United Rentals, Brookfield, Moss Creek price; Adient, Mattel improve; Western Digital sinks

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 26 – The domestic primary high-yield market rounded out an active week with an active session.

Brookfield Property REIT Inc. priced an upsized $1 billion issue of seven-year senior secured notes (Ba3/BB+) at par to yield 5¾%.

United Rentals (North America), Inc. priced a $750 million issue of senior notes due Jan. 15, 2030 (Ba3/BB-) at par to yield 5¼%.

Moss Creek Resources Holdings, Inc. priced a $500 million issue of eight-year senior notes (B3/B+) at par to yield 10½%.

And Xplornet Communications, Inc. priced an upsized $75 million add-on to its 9 5/8%/10 5/8% senior PIK notes due June 1, 2022 (expected ratings Caa2/CCC) at 99.06.

While Truck Hero, Inc. was scheduled to close the books on its $335 million offering of five-year first-lien senior secured notes (B2) on Friday, terms were not available as of press time.

The European primary market also saw some action on Friday with William Hill plc pricing a £350 million issue of seven-year senior notes (Ba1/BB) at par to yield 4¾%.

Meanwhile, new paper remained in focus and continued to put in strong performances in the secondary space.

United Rentals’ new paper was active and making gains after freeing for trade.

Adient US LLC’s new 7% senior notes due 2026 continued to improve in high-volume activity.

Outside of the new paper, Western Digital Corp.’s split-rated 4¾% senior notes due 2026 were trading down in high-volume activity after an analyst downgrade of the company’s equity in the run-up to its earnings report.

Mattel Inc.’s 6¾% senior notes due 2025 saw nominal gains after a first-quarter earnings beat.

Brookfield upsizes

Brookfield Property REIT priced an upsized $1 billion issue of seven-year senior secured notes (Ba3/BB+) at par to yield 5¾% on Friday, according to market sources.

The issue size increased from $750 million.

The yield printed in the middle of yield talk, as well as initial guidance, in the 5¾% area.

Morgan Stanley & Co. LLC, Barclays, BofA Merrill Lynch, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., RBC Capital Markets LLC, TD Securities (USA) LLC and Wells Fargo Securities LLC are the joint bookrunners.

The Chicago-based real estate company plans to use proceeds to pay down its revolving credit facility and term loan A-1.

Brookfield Property REIT owns, operates and develops office, retail, multifamily, industrial, hospitality, triple net lease, self-storage, student housing and manufactured housing assets.

United Rentals drive-by

United Rentals priced a $750 million issue of senior notes due Jan. 15, 2030 (Ba3/BB-) at par to yield 5¼% in a quick-to-market Friday trade, according to a syndicate source.

The yield printed at the tight end of yield talk in the 5 3/8% area.

Morgan Stanley & Co., BofA Merrill Lynch, Wells Fargo Securities LLC, Citigroup Global Markets Inc., Scotia Capital, MUFG, Barclays, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

The Stamford, Conn.-based equipment rental company plans to use the proceeds to refinance its 5¾% senior notes due 2024 and to repay debt under its ABL facility.

Moss Creek at the wide end

Moss Creek Resources priced a $500 million issue of eight-year senior notes (B3/B+) at par to yield 10½% on Friday, according to market sources.

The yield came at the wide end of the 10¼% to 10½% yield talk, and well wide of initial guidance in the 10% area, according to sources.

BofA Merrill Lynch was the left bookrunner. BMO Securities, Capital One Securities Inc., Citigroup Global Markets Inc. and Wells Fargo Securities LLC were the joint bookrunners.

Moss Creek Resources Holdings is a wholly owned subsidiary of Surge Energy US Holdings Co., which is the issuing entity for the notes.

The Houston-based independent oil and gas exploration, production and acquisition company plans to use the proceeds to repay debt under its revolving credit facility and for general corporate purposes.

Xplornet upsizes PIK notes tap

Xplornet Communications priced an upsized $75 million add-on to its 9 5/8%/10 5/8% senior PIK notes due June 1, 2022 (expected ratings Caa2/CCC) at 99.06 in a quick-to-market Friday trade, according to a syndicate source.

The issue size increased from $30 million.

