Morning Commentary: Citrix’s $4 billion notes on tap; Inetum eyes €350 million offering

By Paul A. Harris

Portland, Ore., Sept. 20 – The mammoth Citrix Systems Inc. $4 billion offering of Picard Midco, Inc. 6.5-year senior secured notes (S&P: B) commanded the lion's share of attention as the lights flickered on in the junk bond market on Tuesday, sources said.

Final talk on the hard-traveled buyout deal, which is set to price on Tuesday, came at a wide-to-talk yield of 10%, implying an original issue discount of 83.561.

The 10% yield comes 25 basis points beyond the wide end of the 9½% to 9¾% yield talk.

The issue price comes about a dollar cheap to earlier formal discount talk of 85.695 to 84.62.

Initial talk had the Picard/Citrix notes coming with a 6½% coupon at a discount of 88 to 90 to yield in the high-8% to 9% area.

There have also been covenant changes.

Close-of-books had been scheduled for late Monday, at which point orders modestly exceeded deal size, according to a market source, who added that demand for the concurrent $4.05 billion term loan B was somewhat stronger.

The steep (and steepening) discount on the Citrix secured notes will almost surely force a recalibration of the primary market, sources say.

The market backdrop for the deal’s Tuesday execution left plenty of room for improvement, sources said.

Cash bonds were ¼ of a point lower on the morning, while the index was down ½ point, according to a bond trader in New York.

With the S&P 500 stock index down 1.03% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down a hefty 0.75%, or 56 cents, at $73.93.

The Ford Motor Co. 6.1% senior green notes due August 2032 (Ba2/BB+) were down a whopping 1½ points on the morning at 93¾ bid, 94¼ offered in active trading, the bond trader said, adding that a 94 bid had been hit.

The Ford green bonds came at par on Aug. 16 in a $1.75 billion high-grade-style execution.

Meanwhile, there was new issue news out of Europe on Tuesday.

Granite Bidco SAS plans to sell €350 million of six-year senior secured notes (B2) backing the buyout of France-based information technology company Inetum SA by Bain Capital.

Marketing is scheduled to take place through Thursday.

Fund flows

High-yield ETFs saw a healthy $504 million of daily cash inflows on Monday, according to a market source.

However, actively managed high-yield funds sustained $215 million of outflows on the day.

The combined funds are tracking $997 million of net outflows on the week that will conclude with Wednesday’s close, according to the market source.

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