Morning Commentary: MDC Partners bonds crater on dismal earnings; Wednesday deals trade higher

By Paul A. Harris

Portland, Ore., May 10 – Bonds of MDC Partners Inc. fell 7 to 8 points on Thursday as the company reported that EBITDA fell dramatically in the most recent quarter, compared with the same quarter last year.

There was activity in the MDC Partners 6½% senior notes due April 2024, a $900 million issue, the trader said.

The company's adjusted EBITDA for the first quarter of 2018 was $7.8 million versus $35.8 million for the first quarter of 2017, the report stated.

Conceding that the company’s performance in March and April was disappointing, chairman and chief executive officer Scott Kauffman cited the combination of select client cutbacks and a slower conversion of the company's new business pipeline, prompting MDC Partners to update its 2018 financial targets.

Elsewhere, amid stronger equity prices, high-yield ETFs were up on the morning.

The SPDR Blmbg Barclays High Yield Bd ETF (JNK) was a nickel higher (0.14%) at mid-morning, priced at $35.80 per share.

OneMain/Springleaf up ¾ point

Deals that priced on Wednesday were turning in strong secondary market performances on Thursday morning, a trader said.

The OneMain/Springleaf 7 1/8% bullet due March 2026 (B1/B) was up ¾ of a point at par ¾ bid, 101¼ offered.

The upsized $900 million issue (from $500 million) via Springleaf Finance Corp. priced at par on Wednesday.

The new Centene Corp. 5 3/8% senior notes due June 2026 (Ba1/BB+) were up ¼ point on the morning at 101 3/8 bid, 101 5/8 offered, the trader said.

The upsized $1.8 billion issue (from $1.7 billion) priced at par on Wednesday.

And the new WPX Energy, Inc. 5¾% senior notes due June 2026 (B1/BB-) were also trading at 101 3/8 bid, 101 5/8 offered, up 3/8 to ½ point on the day, the trader said.

The upsized $500 million deal (from $400 million) priced at par on Wednesday

All three of Wednesday's deals came upsized in quick-to-market executions.

However, on the heels of a big Wednesday the new issue market appeared to be taking a breather on Thursday morning.

Valeant Pharmaceuticals International, Inc. entered the pipeline as it announced it intends to issue $750 million of senior secured notes and $750 million of unsecured notes as part of a $6.52 billion debt refinancing package.

Goldman Sachs and JPMorgan are each expected to lead a tranche of the notes, according to a market source (see related story in this issue).

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