Ontario Gaming clears junk calendar; Coty above par; R.R. Donnelly up; Beacon flat

By Paul A. Harris and Cristal Cody

Portland, Ore., July 20 – Amid light news flow in the dollar-denominated high-yield bond primary market on Thursday Ontario Gaming GTA LP priced a $400 million issue of seven-year senior secured notes (B2/B/B+) at par to yield 8%, inside of talk.

Ontario Gaming cleared the week’s business on the active calendar, leaving the Brand Industrial Services, Inc. $1.335 billion offering of seven-year senior secured notes (B3/B-), expected to price in the week ahead (initial talk 10¾% to 11%).

Meantime a big acquisition financing deal that began being telegraphed to the market in late spring began to take shape.

A $1.625 billion notes offer backing the buyout of Arconic Corp. will launch into the market during the week ahead, sources say.

It is expected to include $900 million of senior secured notes with 8¾% to 9½% initial guidance.

There is reverse inquiry at play in the secured notes, sources say, adding that early orders amount to the full size of the tranche.

The deal is also expected to include $725 million of senior unsecured notes with early guidance that has them coming 300 to 350 basis points behind the secured notes.

Sponsor Apollo Global Management is expected to take down the entire unsecured tranche.

Coty Inc.’s 6 5/8% senior secured notes due 2030 (Ba2/BB) topped junk secondary action Thursday in the first session after it priced, a source said.

The bonds were up 1/8 point from issuance on nearly $75 million of paper changing hands.

R.R. Donnelley & Sons Co.’s new 9¼% junior-lien secured notes due 2028 (B3/B-) traded Thursday 4 points better than where it priced earlier in the week, a trader said.

Beacon Roofing Supply Inc.’s new 6½% senior secured notes 2030 (Ba3/BB) also were active in lighter trading and stayed mostly wrapped around issuance over the session.

“It wasn’t slow, but volume was a little on the lighter side,” a trader said.

The iShares iBoxx High Yield Corporate Bond ETF declined 33 cents, or 0.44%, to $75.18.

Coty edges higher

In the secondary market, Coty’s 6 5/8% senior secured notes due 2030 (Ba2/BB) attracted the bulk of action Thursday on $74.8 million of paper traded, a trader said.

The issue went out marginally higher but better than issuance at par 1/8 and were seen over the session in the par to par 3/8 context.

Another trader saw the notes at par, par 3/8 midday.

Coty priced an upsized $750 million of the bonds on Wednesday at par to yield 6 5/8% in a drive-by that had $2.8 billion of demand.

The yield printed at the tight end of yield talk in the 6¾% area. Initial talk was in the 7% area.

R.R. Donnelley up

R.R. Donnelley & Sons’ new 9¼% junior-lien secured notes due 2028 (B3/B-) were moving Thursday in the 99¼ to 99½ area, a trader said.

The bonds traded 4 points higher from where they priced Tuesday.

The company sold $285 million of the notes on top of talk at 95.28089 to yield 11%.

The deal size was upsized from $250 million.

Meanwhile, R.R. Donnelley & Sons’ credit default swaps spreads widened 37 basis points over the past week ended Wednesday to 380 bps, according to a Moody’s Investors Service report.

Beacon Roofing holds

Beacon Roofing’s new 6½% senior secured notes 2030 (Ba3/BB) traded Thursday mostly wrapped around issuance at par to 100.275, a trader said.

The company sold $650 million of the bonds on Monday at par in a deal upsized from $500 million.

The yield printed at the tight end of the 6½% to 6¾% yield talk. Initial talk was in the 6¾% to 7% area.

$2.22 billion weekly inflow

The dedicated high-yield bond funds had $2.216 billion of net inflows for the week to Wednesday’s close, according to fund-tracker Refinitiv Lipper.

It was the first inflow in four weeks, preceded by three weekly outflows that totaled negative $1.39 billion, according to a Prospect News analysis of the data.

Indexes

The KDP High Yield Daily index dropped to 50.7 and a 7.31% yield on Thursday from 50.97 with a yield of 7.18% on Wednesday, 51.06 and a 7.14% yield on Tuesday and 50.94 with a 7.19% yield on Monday.

The index had a cumulative gain of 81 points in the prior week.

The CDX High Yield 30 index fell to 103.07 Thursday from 103.16 on Wednesday, 103.14 on Tuesday and 102.95 at the week’s start.

The index had a cumulative loss of 122 bps in the previous week.

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