Enterprise Development, goeasy price; Intelsat jumps; L-Brands drops; funds add $1.852 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 12 – New deals in the domestic and European primary market continued to trickle in on Thursday.

After three weeks in the market, Enterprise Development Authority priced an upsized $450 million issue of 12% senior secured notes due July 15, 2024 (B3/B-) at 97.00 to yield 12.729%.

The notes saw large price swings in secondary trading, rising as much as 3 points above issue price before settling 7/8 to 1 point above it.

In drive-by action, goeasy Ltd. priced a $150 million add-on to its 7 7/8% senior notes due Nov. 1, 2022 (Ba3/BB-) at 105.00.

In the European primary, OTE plc priced an upsized €400 million issue of 2 3/8% four-year senior notes at 99.718 to yield 2.45%.

Kongsberg Automotive ASA priced a €275 million issue of seven-year senior secured notes due 2025 (Ba3/B+) at par to yield 5%.

While new paper from Enterprise Development Authority was active and making gains in secondary activity, many of the deals to price over the past week drifted out of focus on Thursday.

However, Transocean Pontus Ltd.’s newly priced 6 1/8% senior notes due 2025 (B1/BB-) and Qorvo, Inc.’s 5½% senior notes due 2026 were both seen slightly improved in limited trading activity.

Intelsat Luxembourg SA’s junk bonds were in focus and making large gains after the Federal Communications Commission unanimously approved the company’s proposal to open the C-band to 5G signals.

L Brands’ junk bonds were also active but posting losses after the company announced June sales at its Victoria Secret stores fell 1% in June.

In a reversal of a three-week trend of outflows, dedicated high-yield bond funds saw $1.852 billion of aggregate inflows during the week to the Wednesday's close, according to the Lipper US Fund Flows weekly report.

Enterprise Development Authority prices

In a deal that kicked off three weeks ago, Enterprise Development Authority crossed the finish line on Thursday.

The issuing authority of the California-based Estom Yumeka Maidu tribe priced an upsized $450 million issue of 12% senior secured notes due July 15, 2024 (B3/B-) at 97.00 to yield 12.729%.

The issue size was increased from $440 million.

Most recent talk in the market had the deal coming with a 12% coupon at a discount, an investor said. Initial guidance was in the high 9% to low 10% area.

Wells Fargo had the books for the capital expenditures deal.

goeasy taps 7 7/8% notes

goeasy priced a $150 million add-on to its 7 7/8% senior notes due Nov. 1, 2022 (Ba3/BB-) at 105.00 in a quick-to-market Thursday trade.

The reoffer price came at the cheap end of the 105 to 105.25 price talk, and rendered 6.168% yield to worst, and a 6.517% yield to maturity.

Wells Fargo was the left bookrunner. BMO was the joint bookrunner.

The Mississauga, Ont.-based alternative financial services provider plans to use the proceeds to grow its consumer loan portfolio and for general corporate purposes.

Like most small add-ons, the add-on caused limited trading activity in the issue in the secondary space.

About $6.3 million of the bonds were on the tape late in the session. They were seen trading as high as 106 ½ but most prints were around 105¼, a market source said.

OTE upsizes

Greek telecom OTE plc priced an upsized €400 million issue of 2 3/8% four-year senior notes at 99.718 to yield 2.45%.

The issue size was increased from €350 million.

The yield printed 5 basis points beneath the tight end of the 2½% to 2 5/8% yield talk. Initial talk was 2¾%.

The deal was approximately five-times oversubscribed, according to a company press release, which also stated that the 2 3/8% coupon was OTE's lowest in the past decade.

Deutsche Bank and Morgan Stanley managed the sale.

Kongsberg at the wide end

Kongsberg Automotive priced a €275 million issue of seven-year senior secured notes due 2025 (Ba3/B+) at par to yield 5%.

The yield printed at the wide end of the 4¾% to 5% yield talk. Yield talk came in line with initial price talk in the high 4% area to 5%.

Sole physical bookrunner JPMorgan will bill and deliver.

The Kongsberg, Norway-based automotive parts manufacturer plans to use the proceeds to refinance $172 million and €182 million of debt under its revolving credit facilities. At the same time, the company intends to enter into a new €50 million revolver.

