Melco Resorts, Alight Solutions add-on price; MTS Systems, Horizon Pharma on tap; McDermott jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 10 – The domestic high-yield primary market saw an uptick of activity on Wednesday with two deals pricing and two more set to price during Thursday’s session.

Melco Resorts Finance Ltd. priced an upsized $600 million issue of eight-year senior notes (expected Ba2/confirmed BB) at par to yield 5 5/8%.

The new paper was in focus and making gains in the secondary space after breaking for trade.

Alight Solutions also priced a $280 million add-on to the Tempo Acquisition LLC and Tempo Acquisition Finance Corp. 6¾% senior notes due June 1, 2025.

The activity will continue on Thursday.

MTS Systems Corp. is on deck with an upsized $350 million offering of eight-year senior notes (B3/B+).

And Horizon Pharma USA, Inc. is planning to price a $500 million offering of eight-year senior notes (expected ratings B1/B+).

The European primary market also saw some action with Domestic & General planning a roadshow for a £630 million three-part offering.

Meanwhile, the secondary space was strong on Wednesday following Federal Reserve Chairman Jerome Powell’s statements to congress.

Crude oil futures also helped lift the overall space as they reached their highest level in seven weeks.

McDermott International, Inc.’s 10 5/8% senior notes due 2024 jumped in high-volume activity on Wednesday after the company announced it had been awarded a substantial contract.

Several names in the energy space were also posting gains as they rode the wave of rising crude oil futures.

Alight tap prices rich

In Wednesday's primary market, Alight Solutions priced a $280 million add-on to the Tempo Acquisition and Tempo Acquisition Finance Corp. 6¾% senior notes due June 1, 2025 at 101.25.

The acquisition financing deal prints with a 6.258% yield to worst and a 6.487% yield to maturity.

The issue price came at the rich end of price talk in the 101 area.

Barclays was the lead left bookrunner.

Melco upsizes

Elsewhere, Macao-based Melco Resorts priced an upsized $600 million issue of eight-year senior notes (expected Ba2/confirmed BB) at par to yield 5 5/8%.

The issue size increased from $500 million.

The yield printed at the tight end of yield talk in the 5¾% area, which had been revised from earlier official talk in the 5 7/8% area.

Deutsche Bank and ANZ were the bookrunners.

MTS Systems upsizes, talk 6% area

MTS Systems is on deck for Thursday with an upsized $350 million offering of eight-year senior notes (B3/B+), increased from $300 million.

The deal is talked to yield in the 6% area, inside of initial guidance in the 6¼% area.

Wells Fargo is the left bookrunner.

Horizon Pharma refinancing

Elsewhere, Horizon Pharma plans to price a $500 million offering of eight-year senior notes (expected ratings B1/B+) on Thursday.

Initial guidance has the deal coming to yield in the 5 5/8% area.

Citigroup is the lead bookrunner.

The Dublin-based biopharmaceutical company plans to use the proceeds, along with cash on hand, to redeem all of its 6 5/8% senior notes due 2023 and its 8¾% senior notes due 2024.

Domestic & General roadshow

Domestic & General plans to begin a roadshow on Thursday for a £630 million three-part offering.

The deal features £480 million of senior secured notes in two tranches from issuing entity Galaxy Bidco Ltd.: £230 million of seven-year fixed-rate notes and £250 million of seven-year floating-rate notes.

In addition, Galaxy Finco Ltd. is selling £150 million of eight-year senior unsecured notes.

Sole physical bookrunner and global coordinator Barclays will bill and deliver.

Proceeds will be used to fund the acquisition of the Bedworth, England-based home-appliance warranty provider by CVC Fund VII and the Abu Dhabi Investment Authority, and to refinance debt.

Melco in focus

Melco’s 5 5/8% senior notes due 2027 were in focus after breaking for trade with the notes strong out of the gate.

The notes were trading in a range of par ½ to 101 1/8, sources said.

They were changing hands at par ¾ bid, 101 offered heading into the market close.

More than $46 million of the bonds were on the tape by the late afternoon.

McDermott gains

McDermott’s 10 5/8% senior notes due 2024 jumped more than 3 points on Wednesday after news broke that the engineering, procurement, construction and installation company was awarded a $1.5 billion contract.

The 10 5/8% notes traded as high as 96½ before closing the day at 96 1/8, according to a market source.

More than $36 million of the bonds were in play during Wednesday’s session, making it among the most actively traded in the space.

The notes were in focus and trading up on news the company had been awarded yet another contract, a market source said.

News broke on Wednesday that Saudi Aramco had awarded McDermott a $1.5 billion contract for the construction of an offshore gas facility and pipelines.

The oil patch

Several names in the oil patch were on the rise on Wednesday as crude oil futures reached their highest level in seven weeks.

Chesapeake Energy Corp.’s junk bonds were on the rise with the capital structure gaining 1½ to 2 points.

The 8% senior notes due 2027 rose 1½ points to 85 7/8, according to a market source. More than $20 million of the bonds were in play during Wednesday’s session.

The oil and natural gas company’s 8% senior notes due 2025 were up almost 2 points to 89¾.

The 7% senior notes due 2024 were up 1½ points to 87¾.

Ensco Rowan Plc’s 7¾% senior notes due 2026 rose 2¾ points to 77¼.

Crude oil futures reached their highest levels in seven weeks after the release of a report that showed a greater than anticipated decline in U.S. inventories.

The barrel price of WTI crude oil for August delivery rose to trade firmly on a 60 handle, a market source said.

Crude oil futures settled at 60.43, an increase of $2.60 or 4.5%.

Tuesday inflows

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

High-yield ETFs saw $48 million of inflows on the day.

Actively managed high-yield funds saw $50 million of inflows on Tuesday, the source said.

With only the Wednesday daily flows remaining to tally, the combined high-yield funds are tracking $353 million of inflows for the week to Wednesday's close, the investor added.

Indexes mixed

Indexes were mixed on Wednesday with some largely flat and others posting gains.

The KDP High Yield Daily index shaved off 1 basis point to close Wednesday at 71.80 with the yield now 5.43%.

The index dropped 12 bps on Tuesday and was flat on Monday.

The ICE BofAML US High Yield index gained 18.4 bps with the year-to-date return now 10.375%

. The index dropped 14.8 bps on Tuesday and shaved off 1.8 bps on Monday.

The CDX High Yield 30 index rose 22 bps to close Wednesday at 107.66. The index gained 12 bps on Tuesday after falling 38 bps on Monday.

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