Avalon, Cheniere Energy, Eldorado price; Intelsat lags issue price; funds lose $639 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 6 – The drive-by window was open for business on Thursday with three issuers pricing an aggregate of $2.7 billion, marking the biggest day for new deal volume in nearly a month.

Cheniere Energy Partners, LP priced a $1.1 billion issue of eight-year senior notes (Ba2/BB), Avolon Holdings Ltd. priced an upsized $1 billion issue of five-year senior bullet notes (Ba3/BB) and Eldorado Resorts Inc. priced a $600 million issue of eight-year senior notes (B3/B).

One more issuer also hopped aboard the forward calendar on Thursday. Pacific Drilling SA is planning to have a roadshow for a $700 million offering of five-year senior secured first lien notes through Sept. 13 and to price it thereafter.

The European primary market also saw a flicker of activity with Ei Group plc planning to start a roadshow on Friday for a £150 million offering of 5.5-year senior notes (S&P: expected B).

Meanwhile, the new paper was in focus in the secondary space with Cheniere Energy and Avolon major volume movers. While above their issue price, neither notes made significant gains after breaking for trade.

Intelsat Jackson Holdings SA’s newly priced 8½% senior notes due 2024 dominated trading activity in the secondary space. However, the notes were lagging their issue price in the high-volume trading.

Intelsat’s older issues remained active in the secondary space with some seeing nominal gains and others trading largely flat.

Outside of the new deals, Altice SA’s 7¾% notes due 2022 were down in active trading on Thursday following the completion of the sale of a 75% stake in its telecom tower business in Portugal.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw their first outflow in six weeks with $639 million leaving the space in the week ended Sept. 5, according to fund-flow statistics generated by AMG Data Services Inc.

The outflow kicks off September with cash leaving the space after five consecutive weeks of inflows.

Cheniere drives by

Cheniere Energy Partners priced a $1.1 billion issue of eight-year senior notes (Ba2/BB) at par to yield 5 5/8%.

The yield printed in the middle of the 5½% to 5¾% yield talk and tight to initial talk in the 5¾% area.

JP Morgan, MUFG, ABN Amro, SG, Mizuho, Morgan Stanley, SMBC Nikko, Credit Suisse, HSBC and BofA Merrill Lynch were the joint bookrunners for the debt refinancing deal.

Avolon upsizes

Avolon Holdings priced an upsized $1 billion issue of five-year senior bullet notes (Ba3/BB) at par to yield 5 1/8%.

The issue size increased from $750 million.

The yield printed in the middle of yield talk in the 5 1/8% area and tight to initial guidance in the 5¼% area.

JP Morgan, BNP Paribas, Barclays, Credit Agricole, Fifth Third, Morgan Stanley, Natixis, SG and SunTrust were the joint bookrunners for the debt refinancing deal.

Eldorado Resorts prices tight

Eldorado Resorts priced a $600 million issue of eight-year senior notes (B3/B) at par to yield 6%.

The yield printed at the tight end of the 6% to 6¼% yield talk.

JPMorgan, Macquarie, Credit Suisse, US Bancorp, Capital One, KeyBanc, SunTrust and BofA Merrill Lynch were the joint bookrunners for the acquisition financing.

Pacific Drilling roadshow

There were also roadshow announcements on Thursday.

Pacific Drilling plans to have a roadshow for a $700 million offering of five-year senior secured first-lien notes through Sept. 13 and to price it thereafter.

An investor conference call is set to take place at 12:30 p.m. ET on Friday.

Credit Suisse is the sole bookrunner.

The Luxembourg-based drillship operator plans to use the proceeds to refinance or repay a portion of the pre-petition debt and for the general corporate purposes of the reorganized company.

Pacific Drilling filed for bankruptcy on Nov. 12, 2017 under Chapter 11.

Ei starts Friday

In the sterling-denominated primary market, Ei Group plans to start a roadshow on Friday for a £150 million offering of 5.5-year senior notes (S&P: expected B).

Joint global coordinator and bookrunner Deutsche Bank will bill and deliver. BNP Paribas is also a joint global coordinator and bookrunner. Lloyds Bank and NatWest Markets are joint bookrunners for the debt refinancing deal.

New paper in focus

The deals to price on Thursday were active in the secondary space after breaking for trade. Cheniere Energy’s 5 5/8% senior notes due 2026 “were busy” with more than $68 million of the bonds on the tape by the late afternoon, a market source said.

However, the 5 5/8% notes had a lackluster performance in the high-volume trading. The notes were seen changing hands between par 1/8 and par ¼.

Avolon’s 5 1/8% senior notes due 2023 likewise failed to make gains in active trading.

The notes were seen changing hands between par 1/8 to par 3/8, according to a market source. More than $17 million of the bonds had traded by late afternoon.

Intelsat lags issue price

Intelsat’s newly priced 8½% senior notes due 2024 dominated trading activity in the secondary space with more than $166 million of the bonds on the tape by the late afternoon.

While the notes began the day at par, they dropped in the high-volume activity and spent most of the day between 99¾ and 99 7/8, a market source said.

Intelsat priced an upsized $2.25 billion issue of the notes at par to yield 8½% in a Wednesday drive-by.

The new deal sparked activity throughout the structure. Intelsat’s 7½% senior notes due 2021 were making gains in active trading on Thursday.

The notes were up about ½ point to 101½ with about $22 million of the bonds on the tape, a market source said.

Proceeds from Intelsat’s new offering will be used to fund a tender offer for the company’s 7¼% notes due 2020.

At the same time that the tender starts, the company will issue a notice to redeem any remaining notes on Oct. 15.

The 7¼% notes continued to trade flat around par 3/8. While active, the notes have traded flat since the tender offer was announced.

Altice trades down

Altice’s 7¾% senior notes due 2022 dropped about 1 3/8 points on Thursday after the company announced it had completed the sale of a stake in its tower business in Portugal.

The notes were wrapped around 94 in active trading, a market source said. More than $16 million of the bonds were on the tape by the late afternoon.

The 7¾% notes closed Wednesday at 95 3/8.

Altice announced it had completed the sale of a 75% stake in its Tower of Portugal business on Thursday to a group of investors led by Morgan Stanley Infrastructure Partners and Horizon Equity Partners.

The sale has long been part of the telecommunications company’s plan to deleverage itself. The Tower of Portugal business is valued at €660 million.

Wednesday outflows

The daily cash flows of the dedicated high-yield bond funds were decidedly negative on Wednesday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs sustained $554 million of outflows on the day.

Actively managed funds saw $155 million of outflows on Wednesday, the trader said.

Indexes mixed

Three benchmarks for the high-yield secondary market were again mixed on Thursday with two posting losses and one seeing gains.

The KDP High Yield Daily index was down 5 basis points on Thursday to close the day at 70.37 with the yield now 5.83%. The index was down 4 bps on Wednesday and was flat on Tuesday.

The Merrill Lynch High Yield index saw nominal losses on Thursday after a large drop Wednesday. The index was down 1.3 bps with the year-to-date return now 1.852%.

The index was down 8.9 bps on Wednesday after a 2.7 bps gain on Tuesday.

The CDX High Yield 30 index was again the sole index to see gains on Thursday. The index was up 8 bps to close the day at 106.87.

The index was up 2 bps on Wednesday after a 9 bps drop on Tuesday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.