Silgan, MSCI, Community Health add-on price; Newell drops on downgrade; oil patch improves

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 4 – The high-yield drive-by window was open on Monday with three deals pricing in what promises to be an active week of new issuance.

CHS/Community Health Systems Inc. priced a $500 million add-on to its 8% senior secured notes due March 15, 2026.

Silgan Holdings, Inc. priced an upsized $400 million issue of 8.2-year senior notes (Ba3/BB-). And MSCI Inc. priced a $500 million offering of 10-year senior notes.

The calendar remains active with Wesco PattonAir marketing a revised $2.18 billion acquisition/merger financing deal with widened guidance.

Ardagh started a roadshow for a $2.22 billion offering, and Maxar Technologies Inc. is planning a roadshow for a $1.25 billion offering.

Meanwhile, the secondary space was firm on Monday with equity markets reaching new heights on optimism surrounding a trade deal and crude oil futures on the rise.

Several names in the oil patch were on the rise in active trading with Antero Resources Corp.’s capital structure continuing to rebound after hitting all-time lows last week.

Newell Brands Inc. dominated activity in the secondary space after S&P downgraded the consumer product company to junk.

TransDigm Inc.’s recently priced 5½% notes due 2027 (B3/B-) remained active in secondary trading with the notes solidifying at par after dipping below in earlier trading.

A big Monday

The primary market generated a good deal of news on Monday.

In drive-by action, CHS/Community Health Systems priced a $500 million add-on to its 8% senior secured notes due March 15, 2026 at par.

Silgan Holdings priced an upsized $400 million issue of 8.2-year senior notes (Ba3/BB-) at par to yield 4 1/8% in a Monday drive-by.

The issue size increased from $300 million. The yield printed at the tight end of yield talk in the 4¼% area.

Meanwhile, MSCI was also in the market with a $500 million drive-by offering of senior notes (Ba2/BB+).

The 10-year non-call-five deal was talked to yield 4% to 4 1/8%, deep inside of the 4½% to 4¾% initial guidance, and was heard to be playing to an order book that was multiple times oversubscribed.

Final terms were unavailable at press time.

The calendar

In a deal marketed by means of a late October roadshow, Wesco PattonAir came forward with an upsize, major revisions and wider guidance to its acquisition/merger financing, on Monday.

The bond deal, now with an overall $2,175,000,000 size, includes an upsized $1.6 billion amount of senior secured notes (B3/B) coming in two tranches with minimum sizes of $500 million apiece. Proceeds from a proposed $600 million term loan were shifted to the secured notes tranches, and the loan was withdrawn from the market.

The size and structure of the $575 million tranche of eight-year non-call-three senior unsecured notes (Caa2/CCC+) remains unchanged.

Meanwhile, Ardagh started an international roadshow on Monday in Los Angles for a $2,215,000,000 equivalent offering of ARD Finance SA senior secured toggle notes due June 30, 2027 (expected ratings Caa2/B-) in dollar- and euro-denominated tranches, according to market sources.

Initial guidance has the dollar-denominated notes coming to yield in the 7% area, a New York-based trader said.

And Maxar Technologies plans to run a full roadshow for a $1.25 billion offer of four-year senior secured notes.

Newell Brands drops

Newell Brands senior notes dominated activity in the secondary space with the capital structure selling off after S&P downgraded the company to junk.

The commercial product manufacturer’s 4.2% senior notes due 2026 were the most active in the structure with the notes dropping 2 points to 102½, according to a market source.

The notes saw more than $236 million in reported volume by the late afternoon.

Newell’s 5 3/8% notes due 2036 traded off 4 points to 102 5/8 with more than $115 million in reported volume.

The 3.85% notes due 2023 dropped 1 point to 102½ with $40 million in reported volume by the late afternoon.

The 5½% notes due 2046 saw the most dramatic drop with the notes down more than 7 points to par 3/8.

S&P downgraded Newell’s senior unsecured notes to BB+ from BBB- following news the company would retain its Mapa Spontex and Quickie businesses. (See related article in this issue).

Investment grade desks were most likely dumping the notes following the downgrade, a market source said.

The oil patch

The oil patch started the week off on strong footing with several names on the rise alongside crude oil futures.

California Resources Corp.’s 8% senior notes due 2022 gained 2½ points to close the day at 44. The notes continued their upward momentum since a surprise third-quarter earnings beat last week propelled the notes up 12 points.

Antero Resources Corp.’s capital structure also continued to rebound after selling off in the run up to its third quarter earnings report last week.

Antero’s 5 1/8% senior notes due 2022 rose 2 points to 82½. The 5 5/8% notes due 2023 were up 2½ points to 76½, according to a market source.

The bonds have been on the rise since a surprise third quarter earnings beat late last week, sources said.

The energy company’s bonds hit all-time lows in the run up to the report as investors expressed concern about the energy company’s ability to repay its debt.

TransDigm at par

TransDigm’s recently priced 5½% senior notes due 2027 solidified at par on Monday after lagging its issue price in initial trading.

The notes remained active with $21 million in reported volume by the late afternoon, which is to be expected given the $2.65 billion size of the issue, a market source said.

The notes, which priced at par on Oct. 28, traded as low as 99¾ and were wrapped around 99 7/8 during their initial days in the market.

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 market source.

High-yield ETFs saw $238 million of inflows on the day.

Actively managed high-yield funds saw $5 million of inflows on Friday, the source said.

Indexes gain

Indexes started the week on strong footing.

The KDP High Yield Daily index rose 14 basis points to close Monday at 71.31 with the yield 5.44%.

The ICE BofAML US High Yield index was up 5.8 bps to 12.181%.

The CDX High Yield 30 index was up 37 bps to close Monday at 107.8.

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