Golden Entertainment prices; Staples upsizes offering, closes books; Ensign Drilling drops; CEC surges

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 8 – The European and domestic high-yield primary markets were active on Monday with each seeing one deal price and the forward calendar growing.

Golden Entertainment Inc. priced a $375 million issue of seven-year senior notes (Caa1/CCC+) at par to yield 7 5/8%.

Mineral Resources Ltd. will market a $750 million offering of eight-year senior notes (S&P: B+) on an investor roadshow with pricing expected during the April 15 week.

The highly anticipated offering from Staples, Inc. upsized and underwent changes prior to books closing on Monday with allocation expected on Tuesday.

In the European market, Ineos Finance plc priced a €770 million issue of seven-year senior secured notes (Ba1/BB+/BBB-) at par to yield 2 7/8% in a Monday drive-by.

Italmatch Chemicals SpA started a roadshow for a €200 million add-on to its floating rate notes due Sept. 30, 2024 (expected ratings B3/B).

Meanwhile, the secondary space launched the week with light trading volume, sources said.

Ensign Drilling Inc.’s 9¼% senior notes due 2024 (B2/BB-) dropped in high-volume activity on Monday with the notes lagging their issue price, despite a strong day for crude oil futures.

Forestar Group Inc.’s 8% senior notes due 2024, in contrast, remained well above their issue price with the notes continuing to make gains.

Several names in the energy sector were posting gains as crude oil futures shot up another 2% on Monday.

While volume was light, California Resources Corp.’s 8% senior notes due 2022, Whiting Petroleum Corp.’s 6 5/8% senior notes due 2026 and Extraction Oil & Gas Inc.’s 5 5/8% senior notes due 2026 rose 1 to 2 points during Monday’s session.

CEC Entertainment Inc.’s 8% senior notes due 2022 surged in active trading on Monday on news the company will again go public.

Golden Entertainment oversubscribed

The April 8 week got underway with a steady news flow in the high-yield new issue market.

Golden Entertainment priced a $375 million issue of seven-year senior notes (Caa1/CCC+) at par to yield 7 5/8%.

The yield printed at the tight end of yield talk in the 7¾% area and well inside of initial talk in the 8% area.

The order book was heard to be at two-times deal-size on Monday morning, a trader said.

J.P. Morgan, Credit Suisse, Macquarie, Capital One, Citizens Bank and Fifth Third Bank were the joint bookrunners for the debt refinancing deal.

Staples upsizes, rejiggers bonds

Staples announced changes to an upsized $3.025 billion offering of high-yield notes, in addition to setting official price talk.

An upsized $2.025 billion tranche of seven-year senior secured notes (B1/B+) is talked to yield 7¼% to 7½%, inside of initial guidance in the 7½% to 7¾% area.

A downsized $1 billion tranche of eight-year senior unsecured notes (B3/B-) is talked to yield in the 10¾% area, wide of initial guidance in the high 9% to low 10% area.

Books closed Monday, and the deal, via left lead Goldman Sachs, is set to allocate on Tuesday.

The secured notes tranche is upsized to $2.025 billion from $750 million.

That upsize represents the shift of $375 million of proceeds to the secured notes from the unsecured notes, as well as the shift of $900 million of proceeds to the secured notes from the concurrent bank loan, decreasing the loan size to $2.3 billion from $3.2 billion.

Along with the changes in tranche sizes there were also changes to the offering documents.

The Framingham, Mass.-based business supplies distributor plans to use the proceeds to repay bank debt and fund a dividend to shareholders.

Mineral Resources brings $750 million

Australia's Mineral Resources will market a $750 million offering of eight-year senior notes (S&P: B+) on an investor roadshow.

The notes come with early guidance in the 7¾% to 8% area.

The offer, which is being managed by JP Morgan, is expected to price during the April 15 week.

The Perth-based mining services provider plans to use the proceeds to repay bank debt and for general corporate purposes.

Idneos drives by

Ineos Finance priced a €770 million issue of seven-year senior secured notes (Ba1/BB+/BBB-) at par to yield 2 7/8% in a quick-to-market Monday trade.

The yield printed 37.5 basis points inside of the 3¼% initial guidance.

Barclays and JPMorgan were the global coordinators. JPMorgan will bill and deliver.

The London-based manufacturer of petrochemicals and specialty chemicals plans to use the proceeds to refinance €770 million of its senior secured notes due 2023.

Italmatch roadshows tap

Italmatch Chemicals started a roadshow on Monday in the London West End for a €200 million add-on to the Fire (BC) SpA Euribor plus 475 bps senior secured floating-rate notes due Sept. 30, 2024 (expected ratings B3/B).

