Clearway prices; Refinitiv downsizes; International Game Technology on tap; Carvana, Enova weaken

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 17 – While the domestic primary market launched what promises to be an active week with one deal pricing, all eyes are on the deal that is expected during Tuesday’s session.

Clearway Energy Operating LLC priced an upsized $600 million issue of seven-year senior notes (Ba2/BB) in a Monday drive-by. The notes were gaining strength in active trading in the secondary space.

Refinitiv downsized its closely watched offering of senior notes and adjusted pricing with the deal expected on Tuesday.

International Game Technology plc joined the forward calendar and launched a short roadshow for a $500 million offering of seven-year bullet notes (Ba2/BB+) on Monday.

In the European primary market, Italmatch Chemicals SpA also launched a roadshow for a €410 million offering of six-year senior secured floating-rate notes.

Meanwhile, the four deals to price on Friday saw mixed performances in the secondary space.

Fortress Transportation and Infrastructure Investors’ 6½% senior notes due 2025 (B1/B+) were the most active of Friday’s deals with the notes trading up during Monday’s session.

Schweitzer-Mauduit International, Inc.’s 6 7/8% senior notes due 2026 (B2/B+) also improved although trading of the notes was light.

While still well above their issue price, Carvana Co.’s 8 7/8% senior notes due 2023 (Caa2/CCC+) were down slightly in light trading.

Enova International, Inc.’s 8½% senior notes due 2025 (B3/B-) dropped below their issue price in active trading on Monday.

Clearway upsized and tight

The Monday session in the new issue market saw Clearway Energy price an upsized $600 million issue of seven-year senior notes (Ba2/BB) at par to yield 5¾% in a quick-to-market trade.

The issue size increased from $550 million.

The yield printed at the tight end of the 5¾% to 6% yield talk and inside of initial guidance in the 6% area.

RBC, BofA Merrill Lynch, Credit Suisse and Citigroup were the joint bookrunners.

The Princeton, N.J.-based renewable and conventional energy generator, formerly NRG Yield, Inc., plans to use the proceeds to pay off the outstanding Clearway Energy, Inc. 2019 convertible notes, to partially fund the Carlsbad drop down transaction and other growth transactions, and for general corporate purposes.

The 5¾% notes were active after breaking for trade and making gains. They were seen trading between par 3/8 to par ¾ with more than $23 million bonds changing hands.

Refinitiv downsizes bonds

Refinitiv rejiggered its acquisition financing, shifting $1.25 billion of proceeds to its term loans from its four-part bond offer on Monday.

The loans are upsized to $9.25 billion equivalent from $8 billion equivalent, while the bonds are downsized to $4.25 billion equivalent from $5.5 billion equivalent.

Meanwhile, pricing tightened on three of the four bond tranches.

A downsized $1.25 billion tranche of 7.5-year first lien notes (B2/B/BB+) is talked in the 6½% area, versus initial guidance in the low 7% area. The tranche is downsized from $2 billion.

A $1 billion equivalent tranche of 7.5-year euro-denominated first-lien notes (B2/B/BB+) is talked in the 4¾% area, versus initial guidance in the 5% area.

In a pair of unsecured tranches, a downsized $1,575,000,000 tranche of eight-year senior notes (Caa2/B-/B+) is talked to yield in the 8½% area. The tranche is downsized from $1.8 billion. Initial guidance was in the low 9% area.

Meanwhile, pricing widened on a downsized $425 million equivalent tranche of euro-denominated eight-year senior notes (Caa2/B-/B+) to the 7¼% area from initial guidance in the 7% area. The euro-denominated senior notes tranche was downsized from $700 million.

The bonds and loans are expected to be priced and allocated on Tuesday.

JPMorgan is the global coordinator and physical bookrunner for the bond deal backing the acquisition of a 55% stake in Thomson Reuters Financial & Risk by Blackstone, Canada Pension Plan Investment Board and GIC, and for general corporate purposes.

International Game roadshow

International Game Technology started a two-day roadshow on Monday for a $500 million offering of seven-year bullet notes (Ba2/BB+).

BofA Merrill Lynch is managing the lead.

The London-based provider of gaming technology and equipment plans to use the proceeds, together with a draw on its senior syndicated revolving credit facilities, to redeem its $600 million 5 5/8% senior secured notes due 2020 on Sept. 27 at 102.843.

