Primary quiet, though SunCoke, First Cash, Delek hit the road; new Cheniere notes continue climb

By Paul Deckelman and Paul A. Harris

New York, May 16 – Tuesday’s high-yield primary market was seen as quiet – though busy behind the scenes.

Although no new U.S. dollar-denominated and fully junk-rated issues from domestic or industrialized-country borrowers priced during the session – versus the $1.5 billion of such paper that got done in one deal on Monday – primaryside sources heard that a trio of prospective new issuers had begun roadshows to shop their planned deals around to interested investors.

The new name on the forward calendar was that of SunCoke Energy Partners LP, a manufacturer of coke used in the production of steel and the generation of electric power. It expects to price $675 million of eight-year notes later on in the week.

Also heard to be on the road were two deals that emerged during Monday’s session, for pawn shop operator FirstCash, Inc. and for energy credit Delek Partners LP. Pricing is expected on both later this week.

Among the deals that have already priced, the new Cheniere Corpus Christi Holdings LLC issue, which came to market on Monday, remained the standout performer in the secondary arena, easily dominating the Most Actives list and continuing to firm.

Away from the new issues, the bonds of car-rentals giant Hertz Global Holdings Inc. made up for some of the ground it lost during Monday’s session.

But Rite Aid Corp. paper was in retreat, amid news reports for further federal scrutiny of the drugstore chain operator’s pending merger with industry leader Walgreens.

Statistical market performance measures turned mixed on Tuesday, after having firmed for two straight sessions before that.

SunCoke Energy starts roadshow

Although no dollar-denominated deals priced on Tuesday the active calendar grew.

SunCoke Energy Partners, LP began a roadshow for a $675 million offering of eight-year senior notes (BB-).

The deal, which is in the market with initial guidance in the high 6% to low 7% range, is expected to price later this week.

BofA Merrill Lynch, ABN Amro, Citigroup, Goldman Sachs, JP Morgan and TD are managing the debt refinancing deal.

FirstCash seven-year deal

FirstCash, Inc. started a roadshow for a $300 million offering of seven-year senior notes.

Initial guidance is 5¼%, according to an investor.

The notes, in the market via lead left bookrunner Credit Suisse, are expected to price late this week.

The pawnshop operator, which is headquartered in Arlington, Texas, plans to use the proceeds to refinance $200 million of its senior notes and for general corporate purposes including share repurchases.

Delek pricing this week

Delek Partners LP began a roadshow for a $250 million offering of eight-year senior notes.

The debt refinancing deal is expected to price later in the present week.

BofA Merrill Lynch, Fifth Third, RBC and BBVA are managing the offer.

Rallye upsizes

In the European market Rallye SA priced an upsized €350 million issue of senior notes due Jan. 23, 2023 at par to yield 4 3/8%.

The issue size was increased from €300 million.

When final terms were inked, the deal played to €2.6 billion of orders, according to a company press release.

Joint bookrunner NatWest Markets will bill and deliver.

The Paris-based distributor of food and sporting goods products plans to use the proceeds to refinance its bonds due in October 2018.

Iron Mountain starts Wednesday

Boston-based Iron Mountain Inc. plans to start a roadshow on Wednesday in London City for a €300 million offering of senior notes due January 2025 (existing ratings Ba3/BB-).

Joint global coordinator Barclays will bill and deliver. Credit Agricole is also a joint global coordinator.

Proceeds from the long seven-year notes will be used to repay bank debt and for general corporate purposes.

Premier Foods FRN

In the sterling-denominated market Premier Foods plc plans to sell £210 million of five-year senior secured floating-rate notes.

BNP Paribas will bill and deliver, as part of a syndicate of banks that also includes HSBC and Lloyds.

The St. Albans, Hertfordshire, U.K.-based food manufacturer plans to use the proceeds to repay £175 million of its senior secured floating-rate notes due March 2020 and to pay down its revolving credit facility.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, the most recent session for which data was available at press time, according to an investor.

High-yield ETFs saw $171 million of inflows on the day.

However actively managed funds sustained $70 million of outflows on Monday.

The flows of the dedicated bank loan funds were flat to slightly positive at plus-$15 million.

New Cheniere notes move up

In the secondary market, the new Cheniere Corpus Christi Holdings 5 1/8% senior secured notes due 2027 were easily the most active credit of the session, with a market source estimating volume of more than $115 million – several times that of the next nearest junk bond.

“They had another big day on Tuesday,” a trader said, with the day’s action coming on top of the more than $31 million that traded around on Monday after CCH – a subsidiary of Houston-based liquefied natural gas company Cheniere Energy, Inc. – had priced its quickly shopped $1.5 billion issue at par, upsizing it along the way from an originally announced $1 billion.

He said the bonds “kind of hung in there” a little above Monday’s close, quoting them around 101 1/8 bid, calling that a gain of 1/8 to ¼ point.

A second trader pegged the bonds up around 5/32 point, locating them at 101 5/32 bid.

Among other recently priced junk issues, a trader quoted CDK Global Inc.’s 4 7/8% notes due 2027 at 101 bid, up ½ point on the day, with over $11 million having changed hands.

The Hoffman Estates, Ill.-based global provider of integrated information technology and digital marketing solutions to the automotive retail and related industries, priced $600 million of those notes at par in a regularly scheduled forward calendar offering upsized from an initially announced $500 million.

Hertz heads higher

Away from recently priced names, Hertz’s recently struggling bonds were seen on the rebound Tuesday.

“The rentals were kind of busy,” said a trader, who quoted the Estero, Fla.-based car-rental giant’s 7 3/8% notes due 2021 up ¾ point on the day, at 90¼ bid, on “pretty good volume” of more than $24 million.

Its 5½% notes due 2024 did even better, jumping by 1 3/8 points on the day to finish at just under 80 bid, with over $17 million traded.

Hertz’s bonds, and those of rival Avis Budget Group Inc., have recently been under pressure from a combination of continued investor reaction to poor numbers recently posted by Hertz, overall slim profit margins in the industry, and the rise of competitors such as Uber and GM’s new ride-sharing service.

Rite Aid in retreat

Elsewhere, Rite Aid’s 6 1/8% notes due 2023 lost ¾ point, to 98 5/8 bid, with over $11 million traded, as news reports indicated increased critical federal antitrust scrutiny of the Camp Hill, Pa.-based drugstore chain operator’s planned merger with industry leader Walgreens.

Indicators stay strong

Statistical market performance measures turned mixed on Tuesday, after having firmed for two straight sessions before that.

The KDP High Yield Daily index was up by 9 basis points on Tuesday to close at 72.44, after having gained 8 bps in Monday’s trading and been unchanged on Friday. It had firmed for three consecutive sessions before that as well.

Its yield tightened for a fifth straight session, coming in by 3 bps on Tuesday to end at 5.06%, after narrowing by 2 bps on Monday.

But the Markit CDX Series 28 index was marginally lower on Tuesday at 107 11/16 bid, 107 23/32 offered, after having gained 1/8 point on Monday and been unchanged on Friday.

The Merrill Lynch North American High Yield index, though, posted its seventh consecutive advance on Tuesday, improving by 0.081%, on top of Monday’s 0.169% upturn.

Those seven straight gains followed two successive losses and before that, a streak of 11 gains in a row.

Tuesday’s advance raised the index’s year-to-date return to 4.311% from Monday’s 4.226% close, establishing a fourth straight new high point for the year.

© 2015 Prospect News.
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