Price talk is 99, plus or minus 0.25 cents.

Joint global coordinator and joint active bookrunner BNP Paribas will bill and deliver. Goldman Sachs is a joint global coordinator and joint active bookrunner.

Citigroup is a joint global coordinator and joint bookrunner. Credit Agricole CIB is a joint bookrunner.

The Genova, Italy-based specialty chemical additive manufacturer plans to use the proceeds to repay the bridge loan put in place to fund its acquisition of BWA Water Additives.

Ensign Drilling drops

After a decent start in the aftermarket, Ensign Drilling’s 9¼% senior notes due 2024 dropped in high-volume activity on Monday with the notes lagging their issue price.

The 9¼% senior notes were quoted at 99½ bid, par offered early in the session and were seen changing hands at 99¾ in the late afternoon, sources said.

With more than $63 million of the bonds on the tape by the late afternoon, the 9¼% notes were the most actively traded in the secondary space.

The notes were down about 1 point from the heights reached after breaking for trade on Friday.

Ensign priced a $700 million issue of the 9¼% notes at par on Friday.

The yield printed at the wide end of the 9% to 9¼% yield talk.

The notes were heard to have struggled during bookbuilding and underwent covenant changes prior to pricing.

Forestar gains continue

Forestar Group’s 8% senior notes due 2024 continued to put in a strong performance in the secondary space although volume was light.

The notes were quoted at 101 7/8 bid, 102¼ offered early in the session, according to one market source.

They were changing hands between 102 and 102 5/8 in the late afternoon, another source said.

Trading of the small issue was light on Monday with $9 million on the tape by the late afternoon.

The notes continued to see nominal gains after surging out of the gate on Friday.

Forestar priced an upsized $350 million issue of the 8% senior notes at par on Friday.

The yield printed at the wide end of the 7¾% to 8% yield talk and in the middle of initial guidance in the 8% area.

The issue size increased from $300 million.

Energy on the rise

Oil and gas names were on the rise on Monday as crude oil futures shot up another 2% due to speculation about a tightening global supply.

While volume was light, California Resources’ bellwether 8% senior notes due 2022 rose about 1 point.

They were quoted at 82 1/8 bid, 83 1/8 offered and closed the day at 82¾, sources said.

The notes were quoted at 81¼ bid 82¼ offered on Friday.

Whiting Petroleum’s 6 5/8% senior notes due 2026 rose 1½ points to 101½ on Monday.

Extraction Oil & Gas’ 5 5/8% senior notes due 2026 were up 2 points to 81, according to a market source.

Monday was a strong day for the energy sector with crude oil futures again skyrocketing to new five-month highs.

The barrel price of WTI crude oil for May delivery settled at $64.40, an increase of $1.32 or 2.1%, on Monday.

Crude oil futures were rising amid heightened tensions in Libya and speculation the brewing military conflict would limit global oil supplies.

CEC surges

CEC Entertainment’s 8% senior notes due 2022 surged in active trading on Monday on news the restaurant chain would again go public.

The 8% senior notes rose more than 10 points. They were changing hands at 101 5/8 in the late afternoon, according to a market source.

The notes saw more than $14 million in reported volume.

News broke on Monday that CEC Entertainment would combine with Leo Holdings and list on the New York Stock Exchange under the name Chuck E. Cheese Brands.

The valuation for the IPO is $1.4 billion which is 7.5x the estimated EBITDA for 2019, according to a market source.

Friday inflows

The 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, a trader said.

High-yield ETFs saw $126 million of inflows on the day.

Actively managed high-yield funds saw $45 million of inflows on Monday.

While the combined junk funds have reported positive flows in 11 of 2019's 13 weeks, to date, the technicals of the dedicated leveraged loan funds remain conspicuously weak, the trader said.

The loan funds have sustained a whopping $31.8 billion of outflows since the beginning of the fourth quarter of 2018, amounting to 20% of assets under management, the source said.

Indexes gain

Indexes saw gains on Monday after posting cumulative gains on the week last week.

The KDP High Yield Daily index rose 7 bps to close Monday at 70.43 with the yield now 5.77%.

The index saw cumulative gains of 21 bps on the week.

The ICE BofAML US High Yield index shot past 8% year-to-date returns on Monday after only recently surpassing the 7% threshold on March 26 and passing 6% year-to-date returns on March 11.

The index rose 9.8 bps on Monday with the year-to-date return now 8.059%.

The index saw a cumulative gain of 58.1 bps on the week last week.

The CDX High Yield 30 index rose 9 bps to close Monday at 107.10.

The index saw cumulative gains of 36 bps on the week last week.

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