O-I Glass, Owens-Brockway on deck; Iron Mountain improves; high-yield funds lose $1.2 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 11 – The dollar-denominated primary put up a goose egg on Thursday.

However, O-I Glass, Inc. planned to price dollar-denominated and euro-denominated senior green notes on Friday morning.

Owens-Brockway Glass Container Inc. talked a $500 million tranche of eight-year notes (B2/B+) in the 7 3/8% area, inside of earlier guidance in the mid-to-high 7% area.

Official talk on the concurrent OI European Group BV €500 million tranche of five-year notes (Ba3/BB-) remained pending heading into the Thursday New York close. Initial guidance in the mid-to-high 6% area was announced earlier in the day.

Both issuers are indirect wholly owned subsidiaries of O-I Glass. However, the OI European Group euro-denominated notes come with guarantees that render them superior in credit quality to the Owens-Brockway dollar notes, a trader said. (See related story in this issue.)

Elsewhere, an expected $400 million tranche of first-lien secured notes backing the buyout of MoneyGram International Inc. by Madison Dearborn Partners was discussed in a yield context in the 10½% area on Thursday, according to a sellside source.

The timing of the bond deal and structural details had not yet been circulated heading into the close, the source said.

Goldman Sachs will lead.

MoneyGram’s $500 million first-lien term loan B (B2/B/B+), also backing the buyout, launched Thursday.

The euro-denominated high-yield primary market has been busy all week and remained active on Thursday.

Eramet SA priced a €500 million issue of five-year sustainability-linked senior bullet notes (Ba2//BB+) at 99.489 to yield 7 1/8%, tight to talk.

The deal, which was announced at a size of €400 million minimum, at one point was heard to be playing to €850 million of demand.

Secondary space soft

It was a soft day in the secondary space, although the market continued to hold up well as it eyed the specter of a government default.

The cash bond market was unchanged to off about 1/8 point with trading muted as market players eyed debt ceiling negotiations that appeared to be gridlocked.

While the broader market was quiet, new issues and topical news continued to drive activity in the space.

Iron Mountain Inc.’s new 7% senior notes due 2029 (Ba3/BB-) saw heavy volume with the notes slightly improved after a weak break.

Calderys Financing, LLC’s new 11¼% senior secured notes due 2028 (B2/B) came in from the heights reached after breaking for trade; however, they maintained a strong premium.

Icahn Enterprises LP’s senior notes (Ba3/BB) remained for sale with Hindenburg Research announcing it had taken a short position in the company’s bonds.

Home Point Capital Inc.’s 5% senior notes due 2026 (Caa1/) were active with the notes holding on to the strong gains made since Mr. Cooper Group announced its acquisition of the company.

Meanwhile, high-yield mutual funds and exchange-traded funds saw heavy outflows with $1.2 billion leaving the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Iron Mountain improves

Iron Mountain’s new 7% senior notes due 2029 improved in heavy volume on Thursday after a weak break.

The notes added about ¼ point to close the day in the par to par ¼ context, a source said.

There was $120 million in reported volume.

The notes saw a weak break and were marked at 99 5/8 bid, par offered shortly after freeing for trade.

They closed Wednesday wrapped around par.

Iron Mountain priced a $1 billion issue of the 7% notes at par in a Wednesday drive-by.

The yield printed at the wide end of the 6 7/8% to 7% yield talk.

Calderys in from heights

Calderys’ new 11¼% senior secured notes due 2028 came in from the heights reached after breaking for trade on Wednesday.

However, the notes held on to a strong premium.

The 11¼% notes were about ½ point softer on Thursday.

They were trading in the 101¾ to 102¼ context heading into the market close, a source said.

There was $27 million in reported volume.

The notes shot up to 102 bid, 103 offered after breaking for trade on Wednesday and closed the day at 102¾.

The chunky offering and investor-friendly covenant changes helped drive demand for the notes.

Calderys priced a $550 million issue of the 11¼% notes at par on Wednesday.

The yield printed at the tight end of price talk in the 11 3/8% area.

Icahn for sale

Icahn’s senior notes remained for sale on Thursday with the notes falling another 2 to 5 points in heavy volume.

Icahn’s 5¼% senior notes due 2027 sank 5 points to close the day at 79½ with the yield now 11 7/8%.

There was $31 million in reported volume.

The notes have now fallen about 15 points since Hindenburg Research released their report on the company.

The 6 3/8% senior notes due 2025 fell another 3 points to close the day at 88 with the yield also 11 7/8%.

There was $30 million in reported volume.

The notes have now fallen 10 points since the Hindenburg Report.

The 4 3/8% senior notes due 2029 fell another 3 points to close the day at 74½ with the yield now 10 3/8%.

There was $34 million in reported volume.

The notes are now down 14 points since early May.

The 6¼% senior notes due 2026 fell 3 points to close the day at 86 with the yield also 11 7/8%.

There was $42 million in reported volume.

Icahn’s capital structure has taken a hit since short-seller Hindenburg Research released a report accusing the company of operating a ponzi-esque scheme with the value of its highly leveraged assets inflated.

After an initial round of selling following the release of the report on May 2, the notes again saw heavy selling on Wednesday after Icahn Enterprises disclosed a federal probe as a result of the report.

Hindenburg Research announced on Thursday that it was taking a short position in the company’s bonds.

Home Point active

Home Point’s 5% senior notes due 2026 saw heavy volume on Thursday with the notes holding on to the strong gains made since Mr. Cooper announced its acquisition of the company.

The 5% notes continued to trade in the 90 to 91 context.

They closed the day at 90½ with the yield about 9 1/8%.

There was $38 million in reported volume.

The notes were trading in the 84 to 85 context heading into Wednesday’s session.

The mortgage originator’s notes soared following news Mr. Cooper would acquire it for $324 million in cash.

The 5% notes will remain outstanding with Mr. Cooper assuming responsibility for them.

While the notes were not trading up to a takeout price, the acquisition will improve the notes’ credit profile with further spread compression in store, a source said.

Moody’s Investors Service has earmarked the notes for an upgrade.

Indexes

The KDP High Yield Daily index fell 4 points to close Thursday at 50.68 with the yield 7.3%.

The index added 12 points on Wednesday after falling 9 points on Tuesday and 10 points on Monday.

The ICE BofAML US High Yield index was off 0.2 bps with the year-to-date return now 4.361%.

The index gained 30.9 bps on Wednesday after falling 13.4 bps on Tuesday and 7.9 bps on Monday.

The CDX High Yield 30 index fell 22 bps to close Thursday at 100.12.

The index added 36 bps on Wednesday after falling 23 bps on Tuesday and 9 bps on Monday.

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