Ford green notes higher on day in junkland; Royal Caribbean rallies; Enerflex expected soon

By Paul A. Harris and Cristal Cody

Portland, Ore., Oct. 4 – The junk bond primary market continued to trickle out news on Tuesday.

However, if the global capital markets continue to rally in the fashion seen the first two sessions of October, new issue volume is sure to ramp up, sources say.

The Enerflex Ltd. $625 million offering of five-year senior secured first-lien, second-out notes (B2/BB-/BB-) officially kicked off on a Tuesday investor call.

Initial talk sets out a 9% coupon at a to-be-determined original issue discount, to yield in the context of 12% to 13%, a trader said, adding that orders were just over deal size heading into Tuesday's close.

Enerflex is expected to price on Wednesday or Thursday.

Meanwhile in Europe, Madrid-based fashion retailer Tendam Brands SAU set initial guidance on its €300 million offering of 5.5-year senior secured floating-rate notes at 12% to 12½%.

That deal is expected to price before the end of the week.

In secondary trading, Ford Motor Co.’s 6.1% senior green notes due 2032 (Ba2/BB+) priced in August continued to trade better over Tuesday’s session.

The paper rallied as much as 2 points Monday and traded Tuesday about 1 point better.

Stocks saw strong gains Tuesday and the junk space improved.

The S&P 500 index climbed 3.06%, the Dow 30 jumped 2.8% and the Nasdaq Composite index closed up 3.34%.

The iShares iBoxx High Yield Corporate Bond ETF was $1.55, or 2.15%, better at $73.52.

Royal Caribbean Group’s new 9¼% senior notes due 2029 (B3/B+) brought to the market in September rallied 1 1/8 points Tuesday.

Twitter

Bonds of Twitter Inc. traded up as much as 4½ points on Tuesday after billionaire Elon Musk, one of the world's more careful shoppers, expressed a willingness to go forward with a proposed buyout, essentially reasserting the terms of a deal he had spent the past several months attempting to bust up, according to a bond trader.

The Twitter 5% senior notes due March 2030 traded as high as 101¼, intraday, before falling back to par ¼, still 3½ points higher from where they began the session, the trader said.

Sellers were, in general, forced into the background on Tuesday, as risk appetite returned to the capital markets with a vengeance during the first two sessions of the month, the source said.

Traders were seeing four offers-wanted-in-competition (OWIC) lists for every single bids-wanted-in-competition (BWIC) list, prompting sellers to dangle high offers in front of the ETFs, and causing ETF names to outperform, with some trading as much as two points higher on the day, according to the trader.

Ford revs up

Ford Motor’s 6.1% senior green notes due August 2032 (Ba2/BB+) traded higher, in the 92½, 92¾ range by late Tuesday afternoon, a market source said.

The bonds were quoted early Tuesday up ½ point to 1 point at 91¼ bid, 91¾ bid offered.

Gains were extended from Monday when the paper rallied as much as 2 points.

Ford priced $1.75 billion of the bonds in a high-grade style execution on Aug. 16 at par.

Royal Caribbean higher

Royal Caribbean’s 9¼% senior notes due January 2029 (B3/B+) also rallied 1 1/8 points to 101¼ bid over the session, a source said.

The bonds priced at par in a $1 billion tranche on Sept. 22 as part of a two-part transaction.

Royal Caribbean’s existing 11 5/8% senior notes due 2027 (B3/B+) picked up 1 7/8 points Tuesday to 93¾ bid.

The issue was trading about 2½ points better since Friday.

The 2027 tranche was heavily traded in the prior week, finishing the week down 4¾ points on $479 million of secondary volume, according to a note from BofA Securities, Inc.

Indexes

The KDP High Yield Daily index was at 52.52 and a yield of 7.65% on Tuesday versus 51.84 and a yield of 7.95% on Monday.

The index posted a cumulative loss of 106 points last week.

The CDX High Yield 30 index rose to 97.73 on Tuesday after adding 54 basis points Monday to 96.35.

The index posted a cumulative loss of 197 bps in the prior week.

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