OneMain drives by junkland; forward calendar expands; DISH holds; Carnival weaker

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 20 – Amid heavy news volume the high-yield primary market hit the ground running on Tuesday, on the heels of the extended Juneteenth holiday weekend

Six issuers announced a whopping $4.65 billion of business, all of it expected to clear ahead of the coming weekend.

Only one deal priced.

Meanwhile, it was a quiet return from the long weekend in the secondary space as market players await the new deals in the pipeline and continue to assess the Federal Reserve’s next move.

The cash bond market was soft in light volume with few making moves in the space, a source said.

With little to move the needle on Tuesday, large, liquid issues were the drivers of activity in the space.

DISH Network Corp.’s senior notes remained active with the notes holding the gains made after a rebound the previous trading session.

Carnival Corp.’s senior notes were weaker on Tuesday after a strong rally over the past month and a half.

Priced

Of the deals that were announced on Tuesday morning, only one cleared the market by sunset.

In a drive-by, OneMain Holdings Inc. priced a $500 million issue of OneMain Finance Corp. 5.5-year senior notes (Ba2/BB) at par to yield 9%, in the middle of talk.

Books built to $950 million by early afternoon, a sellside source said.

The deal was trading at par bid, par ¼ offered at the Tuesday close, according to this source who added that a lot of big holders of the company’s existing bonds did not play Tuesday’s deal, contending that its market concession left something to be desired.

Calendar

Most of Tuesday’s announcements came on timelines that have them in the market until at least Thursday.

However, watch for some of those timelines to be accelerated, a sellside source advised.

In particular, the GrafTech Global Enterprises Inc./GrafTech International Ltd. $450 million offering of 5.5-year senior secured notes (B1/BB), whispered with an all-in yield of 10¾% to 11%, could price Wednesday, although it was initially scheduled to remain in the market until Thursday, the source said. He added that the deal, which came with $280 million of reverse inquiry, was playing to $350 million of orders on Tuesday afternoon.

Also Brinker International, Inc., in the market with a $350 million offering of seven-year senior notes due 2030 (B1/BB-), with initial talk in the 8% area, could price its deal Wednesday, a day ahead of schedule, the source said.

Books were already 1.5-times deal size on Tuesday afternoon, the sellsider said.

Meantime, in a deal which hit the market ahead of the holiday weekend, the Windsor Holdings III, LLC/Univar Solutions Inc. $1.8 billion offering of seven-year senior secured notes (B2/B+/BB+) still has talk in the 8½% area, and could price Wednesday, the source said.

However, the concurrent $1.75 billion dollar-denominated seven-year term loan B (B+/BB+) is playing to a substantially greater amount of demand than the bonds (orders for the bonds were heard to be around deal-size on Tuesday), so watch for some of the bond proceeds to be shifted to the bank deal, the sellsider said.

The financing for Apollo’s buyout of Univar also includes a $550 million euro equivalent seven-year term loan B.

DISH holds

DISH’s senior notes were holding on to the gains made the previous session in active trade.

The satellite broadcaster’s near-dated 5 7/8% senior notes due Nov. 15, 2024 (B3/B-) remained on an 88-handle.

The notes continued to trade in the 88 to 88½ context throughout the session with the yield about 15½%, according to a market source.

The 11¾% senior secured notes due 2027 (Ba3/B) continued to trade on a 97-handle.

They were changing hands in the 97 3/8 to 97 5/8 context heading into the market close.

DISH’s senior notes have been volatile over the past two weeks with buying interest sparked by rumors of a partnership to sell wireless plans through Amazon giving way to selling pressure after DISH announced its wireless plans with no mention of Amazon.

While DISH’s capital structure had heavy selling pressure early last week, there was a strong rebound late last week.

The 5 7/8% notes are now trading at their highest level in June and the 11¾% notes nearly eliminated their losses from the most recent bout of selling.

Carnival weaker

Carnival’s senior notes were slightly weaker in active trade with the market off to a soft start on Tuesday.

Carnival’s 10 3/8% senior priority notes due 2028 (B2/B+) were off about ¼ point to break below a 109-handle.

The notes were changing hands in the 108 7/8 to 109 1/8 context heading into the market close, according to a market source.

The yield was about 7 5/8%.

The 6% senior notes due 2029 (B3/B) were also off about ¼ point to trade in the 87 to 87½ context with the yield about 8¾%.

The notes have been on the rise over the past month as analysts turn bullish on the company’s stock, and the cruise industry in general, due to strong demand and booking trends, a source said.

Fund flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained hefty outflows of $559 million on the day.

Actively managed funds, on the other hand, had solid inflows of $215 million on Friday, the source said.

Indexes

The KDP High Yield Daily index shed 7 points to close Tuesday at 50.7 with the yield now 7.29%.

The index posted a cumulative gain of 15 points on the week last week.

The ICE BofAML US High Yield index was down 8.3 basis points with the year-to-date return now 5.328%.

The CDX High Yield 30 index was down 18 bps to close Tuesday at 102.33.

The index posted a cumulative gain of 7 bps on the week last week.

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