TreeHouse drives by; IPL prices; NCR notes higher; American Airlines down; Antero rises

By Paul A. Harris and James McCandless

San Antonio, Aug. 25 – Even in late August, the primary high-yield market is still pushing out new deals, forestalling the late summer lull one market session at a time.

TreeHouse Foods, Inc. drove by with an upsized issue on Tuesday.

And, IPL Plastics Inc. wrapped up its roadshow with a moderately upsized $485 million deal.

In the junk bond secondary space, recent issuance and the travel sector took the lion’s share of volume.

Recent notes from NCR Corp. ended the session in a higher position, sustaining a positive trend since pricing last week.

In the travel space, Carnival Corp. & plc’s issues moved in direction directions as the cruise line canceled some routes for 2021.

Elsewhere, American Airlines Group Inc.’s paper moved down while United Airlines Holdings, Inc.’s notes diverged.

In the oil and gas space, Antero Resources Corp.’s notes rose on the heels of an announcement of early results for a two-series tender offer.

Tuesday primary

The high-yield drive-through window opened Tuesday for TreeHouse Foods which priced an upsized $500 million issue (from $400 million) of eight-year senior notes (Ba2/BB-) at the tight end of talk.

The bonds were heard to be playing to $3 billion of orders just before the close of books, according to a trader who added that there was $100 million of reverse inquiry at play in the deal.

Meanwhile at the conclusion of its roadshow IPL Plastics priced an upsized $485 million issue (from $450 million) of 6% eight-year senior secured notes (B3/B) also at the tight end talk.

The deal played to high demand, according to a bond trader who added that there were $4.2 billion of orders in the book around noon Tuesday (see related stories in this issue).

Notwithstanding expectations of a late-August summer lull in issuance – the so-called Dog Days of the junk bond market – further primary market activity is expected in the run-up to Labor Day, sources said Tuesday.

Present market technicals are extremely inviting for issuers, a syndicate banker said.

And in spite of the torrid new issue activity which took place during the pandemic of spring and early summer 2020, there remains cash to be put to work in junk, as investors reach for yield, sources say.

Look for at least a handful of deals ahead of Labor Day, sources say.

Morgan Stanley is expected to bring a new unsecured deal before the end of the week, a trader said. There could be another deal from JPMorgan, and BofA might have another deal, as well, the source added.

Also on Tuesday a post-Labor Day calendar began to take shape.

Delta Air Lines, Inc. is expected to show up with a first-lien deal backed by its SkyMiles frequent flyer program, after Labor Day, source say.

Recall that in late June United Airlines, Inc. came with a $2 billion offering (later upsized to $3.8 billion) of seven-year secured paper backed by a first-priority lien on the assets of is Mileage Plus Intellectual Property Assets Ltd.

United's frequent flyer program came into the deal when the Chicago-based air carrier failed to persuade investors to accept earlier proposed collateral packages said to include some of the older vintages of aircraft in its portfolio, augmented by some routes and gates.

NCR higher

Recent notes priced by NCR last week ended the session in a higher position, traders said.

The 5% senior notes due 2028 gained ½ point to close at 101 bid.

About $20 million was on the tape as the session concluded.

Last week, the Atlanta-based enterprise technology provider sold $650 million of eight-year notes as part of a $1.1 billion two-tranche pricing.

With the proceeds, the company plans to pay off the outstanding $600 million of its 5% senior notes due 2022 and $700 million of 6 3/8% senior notes due 2023.

Carnival flat, up

In the travel space, Carnival’s notes were moving sideways or up, market sources said.

The 9 7/8% notes due 2027 closed level at 98 bid. The 11½% notes due 2023 gained 1¼ points to close at 110¾ bid.

About $57 million of the notes combined changed hands.

Before the open on Tuesday, the Miami-based cruise line company announced that it would delay sailing on its Princess Cruises and Cunard lines until 2021.

The company previously said earlier in the month that it would resume some European routes in September and U.S. routes in October.

“The writing has been on the wall for this for a few months now,” a trader said. “They’ll have to put even more focus on longer-term bookings.”

A resurgence in coronavirus cases has kept the name and others in the sector from sailing amid travel restrictions and low demand.

AA down, United mixed

Elsewhere, American Airlines’ paper was pushed down throughout Tuesday, traders said.

The 11¾% senior paper due 2025 dropped ½ point to close at 94¾ bid. The 5% senior paper due 2022 shaved off ½ point to close at 62 bid.

Early Tuesday morning, the Fort Worth-based air traveler announced that if a second round of federal aid isn’t passed by October, up to 40,000 workers could be laid off or furloughed.

The company said that 19,000 of those positions would be involuntary cuts.

More federal payroll aid has been proposed in the U.S. Senate with support from President Trump, though negotiations have been hampered.

Chicago-based sector peer United Airlines’ notes diverged in direction.

The 5% senior notes due 2024 garnered 1¼ points to close at 89 bid. The 4¼% senior notes due 2022 shaved off ¼ point to close at 92½ bid.

Antero rises

In the oil and gas space, Antero Resources’ paper rose, market sources said.

The 5 1/8% senior paper due 2022 picked up 1½ points to close at 85 bid. The 5% senior paper due 2025 tacked on 1½ points to close at 70 bid.

As Tuesday trading began, the company announced that as of 5 p.m. ET on Aug. 24, $88,389,000 of its 2022 notes and $95,661,000 of its 5 5/8% senior notes due 2023 had been tendered and not withdrawn prior to the Dutch auction early tender deadline, Prospect News reported.

The company intends to accept for purchase all tendered notes and to make payment on Aug. 25.

Indexes better

Two high-yield indexes capped the day in better positions.

The KDP High Yield Daily index pushed up 15 basis points to 66.98 to end Tuesday with the yield at 5.42%.

The index rose 8 bps on Monday, gained 3 bps on Friday and garnered 1 bps on Thursday.

The ICE BofAML US High Yield index moved higher by 26.1 bps with the year-to-date return closing at 0.467%.

The index improved by 29.2 bps on Monday, tacked on 4.4 bps on Friday and shaved off 4.3 bps on Thursday.

© 2015 Prospect News.
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