The reoffer price came on top of price talk.

SunTrust Robinson Humphrey Inc. was the left bookrunner. BMO Securities and Jefferies LLC were the joint bookrunners.

Proceeds will be used to fund the acquisition of certain spectrum licenses.

The prospective issuer is Canada's largest rural-focused broadband internet provider.

Truck Hero carries over

One deal was pending at Friday's close.

Truck Hero was scheduled to close the books on its $335 million offering of five-year first-lien senior secured notes (B2) at noon ET on Friday and some sources were looking for final terms ahead of the weekend.

However, no terms were available Friday evening.

The deal was talked to yield 8½% on Friday morning, wide to initial guidance of 8% to 8 3/8%.

There were structural changes. The tenor of the notes decreased to five years from seven years. Call protection decreased to two years from three years.

There were also covenant changes.

William Hill prices £350 million

In the European session, William Hill priced a £350 million issue of seven-year senior notes (Ba1/BB) at par to yield 4¾% on Friday, according to a market source.

The yield printed on top of yield talk, and tight to the 4¾% to 5% initial talk.

Active bookrunner Barclays will bill and deliver. Lloyds and NatWest are also active bookrunners.

The London-based bookmaking operation plans to use the proceeds to partially refinance £375 million of its 4¼% notes due 2020 and for general corporate purposes.

United Rentals trades up

United Rentals’ 5¼% senior notes due 2030 were strong out of the gate, a market source said. The notes traded up 5/8 point soon after breaking for trade.

There were $43 million of the bonds on the tape shortly before the market close.

Adient improves

Adient’s new 7% senior notes due 2026 continued to improve in high-volume activity on Friday.

The notes were quoted at 102¼ bid, 102 5/8 offered early in the session and were changing hands at 102 5/8 in the late afternoon, sources said.

The notes closed Thursday around 102 3/8 after skyrocketing out of the gate.

Adient priced an upsized $800 million issue of the 7% notes at par on Thursday.

The issue size was increased from $750 million.

The yield printed tight to yield talk in the 7 1/8% area and inside of initial guidance in the low-to-mid 7% area.

Western Digital trades down

Western Digital’s 4¾% senior notes due 2026 continued to see active trading in the run-up to the computer hard disk and data storage company’s earnings report.

The 4¾% notes were losing ground after an analyst downgrade of the company’s equity on Friday.

The notes traded down 1 point and stood poised to close the day at 97 3/8, a market source said.

More than $23 million of the bonds were on the tape by the late afternoon.

A Baird analyst downgraded Western Digital’s equity to “underperform” from “outperform” on Friday.

The notes have been active for the past two weeks in the run-up to the company’s third-quarter earnings report, which is expected on Monday.

Mattel’s earnings

Mattel’s 6¾% senior notes due 2025 saw nominal improvement following an earnings beat on Friday.

The 6¾% notes rose 3/8 point to par 3/8, according to a market source.

More than $18 million of the bonds were on the tape by the late afternoon.

Mattel’s first-quarter earnings beat expectations with revenue of $689.2 million versus analyst expectations of $648 million, a market source said.

Indexes

Indexes were mixed on Friday.

The KDP High Yield Daily index fell 9 basis points to close Friday at 70.41 with the yield now 5.77%.

The index was down 14 bps on Thursday, was up 4 bps on Wednesday, was flat on Tuesday and slid 2 bps on Monday.

The index saw a cumulative loss of 21 bps on the week.

The ICE BofAML US High Yield index gained 4.1 bps with the year-to-date return now 8.751%.

The index slid 7.5 bps on Thursday, gained 10.6 bps on Wednesday and 13.2 bps on Tuesday after slipping 0.6 bps on Monday.

The index saw a cumulative gain of 19.8 bps on the week.

The index shot past 8% year-to-date returns on April 8 after only recently surpassing the 7% threshold on March 26 and passing 6% year-to-date returns on March 11.

The CDX High Yield 30 index gained 34 bps to close Friday at 107.69.

The index was down 10 bps on Thursday, 25 bps on Wednesday, gained 18 bps on Tuesday, and dropped 12 bps on Monday for a cumulative gain of 5 bps on the week.

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