Morning Commentary: CQP, CVR Energy high-yield bonds on deck; XPO notes hold premium

By Abigail W. Adams

Portland, Me., Dec. 8 – The domestic high-yield primary market stood poised to close a high-volume week with two issuers set to price $1.3 billion.

CQP Holdco LP and BIP-V Chinook Holdco LLC’s $700 million offering of 10-year senior secured notes (B1/BB) is expected to price early in the session with books closing last night.

Price talk was for a yield in the 7½% area, which was in line with initial guidance for a yield in the mid-7% area, sources said.

Official talk circulated early Friday for CVR Energy Inc.’s $600 million offering of five-year senior notes (B1/B+/BB-) with books to close at 11:30 a.m. ET and pricing thereafter.

CVR’s offering is talked with a yield in the 8½% area, in line with guidance for a yield in the mid-8% area.

If priced at their current size, the two deals will bring the weekly tally to $8.135 billion in 14 tranches.

The stampede of issuance over the past week was largely expected with spreads at their tightest of the year and maturity walls approaching.

Demand for the new notes remained strong with the deluge of paper over the past week putting in a strong performance in the aftermarket.

New and recent deals continued to perform well despite a soft day for the market.

The secondary space was off 1/8 point after the release of the U.S. Nonfarm Payrolls report, which came in above expectations.

Treasury yields were on the rise following the report with the two-year yield up 12 basis points to 4.7% and the 10-year yield up 8 bps to 4.24%.

However, the new paper was holding strong with XPO Inc.’s new 7 1/8% senior notes due 2032 (Ba3/BB-/BB+) maintaining the gains made on the break.

The notes came in slightly with the broader market with the notes wrapped around par ½ in early trade, a source said.

They closed the previous session in the par 5/8 to par 7/8 context.

XPO priced a $585 million issue of the 7 1/8% notes at par on Thursday.

Pricing came toward the tight end of talk for a yield in the 7¼% area.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.