Italmatch roadshows FRN

Italmatch Chemicals began a roadshow Monday for a €410 million offering of six-year senior secured floating-rate notes.

Joint global coordinator and joint bookrunner Goldman Sachs will bill and deliver. BNP Paribas is also a joint global coordinator and joint bookrunner. Citigroup and Credit Agricole are joint bookrunners.

The issuing entity will be special purpose vehicle Fire (BC) SpA.

Proceeds will be used to help fund the acquisition of Italmatch, a Genova, Italy-based specialty chemical additive manufacturer, by Bain Capital from Ardian.

Fortress active

Fortress’ 6½% senior notes due 2025 were the most actively traded of Friday’s deals with the notes gaining strength during Monday’s session.

The notes were seen up about 3/8 point to trade at 99¼, according to a market source. More than $19 million of the bonds were in play during Monday’s session.

Fortress priced $300 million of the 6½% notes at 98.5 to yield 6.771% on Friday.

The yield came in line with discount talk set in the 6¾% area. The reoffer price came on top of the 1.5 points of discount talk.

Initial price talk was for a yield in the 6½% area.

The deal was heard to have played to a $400 million order book, a market source said.

Schweitzer-Mauduit improves

Schweitzer-Mauduit’s 6 7/8% senior notes due 2026 improved on Monday although trading of the notes was light.

The 6 7/8% notes were seen changing hands between par 3/8 and 101¼, a market source said.

The notes were trading in the par to par ¾ range after breaking for trade on Friday.

However, trading of the notes was light on Monday with about $8 million of the bonds in play by the late afternoon.

Schweitzer-Mauduit priced $350 million of the 6 7/8% notes at 99.241 to yield 7% on Friday.

The yield printed in the middle of yield talk that was announced in the 7% area. Official talk came wide of initial talk for a yield of 6½% to 6¾%.

Carvana weakens

After trading up right out of the gate, Carvana’s 8 7/8% senior notes due 2025 came in slightly during Monday’s session.

The notes were seen trading between 101¾ and 102 1/8 on Monday. The notes were trading between 102 and 102¼ on Friday.

While the notes dominated the secondary space on Friday with more than $55 million of the bonds in play after breaking for trading, only $12 million of the bonds were on the tape by late afternoon Monday.

Carvana priced an upsized $350 million issue of the 8 7/8% notes on Friday.

The yield printed at the tight end of yield talk that was set in the 9% area. Initial price talk was in the low 9% area.

The deal was increased from $300 million. It was heard to be three-times oversubscribed, a source said.

Enova below par

Enova’s 8½% senior notes due 2025 dropped below par in active trading on Monday. The notes were seen trading as low as 99 3/8 with most trades around 99¾, a market source said.

About $15 million of the bonds were on the tape by the late afternoon.

While the notes are a single B credit with hefty coupon, their poor performance was attributed to the company’s sector.

The consumer financial sector is not favored by investors due to the lack of tangible assets, a market source said.

Enova priced a $375 million issue of the 8½% notes at par on Friday.

The yield printed at the tight end of yield talk set in the 8 5/8% area. Official talk came wide of initial guidance in the low to mid 8% area, a trader said.

Friday inflows

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

High-yield ETFs saw $201 million of inflows on the day.

Actively managed funds saw $105 million of inflows on Friday.

Year-to-date the cash flows of the dedicated high-yield bond funds are negative-$24.9 billion, the trader said.

The breakdown shows that actively managed funds sustained the brunt of the heavy redemptions seen thus far in 2018, to date: negative-$20.6 billion.

High-yield ETFs are negative-$4.2 billion for 2018 to Friday's close.

Indexes mixed

Three benchmarks for the high-yield secondary market launched the week mixed with one flat, one posting gains and one seeing losses.

The KDP High Yield Daily index was flat on Monday, closing the day at 70.36. However, the yield dropped 1 basis point to 5.84%. The index closed Friday at 70.36 with the yield 5.85%.

The index posted a 6 bps gain on the week last week.

The Merrill Lynch High Yield index continued its upward momentum on Monday. The index was up 4.2 bps on Monday with the year-to-date return now 2.315%.

The index crossed the 2% year-to-date threshold last week and was up 48.2 bps on the week.

The CDX High Yield 30 index dropped 14 bps to close Monday at 107.25. The drop was the index’s first after a solid week of consecutive gains last week that saw the index climb 55 bps.

© 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.