the deal since that time.

Dish gains

Dish Corp.’s 5% senior notes due 2023 were among the gainers of Friday’s session although trading of the notes was light, a market source said.

The notes were up about 1 point to close Friday at 87¼. Dish’s 7¾% senior notes due 2026 were up about½ point in active trading, closing Friday at 88.

The bonds were on the rise after sister corporation EchoStar withdrew its $3.2 billion bid for London-based satellite telecommunications company Inmarsat.

Inmarsat’s U.S. spectrum are complementary to the frequencies owned by Dish, Reuters reported.

EchoStar and Dish were both founded by Charlie Ergen who serves as the chairman of the board of directors for both organizations.

Dish has long sought to develop its wireless spectrum, which has yet to produce returns, as the company’s earnings and satellite-TV subscribers wane.

Investor concern over Dish’s ambitious push to develop a wireless spectrum through financing from its satellite-TV business has pushed Dish bonds down, Bloomberg reported.

Micron under pressure

Micron’s 5½% senior notes due 2025 were under pressure on Friday.

The notes were more active than usual in the secondary space and were quoted down about 2 points, a market source said.

The 5½% notes were seen at 102 bid, 103 offered on Friday. They were previously seen at 104 bid, 104½ offered.

China’s Fuzhou Intermediate People’s Court ruled in favor of Micron competitor United Microelectronics Corp. in a patent suit this past week.

Micron was temporarily banned from selling 26 products in China. United Microelectronics Corp. filed a patent suit against Micron in China shortly after Micron filed a suit against United Microelectronics in the U.S., alleging the company had stolen trade secrets from Micron.

The injunction is expected to have a negative impact of 1% on revenue, Micron said in a company press release.

However, fourth quarter revenue is expected to remain in the previously stated $8 billion to $8.4 billion range.

Micron’s suit against United Microelectronics is ongoing, according to the news release.

PHI down again

PHI’s 5¼% notes were quoted down about 3 points on Friday, an indication that the company’s efforts to refinance the notes continues to struggle, sources said.

The 5¼% notes were seen at 93½ bid, 94½ offered on Friday after previously trading in the 97 to 98 range.

The Lafayette, La.-based provider of helicopter aviation services recently announced it had received tenders from holders of 89.12% of the outstanding $500 million of the 5¼% notes.

The early tenders were expected to settle on July 6, Prospect News reported.

However, the tender offer was contingent on the completion a $600 million Term B loan, a market source said. The drop in the notes “smells like something’s not right there,” the source said.

While books on the term B loan were expected to close on June 28, the deal remains on the forward calendar, Prospect News reported.

PHI initially planned to refinance the notes with a senior notes offering. However, the deal was reported to have struggled during book building and was ultimately pulled from the market.

PHI’s 5¼% notes have risen and fallen as the company has struggled to close on a refinancing package.

Mixed Thursday flows

High-yield ETFs saw a solid $216 million of cash inflows on Thursday, a trader said. However high-yield asset managers sustained $90 million of outflows on the day.

The news on Thursday's daily flows trails a week report from AMG Data Services Inc. stating that the dedicated high-yield bond funds saw $1.73 billion of net outflows in the week ending July 4, including $1.4 billion of outflow from the ETFs.

The junk funds have seen negative weekly flows in five of the past six weeks, with year-to-date flows of negative-$25.5 billion, including $6.9 billion of outflows from the ETFs.

Indexes gain

Three benchmarks for the high-yield secondary market closed out the week with gains.

The KDP High Yield index broke an eight consecutive trading day streak of losses on Friday. The index was up 3 basis points to close Friday at 70.19 with the yield now 5.96%.

The index was down 3 bps on Thursday, 11 bps on Tuesday and 9 bps on Monday.

The Merrill Lynch High Yield index was flipped back into positive territory on Friday. The index was up 8 bps with the year-to-date return now 0.067.

The index was up 8 bps on Thursday and 13.1 bps on Tuesday.

The index sank into negative territory on Monday after a 28.6 bps drop.

The CDX High Yield 30 index was up 37 bps to close Friday at 106.43. The index has seen solid gains throughout the week and was up 21 bps on Thursday and 20 bps on Tuesday.

© 2015 Prospect News.
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