Junk: $2.1 billion of new paper; Ford, O-I Glass, SRS above issue prices; MultiPlan drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 9 – Three issuers priced a $2.1 billion face amount of dollar-denominated junk in four tranches on Tuesday.

However, the activity did little to clear the forward calendar with $6 billion still in the market.

The lion’s share of the forward calendar is DISH Network Corp. and DISH DBS Corp.’s $4 billion two-tranche megadeal, which is slated to price on Wednesday.

Meanwhile, the secondary space remained firm on Tuesday with new and recent deals continuing to dominate the tape.

Ford Motor Co.’s 3¼% senior green bonds due 2032 (Ba2/BB+/BB+) were in focus with the notes putting in a solid performance in the secondary space.

O-I Glass, Inc. subsidiary OI European Group BV’s 4¾% senior notes due 2030 (B1/B+) were also putting in a strong performance with the notes on a 101-handle.

While SRS Distribution Inc.’s 6% senior notes due 2029 (Caa2/CCC) and Parkland Corp.’s 4 5/8% senior notes due 2030 (Ba3/BB/BB) were trading at premiums to their issue prices, they remained on a par-handle.

Outside of recent issues, MultiPlan Corp.’s junk bonds were under pressure on high-volume activity.

Tuesday’s primary

Issuers sold $2.1 billion face amount junk in four tranches in the U.S. dollar market on Tuesday.

One of the three issuers came with a drive-by.

Two of the four tranches were upsized.

Three tranches were priced on the tight, or rich ends of talk. The fourth came in the middle of talk.

Tuesday's action left a $6 billion active calendar, with $5 billion of that expected to clear the market on Wednesday.

Of that amount, $4 billion is coming from one of the market's ultra-familiar names, DISH.

The deal, in two secured bullet tranches (B+), features five-year notes talked to yield in the 5¼% area (tight to initial guidance), and seven-year notes talked in the 5¾% area (on top of initial guidance).

Tranche sizes remain to be determined.

Demand for the DISH secured bullet paper topped $8 billion, at Tuesday's close, a trader said.

Ford in focus

Ford’s 3¼% senior green bonds due 2032 were in focus on Tuesday with the notes putting in a strong performance.

The 3¼% notes were marked at par ¾ bid, 101 offered heading into the market close.

There was more than $171 million in reported volume.

Ford priced a $2.5 billion issue of the 3¼% notes at par on Monday.

The notes priced tighter than talk in the 3 5/8% area.

The offering came on the heels of the company’s announcement that it was establishing a new sustainable financing framework to help the company develop its electric vehicle portfolio, in addition to other environmental and social programs.

The company also announced a tender offer for up to $5 billion of its outstanding issues and announced its intention to return to investment-grade status.

Ford was downgraded to junk in March 2020 as the coronavirus pandemic ravaged the global economy.

101-handle

O-I European’s 4¾% notes due 2030 were the outperformers of Monday’s deals with the notes rising to a 101-handle.

The 4¾% notes were marked at 101 bid, 101¼ offered heading into the market close, according to a market source.

There was about $44.5 million in reported volume.

O-I Glass subsidiary OI European priced a $400 million issue of the 4¾% notes at par on Monday.

The yield printed in the middle of yield talk in the 4¾% area.

At a premium

SRS Distribution’s 6% senior notes due 2029 and Parkland’s 4 5/8% senior notes due 2030 were trading at premiums to their issue prices in high-volume activity.

However, both issues remained on par-handles.

SRS Distribution’s 6% notes were marked at par ¼ bid, par ¾ offered heading into the market close.

There was $93 million in reported volume.

SRS Distribution priced an upsized $850 million, from $700 million, issue of the 6% notes at par on Monday.

The yield printed at the tight end of the 6% to 6¼% yield talk.

Also at a premium, Parkland’s 4 5/8% senior notes due 2030 were marked at par 3/8 bid, par 5/8 offered heading into the market close.

There was $55 million in reported volume.

Parkland priced an upsized $800 million, from $500 million, issue of the 4 5/8% notes at par on Monday.

The yield printed at the wide end of the 4½% to 4 5/8% yield talk.

MultiPlan under pressure

MultiPlan’s capital structure was under pressure on Tuesday with its junk bonds dropping 3½ to 4½ points in high-volume activity.

MultiPlan’s 5½% senior secured notes due 2028 (Ba3/B+) were down 3¾ points to close the day at 97¼.

There was $52 million in reported volume.

MultiPlan’s 5¾% senior notes due 2028 (B3/B-) fell more than 4 points to close the day at 89½.

There was more than $42 million in reported volume.

The activity comes just one day after the health care cost management solutions company held an investor conference call to speak about the volatility of its stock.

While the company reported an earnings beat in early November, stock has been on a downward spiral over the past week.

MultiPlan filed a resale registration statement for stock issuable upon the conversion of 6%/7% convertible PIK toggle notes due 2027 on Monday.

Stock was down almost 11% on Tuesday.

$208 million Monday outflows

The dedicated high-yield bond funds sustained $208 million of net daily outflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $185 million of outflows on the day.

High-yield ETFs sustained $23 million of outflows on Monday, the source said.

To recap Monday's big news on the fund-flows front, the high-yield ETFs saw $1.47 billion of inflows in the Friday session, the biggest daily inflow since March 10.

Factoring that into the tally the combined funds are tracking $2.16 billion of net inflows on the week to this coming Wednesday's close, the market source said.

Indexes

The KDP High Yield Daily index gained 6 points to close Tuesday at 70.05 with the yield now 3.71%.

The index gained 13 points on Monday.

The CDX High Yield 30 index fell 13 bps to close Tuesday at 109.52.

The index was down 7 bps on Monday.

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