Coty notes head higher; Ontario Gaming strengthens in junk trading

By Cristal Cody

Tupelo, Miss., July 21 – While the new issue market was absent on a summer Friday, in the secondary junk bond market Coty Inc.’s 6 5/8% senior secured notes due 2030 (Ba2/BB) improved another 1/8 point and went into the weekend ½ point better than where it priced Wednesday.

Trading activity lightened after Thursday’s heavy volume of nearly $75 million in the name, a source said.

Stocks were mixed Friday. The S&P 500 index edged up 0.03% on the day.

The iShares iBoxx High Yield Corporate Bond ETF added 19 cents, or 0.25%, to $75.37.

Ontario Gaming GTA LP’s new 8% senior secured notes due 2030 (B2/B/B+) pulled back from some of their aftermarket gains on Friday but remained more than ¾ point better than where they priced in the prior session.

Primary market

The new issue market remained idle on typical summer Friday.

The week ahead figures to be active.

The sole announced deal comes from Brand Industrial Services, Inc. which is on the road with a $1.335 billion offering of seven-year senior secured notes (B3/B-) with initial guidance of 10¾% to 11%.

Reverse inquiry is heard to exceed the amount of the offer, a trader said, adding that the stage appears to be set for those bonds to trade well.

Meanwhile a $1.625 billion deal backing the buyout of Arconic Corp. by Apollo Global Management and Irenic is expected to launch into the market during the week ahead.

It is expected to include $900 million of senior secured notes with 8¾% to 9½% initial guidance.

There is reverse inquiry at play in the secured notes, sources say, adding that early orders amount to the full size of the tranche.

The deal is also expected to include $725 million of senior unsecured notes with early guidance that has them coming 300 to 350 basis points behind the secured notes.

Sponsor Apollo is expected to take down the entire unsecured tranche.

Marketing of the Arconic deal could carry into the Aug. 1 week, sources say.

The euro-denominated new issue market also figures to be active in the coming week.

Dealers circulated a save-the-date email for Monday, when they plan to roll out a deal from the consumer/retail space that will feature sterling-denominated fixed-rate notes and euro-denominated floating-rate notes.

The deal is set to be in roadshow mode Monday and Tuesday.

Coty improves

Coty’s 6 5/8% senior secured notes due 2030 went out Friday at par ¼, a source said.

The bonds traded Thursday at par 1/8 and were seen over the session in the par to par 3/8 context.

Coty brought the bonds to the primary market on Wednesday in an upsized $750 million offering at par to yield 6 5/8%.

The drive-by deal had $2.8 billion of demand. The yield printed at the tight end of yield talk in the 6¾% area. Initial talk was in the 7% area.

Ontario Gaming up

Ontario Gaming’s 8% senior secured notes due 2030 (B2/B/B+) were quoted going out the door Friday at 100 7/8, a source said.

The bonds traded over the session in the 101 1/8 to par ¾ range.

The new issue had climbed Thursday to 101 in the secondary market following pricing.

Ontario Gaming and OTG Co-Issuer, Inc. sold $400 million of the seven-year notes on Thursday at par to yield 8%.

The yield printed tighter than talk in the 8¼% area and better than early guidance in the 8½% to 8¾% area.

Indexes

The KDP High Yield Daily index increased Friday to 50.75 and a yield of 7.29%.

On Thursday, the index was at 50.7 and a 7.31% yield, while it finished Wednesday at 50.97 with a yield of 7.18%, closed Tuesday at 51.06 and a 7.14% yield and ended Monday at 50.94 with a 7.19% yield.

The index had a cumulative gain of 81 points in the prior week.

The CDX High Yield 30 index closed Friday up from the start of the week at 103.135, compared to 103.07 on Thursday, 103.16 on Wednesday, 103.14 on Tuesday and 102.95 on Monday.

In the previous week, the index had a cumulative loss of 122 bps.

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