WillScot, Axalta price; Virgin Media pricing expected; Wesco in focus; Ford, Macy’s gain

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 1 – The domestic high-yield primary market launched the new month with decent activity with three issuers tapping the market.

WillScot Corp. priced an upsized $650 million and Axalta Coating Systems Ltd. priced $500 million in Monday drive-bys.

Virgin Media was expected to price a $675 million issue of 10-year senior notes. However, final terms were unavailable as of press time.

Meanwhile, the secondary space launched the new month on firm footing with the market continuing to grind tighter.

With a huge influx of cash, there was a lot of buying activity from exchange-traded funds, which was pushing the market higher, a source said.

Recent issues continued to dominate trading activity.

Wesco Distribution Inc.’s two tranches of senior notes (B2/BB-/BB-) were in focus and holding onto their large premium during Monday’s session.

Macy's Inc.’s recently priced 8 3/8% senior notes due 2025 (Ba1/BB-/BB+) were again on the rise.

Ford Motor Co.’s senior notes also continued to log gains.

Monday’s drive-bys

June got underway at a moderate pace in the new issue market on Monday.

WillScot Corp. priced an upsized $650 million issue of five-year senior secured notes (B3/B) at par to yield 6 1/8%.

The issue size increased from $500 million.

The yield printed 12.5 basis points inside of the 6¼% to 6½% yield talk. Initial price talk was also 6¼% to 6½%.

The deal was heard to be playing to $3 billion of orders, a trader said.

Axalta Coating Systems priced a $500 million issue of 4¾% seven-year senior notes (B1/BB-) at par to yield 4.749% in a Monday drive-by, according to market sources.

The yield printed tight to the 4¾% to 5% yield talk. Initial talk was in the low 5% area.

The deal was more that two-times oversubscribed, a bond trader said.

Also on Monday, Virgin Media was expected to drive by with $675 million of 10-year senior notes (expected ratings B2/B).

The deal was talked to yield 5% to 5¼%.

No final terms were available at press time.

Wesco in focus

Wesco’s two tranches of senior notes were in focus on Monday with the notes holding onto the steep premiums gained after breaking for trade on Friday.

Wesco’s 7 1/8% senior notes due 2025 remained wrapped around 103.

The 7¼% senior notes due 2028 were more than 4 points above their discounted issue price.

They were trading on a 103-handle throughout Monday’s session and were changing hands at 103¾ in the late afternoon, according to a market source.

Each tranche saw about $47 million in reported volume during Monday’s session.

The notes jumped despite a ratings downgrade from Moody’s Investors Service and S&P that coincided with their pricing.

Proceeds from the offering are being used to help fund Wesco’s acquisition of Anixter International Inc. and redeem Anixter’s unsecured notes.

Moody’s lowered Wesco’s unsecured debt rating to B2 from B1 and S&P downgraded Wesco to BB- from BB due to the increased leverage brought on by the acquisition.

However, the notes offered a good yield and the company was solid, a source said.

Wesco priced a $2.825 billion two-tranche offering last Friday.

The deal included a $1.5 billion tranche of 7 1/8% notes due 2025, which priced at par and a $1.325 billion tranche of the 7 ¼% notes due 2028, which priced at 99.244 to yield 7 3/8%.

Pricing of the 7 1/8% notes came at the tight end of the 7 1/8% to 7 3/8% yield talk.

The 7 ¼% notes priced tighter than talk for a yield in the 7 5/8% area.

Macy’s up again

Macy’s 8 3/8% senior notes due 2025 were gaining strength on Monday after losing steam in active trading over the past few sessions.

The 8 3/8% notes were changing hands on a 101-handle early Monday but gained strength into the close with the final prints between 102 and 102 3/8, according to a market source.

The notes remained active with more than $15 million in reported volume during the session.

The 8 3/8% notes saw a strong break after the department store change priced the $1.3 billion issue at par on May 27.

While the notes traded as high as 103 after breaking for trade, they lost steam over the past few sessions as demand faded after accounts got their desired allocation, sources said.

The notes were trading in-line with the overall market on Monday, which saw a strong close after opening relatively flat, a source said.

Ford gains

Ford’s senior notes continued to gain on Monday.

The 9% senior notes due 2025 were the most active of the car manufacturer’s recently priced tranches.

The notes hit a 106-handle on Monday, closing the day at 106¼, according to a market source said.

There were more than $20 million of the bonds on the tape by the late afternoon.

The notes have staged an impressive rebound after initially struggling in the secondary space.

The 9% notes traded as low as 95 in early May.

Ford priced a $3.5 billion tranche of the 9% notes at par as part of an $8 billion three-tranche offering on April 17.

The offering also included a $3.5 billion tranche of 8½% senior notes due 2023 and a $1 billion tranche of 9 5/8% senior notes due 2030.

Ford’s 8½% senior notes due 2023 and 9% senior notes due 2025 meet the criteria for the Federal Reserve’s secondary market corporate credit facility.

$448 million Friday inflows

The dedicated high-yield bond funds saw $448 million of net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high yield funds saw a hefty $790 million of inflows on the day.

However high-yield ETFs were negative, sustaining $342 million of outflows on Friday, the source said.

Indexes gain

Indexes launched the new week and the new month with gains after all posted cumulative gains the previous week.

The KDP High Yield Daily index was up 11 points to close Monday at 64.95 with the yield now 6.72%.

The index posted a cumulative gain of 118 bps on the week last week.

The CDX High Yield 30 index jumped 106 bps to close Monday at 99.35.

The index posted a cumulative gain of 335 bps on the week last week.

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