Taseko Mines, Melco Resorts, on deck; Endo returns; Herbalife holds premium; Genesee & Wyoming flat

By Abigail W. Adams and Paul A. Harris

Portland, Me., April 8 – The April 8 week got underway in the high-yield primary market with a burst of new deal announcements, including four euro-denominated deals and three dollar-denominated deals.

However, no issues were priced.

Two of the three dollar-denominated offerings are only expected to remain in the market overnight with Melco Resorts Finance Ltd.’s benchmark offering of dollar-denominated eight-year senior notes (Ba3/BB-) and Taseko Mines Ltd.’s $500 million offering of six-year senior secured notes (B3/B-) slated to price Tuesday.

Endo Finance Holdings, Inc. commenced marketing a $1.25 billion offering of seven-year senior secured notes, which was already heard to be well oversubscribed.

Meanwhile, the secondary space firmed on Monday after some selling pressure the previous week.

Market players are beginning to reassess the likelihood of a June rate cut in light of recent macro data with signs of weakness in the market starting to appear, a source said.

However, with little news to move the market on Monday, the tone improved although volume was light, a source said.

The market remains laser focused on new issuance with recent deals driving volume and continuing to perform well.

Herbalife International Inc. and HLF Financing Sarl LLC’s 12¼% senior secured notes due 2029 (Ba2/B+) maintained a strong premium to their discounted issue price in heavy volume Monday with the chunky yield superseding concerns about the credit.

Genesee & Wyoming Inc.’s 6¼% senior secured notes due 2032 (Ba3/BB) also maintained the nominal gains made on the break although the tight pricing left little room for upward movement.

The pipeline

The April 8 week got underway in the high-yield primary market with a burst of new deal announcements, including four euro-denominated deals and three dollar-denominated deals.

However, no issues were priced.

Two of the three dollar-denominated offering are only expected to remain in the market overnight.

Melco Resorts announced a benchmark offering of dollar-denominated eight-year senior notes (Ba3/BB-) talked to yield 7¾% to 7 7/8%, tight to early guidance in the high-7% area.

Deal size is expected to be $500 million, but could increase to as much as $750 million, according to a trader who added that the offer is heard to be playing to $1 billion of demand.

And Taseko Mines came with a $500 million offering of six-year senior secured notes (B3/B-) talked to yield 8¼% to 8½%, tight to initial guidance in the mid-to-high 8% area.

Meanwhile, Endo Finance Holdings commenced marketing of a $1.25 billion offering of seven-year senior secured notes.

The Chapter 11 exit-financing deal is in the market in front of $2.8 billion of reverse inquiry in the mid-9% area, a trader said.

Demand for the Endo deal was heard to be $4.1 billion by Monday’s close, the source said.

Herbalife holds gains

Herbalife’s new 12¼% senior secured notes due 2029 held on to the strong gains made on the break with the notes continuing to trade at a strong premium to their discounted issue price.

The 12¼% notes continued to trade in the 98½ to 99 context on Monday with the yield about 12 5/8%, a source said.

With $40 million in reported volume, the notes were the most actively traded issue of the session.

While the deal saw some pushback with market players concerned about the credit, the chunky yield and short duration of the notes were driving them higher in the aftermarket.

Herbalife priced an upsized $800 million, from $700 million, issue of the 12¼% notes at 97.298 to yield 13% on Friday.

The notes came wide to talk for a coupon of 11¾% and a yield of 12½% with pricing climbing a steep trajectory since the deal came into the market.

Early guidance was in the 11% area.

The notes also underwent covenant changes.

Genesee & Wyoming flat

Genesee & Wyoming’s 6¼% senior secured notes due 2032 were unchanged in light volume on Monday with the notes continuing to trade at a nominal premium to their issue price.

The 6¼% notes were stuck in the par to par ¼ context, a source said.

Volume for the sizeable issue was light with $9 million on the tape heading into the market close.

The tight pricing of the notes left little room for movement in the aftermarket, a source said.

Genesee & Wyoming priced a downsized $700 million, from $1 billion, issue of the 6¼% notes at par on Friday.

The yield came at the tight end of the 6¼% to 6½% yield talk.

Proceeds from the notes were shifted to the concurrent term loan with the net leverage of the company remaining unchanged, a source said.

Indexes

The KDP High Yield Daily index slid 2 basis points to close Monday at 50.08 with the yield now 6.99%.

The ICE BofAML US High Yield index added 4 bps with the year-to-date return now 1.013%.

The CDX High Yield 30 index gained 23 bps to close Monday at 106.94.

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