RENK, Titan price; Forterra, New Enterprise move up; funds see record $5.55 billion outflow

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 2 – Three deals came from Europe in the high-yield primary market, while the U.S. domestic market tapered off into a dormant end to the week and an early market close before the Independence Day holiday.

RENK AG priced an upsized €320 million issue of five-year senior secured notes (B1/B).

Titan Cement International SA sold a €250 million issue of 2¾% seven-year senior bullet notes (BB).

And London-based Algeco Global Finance plc priced an upsized €175 million issue of 6½% senior secured mirror notes due March 15, 2023 (B2/expected B-/expected B+).

While few expect the domestic primary market to continue at June’s torrid pace, the traditional summer doldrums may not take hold of the market if conditions remain favorable, sources said.

Meanwhile, the slow pace of the secondary space further decelerated on Thursday.

While volume was light, the secondary space closed the truncated holiday week on firm footing, a source said.

Forterra plc’s 6½% senior notes due 2025 (B3/B-) were active and trading with a steep premium.

New Enterprise Stone & Lime Co., Inc.’s 9¾% senior notes due 2028 (Caa1/CCC+) also put in a strong performance in the aftermarket.

Outside of the new paper, Eldorado Resorts, Inc.’s 6¼% senior notes due 2025 (B1/B) and its 8 1/8% senior notes due 2027 (Caa1/CCC+) were trading off their lows as state gaming boards begin the approval process for its acquisition of Caesars Entertainment Corp.

Meanwhile, dedicated junk funds saw their largest outflow year to date and one of the largest outflows on record.

High-yield mutual and exchange-traded funds had $5.55 billion leave the space in the week through Wednesday’s close, according to Refinitiv Lipper US Fund Flows.

The outflow eclipses the previous largest outflow year to date, when $5.126 billion left the space in the week that closed on March 4.

The previous week’s outflow now stands as the fourth largest on record.

European primary active

The dollar-denominated high-yield primary market remained dormant during the foreshortened Thursday session, ahead of the extended Independence Day holiday weekend in the United States.

However, the European market continued to operate.

RENK AG priced an upsized €320 million issue of five-year senior secured notes at par to yield 5¾%, a deal backing Triton's acquisition of Volkswagen's drivetrain business.

Greek building products supplier Titan Cement International SA priced a €250 million issue of 2¾% seven-year senior bullet notes.

Price talk was in the 2 7/8% area.

And London-based Algeco Global Finance plc priced an upsized €175 million issue of 6½% senior secured mirror notes due March 15, 2023 at 94 to yield 9.14%.

The issue size increased from €150 million.

The pipeline

In the United States, market sources around to answer telephone calls were scarce on Thursday.

Will the July dollar-denominated high yield primary maintain the torrid pace of the record-setting month of June 2020: $58.24 billion in 84 tranches...the first time high yield monthly issuance ever cleared the $50 billion mark?

Not likely, said a couple of market watchers who spent a minute on the phone Thursday morning.

The hot market conditions of June were by no means secret, and so some issuers that might otherwise have been inclined to wait pushed forward plans to refinance.

However, while the market remains strong the traditional summer doldrums of the new issue bourse may hold off, if they appear at all, a syndicate banker said.

High-yield issuers will be taking close looks at maturities and may continue to term out bank and bond debt as long as conditions remain favorable, the source added.

Forterra in demand

Forterra’s 6½% senior notes due 2025 were active and trading with a large premium in the secondary space on Thursday.

The notes were changing hands in the 102½ to 103 context heading into the market close, a source said.

More than $28 million of the bonds were on the tape during Thursday’s shortened session.

The demand for the notes seen during bookbuilding followed them into the secondary space.

Forterra priced an upsized $500 million issue of the 6½% notes at par on Wednesday.

The issue size increased from $400 million.

The yield came tighter than the yield talk in the 6¾% area. Early guidance was in the high 6% area to 7%.

New Enterprise trades up

While trading volume for the small issue was light, New Enterprise Stone & Lime’s 9¾% senior notes due 2028 were also trading with a large premium in the aftermarket.

The 9¾% notes were changing hands in the 101¼ to 102 context on Thursday, according to a market source.

The deal was a refi with proceeds to be used to fund a tender offer for the company’s 10 1/8% notes, which created demand for the new notes, a source said.

“And the coupon’s attractive,” the source said.

The supplier of construction products and services priced a $200 million issue of the 9¾% notes at par on Wednesday.

The yield printed at the tight end of the 9¾% to 10% yield talk.

Eldorado improves

Eldorado’s 6¼% senior notes due 2025 and its 8 1/8% senior notes due 2027 were trading off their lows on Thursday as the regulatory approval process for its acquisition of Caesars begins.

The 6¼% notes gained about ½ point to trade in the par to par ½ context, a market source said.

The notes were active with more than $17 million on the tape.

Eldorado’s 8 1/8% senior notes rose 1 point to trade in the 96½ to 97¼ context with more than $12 million in reported volume.

While both tranches from the $6.2 billion three-tranche megadeal that helped finance the Eldorado/Caesars merger initially performed well in the aftermarket, they sold off last week amid the general market weakness.

The travel and gaming sectors were particularly hard hit by investor concern over a resurgence of Covid-19 cases.

However, the notes were trading off their lows on Thursday as the approval process for the merger begins.

State gaming boards have begun the review process with special meetings to consider the merger already scheduled in Nevada, according to a market source.

Indexes gain

Indexes closed out the truncated holiday week on firm footing. However, they were mixed on the week.

The KDP High Yield Daily index gained 22 basis points to close Thursday at 65.06 with the yield now 6.56%.

The index was up 10 bps on Wednesday, dropped 4 bps on Tuesday and was down 34 bps on Monday.

The index posted a cumulative loss of 6 bps on the week.

The CDX High Yield 30 index gained 39 bps to close Thursday at 99.92. The index was up 22 bps on Wednesday and 81 bps on Tuesday after falling 39 bps on Monday.

The index posted a cumulative gain of 103 bps on the week.

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