First Quantum, XPO price drive-by junk deals; Venture Global megadeal on deck; McAfee weaker

By Abigail W. Adams

Portland, Me., May 17 – It was a busy session for the domestic high-yield primary market with two issuers pricing three junk-rated tranches in drive-by action and the forward calendar continuing to fill in.

First Quantum Minerals Ltd. priced an upsized $1.3 billion of eight-year senior notes and XPO Inc. priced $450 million eight-year unsecured notes (Ba3/BB-/BB+) and $830 million of split-rated five-year senior secured notes (Ba1/BBB-/BBB-) in drive-by action.

While Wednesday marked the first new paper of the week, the calendar continued to fill in with Venture Global LNG Inc. announcing a $3.5 billion two-tranche offering of secured and unsecured notes.

While the pricing of the megadeal was initially slated for Friday, timing may be accelerated to Thursday’s session.

Capstone Borrower Inc. is also slated to price its $500 million offering of seven-year senior secured notes (B2/B-/BB) to finance Blackstone’s acquisition of Cvent Holding Corp. during Thursday’s session with official talk surfacing.

While the primary market is still in the running for one of the highest volume weeks of the year for new issuance, the pricing of Olympus Water US Holding Corp.’s (Solenis) $2.125 billion equivalent two-tranche offering of long five-year senior secured notes was pushed to the May 22 week.

Timing for Aventiv Technologies LLC’s $400 million offering of four-year first-lien senior secured notes (B3/B), which has been on the calendar since the previous week, remains uncertain with the deal experiencing pushback.

Meanwhile, there was an uptick of activity in the secondary space on Wednesday as the market tone improved after selling pressure began to set in the previous session.

The cash bond market was up about 1/8 point.

First Quantum’s new paper dominated activity after freeing for trade although the notes saw a weak break and were lagging their issue price.

Condor Merger Sub, Inc.’s (McAfee Corp.) 7 3/8% senior notes due 2030 (Caa2/CCC+) were weaker in heavy volume.

Drive-bys

The drive-by window was wide open on Wednesday with two issuers clearing the market to bring the first new paper of the week.

First Quantum priced an upsized $1.3 billion, from $1 billion, issue of eight-year senior notes (B+/B+) at par to yield 8 5/8%.

Pricing came at the tight end of talk for a yield in the 8¾% area, which had tightened from initial guidance for a yield in the 9% area.

While the notes played to strong demand during bookbuilding, they saw a weak break with the notes closing the session on a 99-handle.

The notes were trading in the 99½ to 99¾ context heading into the close, a source said.

Also in drive-by action, XPO brought an anticipated offering of secured and unsecured notes.

The freight transportation services company priced an $830 million issue of 6¼% senior secured notes due June 1, 2028 (Ba1/BBB-/BBB-) and a $450 million issue of 7 1/8% senior unsecured notes due June 1, 2031 (Ba3/BB-/BB+) at par.

Pricing for the secured tranche came at the rich end of talk for a yield in the 6 3/8% area. Initial guidance was for a yield of 6% to 6.5%.

Pricing for the unsecured tranche came tight to talk for a yield in the 7¼% area. Initial guidance was for a yield in the low 7% area.

Calendar

The calendar continued to fill in with Thursday also expected to be an active session for new deal activity.

Venture Global is in the market with a $3.5 billion offering of five-year senior secured notes and eight-year unsecured notes.

Initial guidance has the secured notes coming with a yield of 8% to 8¼% and the unsecured notes coming with a yield of 8¼% to 8½%.

The deal is scheduled to price on Friday; however, timing may be accelerated to Thursday’s session, a source said.

Cvent is also expected to price its $500 million offering of seven-year senior secured notes (B2/B-/BB) on Thursday with official price talk set in the 8% area.

Initial guidance was for a yield in the low 8% area.

While additional drive-by action is expected during Thursday’s and Friday’s sessions, Solenis’ $2.125 billion equivalent two-tranche offering of long five-year senior secured notes backing the acquisition of Diversey Holdings Ltd. is now expected to price during the May 22 week.

Solenis’ $1.625 billion tranche, which was guided with a yield in the high 8% area, was heard to be playing to $1.2 billion in orders early Wednesday, according to a market source.

Timing on Aventiv’s $400 million offering of four-year first-lien senior secured notes remains uncertain with the deal from the communications provider for correctional facilities heard to be experiencing pushback.

The deal was heard to be guided with an 11% all-in yield and an OID but pricing may need to push out wider to attract investors who are wary of the sector in an era of socially conscious investing, a source said.

McAfee weaker

McAfee’s 7 3/8% senior notes due 2030 were weaker in active trade on Wednesday.

The 7 3/8% notes fell more than 1½ points in intraday activity but rallied into the close.

The notes traded to a low of 79¾ but closed the day off about ½ point at 80½, according to a market source.

The yield was 11½%.

There was $38 million in reported volume.

Indexes

The KDP High Yield Daily index shaved off 3 points to close Wednesday at 50.42 with the yield now 7.4%.

The index fell 16 points on Tuesday and was flat on Monday.

The ICE BofAML US High Yield index shaved off 1.9 basis points with the year-to-date return now 3.912%.

The index fell 29.7 bps on Tuesday and shed 4.8 bps on Monday.

The CDX High Yield 30 index gained 56 bps to close Wednesday at 100.08.

The index fell 63 bps on Tuesday after inching up 2 bps on Monday.

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