Enterprise’s price swings

Enterprise Development’s new 12% senior secured notes due 2024 spiked then settled after breaking for trade.

The notes were seen trading more than 3 points above their issue price to 99¼ during Thursday’s session, a market source said.

However, the notes came down off their high with the last prints 97 7/8 bid, 98 offered. They were seen trading at 97 7/8 in the late afternoon with about $21.5 million of the bonds on the tape.

Slightly improved

While trading tempered around Transocean’s 6 1/8% senior notes due 2025 and Qorvo’s 5½% senior notes due 2026 on Thursday, both notes were seen slightly improved.

Transocean’s 6 1/8% notes were seen at par 1/8 bid, par ½ offered with most trades between par 1/8 and par ¼, sources said.

The notes dominated trading in the secondary space on Wednesday and were largely wrapped around par.

Transocean priced a $600 million issue of the 6 1/8% notes at 99 to yield 6.39% in a quick-to-market Tuesday trade.

After struggling on their secondary market debut, Qorvo’s 5½% notes were also gaining some momentum on Thursday.

The notes were quoted at par 1/8 bid, par 3/8 offered with most trades at par ¼, sources said. The notes were largely stuck at par in high volume trading on Wednesday.

Qorvo priced an upsized $500 million issue of the 5½% notes at par in a Tuesday drive-by.

The initial size of the deal was $300 million.

Sources pointed to the upsize as the reason for the notes’ lackluster performance in secondary trading.

Intelsat’s comeback

Intelsat’s junk bonds were again in focus and on the rise on the Thursday after the Federal Communications Commission approved the company’s C-band proposal to open the spectrum to 5G signals.

Intelsat’s 8 1/8% senior notes due 2023 were the most active issue of the day with more than $46 million of the bonds traded by late afternoon.

The notes climbed 2 points in high volume trading.

They were quoted at 84 bid, 84½ offered and were seen trading at 84¼, sources said.

The notes were trading in the low 40s in February, according to Trace data.

Intelsat’s 12½% senior notes due 2022 were up about 1 point to par bid, par ½ offered. The notes were trading in the 77 range as recently as April.

Both notes priced at par.

Moody’s also changed the outlook on Intelsat to stable from negative on Thursday.

Intelsat’s junk bonds “have been on a tear,” over the past two months, a source said. “They were left for dead a little while ago,” another source said.

L Brands declines

L Brands junk bonds also saw heavy volume trading on Thursday with the notes dropping on disappointing sales numbers from its Victoria Secret brand.

L Brands 5¼% senior notes due 2028 were down about 1 point to trade at 88¾, a market source said. About $25 million of the bonds had traded by late afternoon.

L Brands reported in a conference call that sales at its Victoria Secret stores had slumped 1% in June, despite its semi-annual sale. “Sales were skinny,” a market source said.

Junk funds see $1.85 billion inflows

The dedicated high-yield bond funds saw $1.852 billion of aggregate inflows during the week to the Wednesday's close, according to Lipper US Fund Flows.

The inflow slightly eclipsed the previous week's $1.729 billion outflow.

Meanwhile, there was some selling pressure in the market on Thursday in the form of a very big bids-wanted-in-competition (BWIC) list which included $500 million from a single manager, traders said.

Indexes gains

Three benchmarks for the high-yield secondary market all posted gains on Thursday after mixed days on Wednesday and Tuesday.

The KDP High Yield index was up 4 basis points to 70.33 with the yield now 5.92%. Thursday marked the indexes fifth consecutive day of gains. The index was up 6 bps Wednesday, 1 bps on Tuesday, and 3 bps on Monday.

The Merrill Lynch High Yield index wiped out its losses from the previous day and rose 15 bps on Thursday with the year-to-date return now 0.52. The index dropped 10.6 bps on Wednesday after a 15.4 bps rise on Tuesday and 25.5 bps rise on Monday.

The index has now been in positive territory for five consecutive trading days. It turned positive on July 6.

The CDX High Yield 30 index also wiped out the losses from the previous day with large gains on Thursday.

The index was up 33 bps to close Thursday at 106.69. The index dropped 24 bps on Wednesday and 11 bps on Tuesday but was up 28 bps on Monday.

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