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Morning Commentary: DISH pricing pushed to Monday; Ford’s new junk bonds improve
By Abigail W. Adams
Portland, Me., Nov. 4 – The domestic high-yield primary market stood poised for a quiet session with no new deals announced and the new paper expected for Friday’s session delayed until Monday.
DISH Network Corp. talked its $2 billion of five-year non-call-two-year senior secured notes (Ba3/B+) with a coupon of 11½% to 11¾% and an original issue discount of 98 for an all-in yield of 11¾% to 12%, according to a market source.
Early guidance was for a 2 point OID and a yield in the mid to high 11% area.
Books are now expected to close at 10 a.m. ET Monday, a source said.
The deal also underwent covenant changes limiting the amount of pari passu debt permitted.
The tepid response to the deal was a surprise to some given its cheapness and the relatively strong fundamentals of the company.
However, DISH has some short-term maturities looming and there is risk involved in the buildout of its wireless network, which proceeds from the new offering are earmarked for.
The deal was also announced on Tuesday, prior to Federal Reserve chair Jerome Powell’s press conference which dashed the market’s hope for a dovish pivot and prepared the market for a higher terminal rate than anticipated.
While selling ensued post-Fed, the secondary space firmed on Friday following the U.S. nonfarm payroll report.
As has been a trend with economic indicators that will help shape Central Bank policy moving forward, the report gave a mixed picture of the economy.
While job growth was greater than anticipated, the unemployment rate also ticked higher than anticipated.
However, the market responded favorably to the report with equities strong and ETFs buyers early in the session.
Ford Motor Credit Co. LLC’s newly priced 7.35% senior notes due 2027 (Ba2/BB+/BB+) improved in active trading early in the session.
The notes were up ¼ point to change hands in the 99½ to 99¾ context, according to a market source.
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