Morning Commentary: Junk opens unchanged; Venture Global driving by with $1 billion

By Paul A. Harris

Portland, Ore., Jan. 10 – After opening slightly lower on Tuesday, cash bonds were unchanged at mid-morning, according to a trader.

The high-yield CDX index was up 5/8 of a point, the trader said.

With the S&P 500 stock index down 0.21% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.29%, or 22 cents, at $75.58.

The freshly minted Transocean Titan Financing Ltd. 8 3/8% amortizing senior secured notes due February 2028 (B2/B-) were trading at a handsome premium to their new issue price on Tuesday morning.

The bonds were 101¾ bid, 102¼ offered after pricing Monday at par in an upsized $525 million issue (from $500 million).

The deal was heard to have been eight-times oversubscribed.

Elsewhere, in a crossover deal which garnered a significant following among high-yield investors, the Regal Rexnord Corp. split-rated senior notes (Baa3/BB+/BBB-), which came in four tranches on Monday, were all trading tighter on Tuesday morning.

The $4.7 billion deal, which priced on the investment-grade desk and trades on the crossover desk, included $1.1 billion of 6.05% three-year notes that priced at Treasuries plus 215 basis points, $1.25 billion of 6.05% five-year notes that priced at Treasuries plus 240 bps, $1.1 billion of 6.3% seven-year notes that priced at Treasuries plus 270 bps and $1.25 billion of 6.4% 10-year notes that priced with a 290 bps spread.

The 2026 paper was 20 bps tighter on Tuesday morning, the bond trader said, and added that the 2028 bonds were 13 bps tighter, the 2030 bonds were 10 bps tighter and the 2033 bonds were 13 bps tighter.

The deal was a huge blowout, playing to a massive $19 billion of demand across all four tranches, sources said.

In the primary market, Venture Global Calcasieu Pass LLC plans to price $1 billion of senior bullet notes due January 2030 (expected ratings B2/BB+) in a Tuesday drive-by.

The deal size will not grow.

Initial guidance has the deal coming to yield in the 6 5/8% area, a trader said.

The offer was playing to reverse inquiry amounting to 1.5-times the deal size, the trader added.

Looking to the active calendar, W&T Offshore Inc. is on the high-yield road with a $275 million offering of three-year second-lien senior secured notes (Caa1/B-).

Initial guidance is in the 12% area.

And Tokyo-based Rakuten Group, Inc. is marketing a $500 million add-on to its 10¼% senior notes due Nov. 30, 2024 (S&P: expected BB).

The deal is in the market with initial guidance that has it pricing with 2 points to 3 points of OID to yield 11½% to 12%.

Both offerings are in the market on timelines that have them pricing before the end of the week.

© 2015 Prospect News.
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