Primary prices $6.2 billion in drive-by action; Ardonagh holds premium; Amer Sports softer; Endeavor gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 12 – The high-yield new issue market saw its biggest day in nearly three years on Monday as four issuers brought five tranches, pricing an overall total of $6.2 billion.

All of that business came quick-to-market.

TransDigm Inc. priced $4.4 billion of first-lien senior secured notes (Ba3/B+) in two tranches.

The massive deal featured $2.2 billion of five-year notes that priced at par to yield 6 3/8% and $2.2 billion of eight-year notes that priced at par to yield 6 5/8%.

TransDigm’s offer, which came into the market in front of $1 billion of reverse inquiry, played to $9 billion of demand across both tranches, with $4.9 billion of that demand favoring the eight-year notes, sources said.

Elsewhere AmWINS Group, Inc. priced a $750 million issue of five-year senior secured notes (Ba3/B+) at par to yield 6 3/8%.

Sally Beauty Supply LLC priced a $600 issue of Sally Holdings LLC and Sally Capital Inc. eight-year senior notes (Ba2/BB-) at par to yield 6¾%.

And CNX Resources Corp. priced a $400 million issue of eight-year senior notes (B1/BB/BB+) at par to yield 7¼%.

All five tranches priced at the tight ends of talk.

None of Monday’s four issuers upsized their announced offerings.

Monday was the biggest day in the junk primary market since March 10, 2021, which saw slightly more than $6.7 billion.

The market had anticipated a big opening to the Feb. 12 week, with sources forecasting that it would be a front-loaded week preceding the extended Presidents Day holiday weekend ahead.

With all of Monday’s action coming in the form of a.m.-to-p.m. drive-by deals, the active forward calendar ended the session empty.

Meanwhile, the secondary space was either side of unchanged on Monday with market players eyeing the latest Consumer Price Index report set for release on Tuesday.

While markets remain focused on rates, new paper was once again dominating activity in the secondary space with the deals to clear the primary last Friday putting in solid performances.

Amer Sports Co.’s new 6¾% senior secured notes due 2031 (B1/BB) were softer in heavy volume on Monday although they were still trading at a large premium to their issue price after jumping on the break.

Ardonagh Group’s dollar-denominated tranches of senior notes also came in from the heights reached on the break although they continued to trade with a modest premium.

Outside of new paper, Endeavor Energy Resources LP’s 5¾% senior notes due 2028 (Ba2/BB+) were on the rise in active trade following news of Diamondback Energy’s $26 billion acquisition of the company.

Amer softer

Amer Sports’ 6¾% senior secured notes due 2031 were softer in heavy volume on Monday.

However, the notes continued to trade at a large premium to their issue price after jumping to a 101-handle on the break.

The 6¾% notes were off ¼ to 3/8 point.

They were trading in the par 7/8 to 101 1/8 context heading into the market close, a source said.

The notes closed the previous session in the 101 1/8 to 101 3/8 context.

Amer Sports priced an upsized $800 million, from $600 million, issue of the 6¾% notes at par on Friday.

The deal was a blowout and played to $6 billion of demand, sources said.

The yield printed at the tight end of the 6¾% to 7% yield talk.

Ardonagh holds premium

Ardonagh’s recently priced tranches were softer in active trade on Monday although they maintained the modest gains made on the break.

Ardonagh’s 7¾% senior secured notes due 2031 (B-/B) were outperforming their unsecured counterpart with the notes largely unchanged on the day.

The 7¾% notes continued to trade in the par ¼ to par ½ context in heavy volume, a source said.

Ardonagh’s 8 7/8% senior notes due 2032 (CCC/CCC) were off about ¼ point from their highs.

The notes closed the day in the par 1/8 to par 3/8 context.

Ardonagh priced a three-part $2.3 billion equivalent offering on Friday.

The deal included at upsized $750 million, from $500 million, tranche of the 7¾% senior secured notes and a $1 billion tranche of the 8 7/8% notes, both which priced at par.

The 7 ¾% secured notes priced at the tight end of the 7¾% to 8% yield talk; the 8 7/8% notes priced at the tight end of yield talk in the 9% area.

The deal also included a €500 million tranche of 6 7/8% senior secured notes due 2031 that priced at par.

Endeavor’s acquisition

Endeavor Energy’s 5¾% senior notes due 2028 were on the rise in heavy volume on Monday after Diamondback announced its $26 billion acquisition of the company.

The 5¾% notes jumped 1½ points.

They were trading in the 101 to 101 1/8 context throughout the session, a source said.

The notes were trading up to their takeout price with the acquisition triggering the 101 poison put, a source said.

Diamondback Energy announced Monday that it would acquire Endeavor in a cash and stock deal with an enterprise value of $26 billion.

Diamondback will use 117.3 million shares and $8 billion in cash to fund the acquisition.

Citigroup has provided Diamondback with an $8 billion bridge facility to cover the cash portion of the transactions.

Indexes

The KDP High Yield Daily index inched up 2 basis points to close Monday at 50.69 with the yield now 6.8%.

The index added 8 bps on the week last week.

The ICE BofAML US High Yield index added 4.3 bps with the year-to-date return now 0.227%.

The index added 16 bps on the week last week.

The CDX High Yield 30 index added 11 bps to close Monday at 106.15.

The index added 10 bps on the week last week

Fund flows

The dedicated high-yield bond funds saw $178 million of net daily inflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $91 million of inflows on the day.

High-yield ETFs saw $87 million of inflows on Friday, the source said.

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