SoftBank Group Issues Most Junk Bonds in Week Ended July 24
Junk Bond Issuance Still Quiet in the Week Ended July 24
Pricing trends
Junk bond issuance activity was subdued in the week ended July 24. Issuers remained wary of the volatility in the commodities markets, and the Treasuries yield curve continued to flatten. Most of the six issues were rated BB.
The SPDR Barclays High Yield Bond ETF (JNK) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) invest in junk bonds.
Deal highlight of the week
SoftBank Group (SFTBY) is a Japan-based holding company that operates mobile and landline telecom, broadband, Internet, and other businesses. It issued dollar-denominated junk bonds worth $2 billion last week. The Ba1/BB+ rated two-tranche issue consisted of the following:
$1 billion in 5.375% senior notes due on July 30, 2022. The notes were issued at 100% of the aggregate principal amount at a yield to worst of 5.375%
$1 billion in 6% senior notes due on July 30, 2025. The notes were issued at 100% of the aggregate principal amount at a yield to worst of 6%
SoftBank Group raised the amount for general corporate purposes.
In the previous week, WPX Energy (WPX), an independent natural gas and oil exploration and production company, was the top issuer of junk bonds with an issuance of $1 billion. Solera Holdings (SLH), Genesis Energy (GEL), and Sunoco (SUN) were among others issuing large amounts of high yield bonds in the previous week.
Issuance by Builders FirstSource
Builders FirstSource (BLDR) manufactures and sells building products for home construction in southern and eastern US. It raised junk bonds worth $750 million last week. The bonds were rated Caa2/B- and carried a coupon of 10.75%. The bonds, which will mature on August 15, 2023, were issued at 100% of their par value with a yield to worst of 10.75%. Builders FirstSource intends to use the proceeds from the sale for its acquisition of ProBuild Holdings.
Issuance by Kenan Advantage Group
Kenan Advantage Group provides liquid bulk transportation services. It issued senior notes worth $405 million last week. The bonds were rated B3/B- and carried a coupon of 7.875%. The junk bonds, which will mature on July 30, 2023, were issued at 100% of their par value with a yield to worst of 7.875%. Kenan will use the proceeds from the sale for its leveraged buyout by OMERS Private Equity.
Issuance by Caleres
Caleres (CAL) is a retailer and wholesaler of footwear. It issued senior notes worth $200 million last week. The bonds were rated B1/BB and carried a coupon of 6.25%. The junk bonds, which will mature on August 15, 2023, were issued at 100% of their par value with a yield to worst of 6.25%. Caleres was the only issuer last week to issue junk bonds with the intent to use the proceeds to refinance older debt.
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