Morning Commentary: NGL, Talos bonds command premiums; Caliber Collision rips higher

By Paul A. Harris

Portland, Ore., Jan. 26 – Bonds priced during Thursday’s $3.45 billion burst of high-yield issuance – four tranches from two issuers – commanded decent or better premiums on Friday morning, according to a bond trader in New York.

Thursday’s action included $2.2 billion of NGL Energy Partners LP senior secured notes (B2/B+/BB-) in two tranches, upsized from $2.1 billion.

The new NGL 8 1/8% notes due February 2029 were par ½ bid, par ¾ offered on Friday morning, the trader said.

The $900 million issue priced at par.

The NGL 8 3/8% notes due February 2032 were par ¾ bid, 101 offered.

The $1.3 billion issue priced at par.

The Thursday session also saw Talos Production Inc. price $1.25 billion of senior secured second-priority notes (B3/BB-/B+) in two tranches, upsized from $1 billion.

The Talos 9% notes due February 2029 were 101½ bid, 101¾ offered on Friday morning.

The $625 million issue priced at par.

The Talos 9 3/8% notes due February 2031 were 101 7/8 bid, 102 1/8 offered on the morning.

The $625 million issue also priced at par.

At present there is obviously a great deal of investor demand focused on the primary market, the trader remarked.

Away from Thursday’s action it continues to be “Up-up-and-away” on the Caliber Collision/Wand NewCo 3 Inc. 7 5/8% senior secured notes due January 2032 (B3/B), the source said.

Those bonds, which priced at par in a $1.25 billion issue, on Jan. 16, were 103 1/8 bid, 103 5/8 offered on Friday morning, the trader said.

That bodes well for market-comparable Crash Champions LLC/Champions Financing, Inc. now on the high-yield road with a $650 million offering of five-year senior secured notes (B3), the trader said.

Early guidance is in the low-to-mid 9% area, and the deal is slated to price in the week ahead.

Given the performance of the Caliber Collision paper, the Crash Champion bonds will likely come a bit tighter than might otherwise be the case, as high-yield investors clamor for exposure to these first-time issuers, especially given that they emanate from the non-cyclical collision repair sector, the trader said (Caliber was heard to have played to $7.5 billion of investor demand).

Joining Crash Champions on an already-substantial active new issue calendar are the following:

• Husky Injection Molding Systems/Titan Co. Borrower, LLC with $1.3 billion of five-year senior secured notes with initial talk in the high-9% area;

• Artera Services LLC with $740 million of seven-year senior secured first-priority notes with initial talk in the 9% area; and

• Rakuten Group, Inc. with $1 billion of three-year notes with initial talk for a 12% yield at a discount.

Away from those announced deals there is a shadow calendar of offerings, most of them telegraphed as “other secured debt” in bank meeting memos to lenders.

Shadow calendar names include Ineos Finance plc, UKG Inc., WestJet Loyalty LP and Shearer’s Foods (Fiesta Purchaser Inc.).

The Shearer’s $500 million secured deal was heard to have been pre-marketed to investors during the past week.

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