Charter prices; forward calendar balloons; Coty, Morton Salt, Central Garden flat; Entergis at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 19 – The domestic high-yield primary market saw one new tranche and two add-ons price during Monday’s session.

Charter Communications, Inc. accounted for the majority of Monday’s new-deal activity and priced a $1 billion offering of 12-year senior unsecured notes (B1/BB).

However, the week ahead will be active with the forward calendar ballooning to more than $5 billion.

Meanwhile, it was a soft day in the secondary space although volume outside of new issues was light as market players await earnings reports.

“No one’s placing big bets ahead of earnings,” a source said.

The lackluster performance of several recent deals was also contributing to the weak tone in the market.

Coty Inc.’s 5% senior notes due 2026 (B3/B); Central Garden & Pet Co.’s 4 1/8% senior notes due 2031 (B1/BB/BB) and SCIH Salt Holdings, Inc.’s two tranches of senior notes were wrapped around their issue price.

However, Entegris Inc.’s 3 5/8% senior notes due 2029 (Ba2/BB) were putting in a strong performance with the notes closing the day on a 101-handle.

Monday’s primary

Charter Communications, one of the most familiar names in the high yield bond universe, showed up early on a news heavy Monday with a $1 billion offering of 12-year senior unsecured notes (B1/BB) that priced at par to yield 4½% in a drive-by.

The yield came at the tight end of yield talk in the 4 5/8% area, which had tightened from the 4¾% to 4 7/8% early guidance.

The deal was heard to be playing to $3.5 billion of demand when early guidance circulated, according to a trader who added that as talk tightened prospective investors bailed on the offer.

The new Charter 4½% unsecured notes were trading in line with this color, at 99 ¼ bid par ¼ offered, shortly after Monday's close, the trader added.

Elsewhere, Genesis Energy, LP priced an upsized $250 million add-on to its 8% senior notes due Jan. 15, 2027 (B1/B+) at 103.75 to yield 7.157%.

The deal upsized from $200 million.

The issue price came in the middle of the 103.5 to 104 price talk. Initial talk was 103.25 to 103.75.

There was heard to be $50 million of reverse inquiry in the deal, a trader said.

Meanwhile, an active forward calendar that began the week well below $500 million streaked into the vicinity of $5 billion by Monday's close (see related stories in this issue).

Flat

Several recent deals saw lackluster receptions in the secondary space with the notes falling flat on a soft day for the market.

Coty’s 5% senior notes due 2026 were marked at 99¾ bid, par offered heading into the market close.

The New York-based beauty company priced an upsized $900 million, from $750 million, issue of the 5% notes at par on Friday.

The yield printed at the wide end of the 4¾% to 5% yield talk.

Central Garden & Pet’s 4 1/8% senior notes due 2031 were marked at par bid, par ¼ offered heading into the close, according to a market source.

The Walnut Creek, Calif.-based supplier of lawn, garden and pet products priced a $400 million issue of the 4 1/8% notes at par on Friday.

Pricing came at the tight end of yield talk in the 4¼% area.

SCIH Salt Holdings (Morton Salt) secured and unsecured notes were both wrapped around par in active trading.

The 4 7/8% senior secured notes due 2028 (B3/B) were trading in the par to par 1/8 context heading into the market close.

The 6 5/8% senior notes due 2029 (Caa2/CCC+) were marked at 99¾ bid, par 1/8 offered.

Morton Salt priced a $1.1 billion tranche of the 4 7/8% notes and a$700 million tranche of the 6 5/8% notes at par on Friday.

The 4 7/8% notes priced at the tight end of the 4 7/8% to 5% yield talk.

The 6 5/8% notes priced in the middle of the 6½% to 6¾% yield talk.

Entergis strong

Entergis’ 3 5/8% senior notes due 2029 were putting in a strong performance on an otherwise weak day in the secondary space.

The notes traded up to a 101-handle and were marked at 101 bid, 101¼ offered heading into the close.

The supplier of materials to the semiconductor industry is a strong BB credit that is well known to investors.

“It’s a high-quality name that people are comfortable with,” a source said.

While lower coupon bonds have been under pressure with rising Treasury yields, the 10-year Treasury yield opened the day down 1 bp at 1.57%.

While it ticked up to an intraday high of 1.608%, the 10-year Treasury yield closed Monday at 1.603%.

Moderating Treasury yields also helped boost Entergis’ notes, a source said.

$292 million Friday inflows

The dedicated high-yield bond funds saw $292 million of net 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 $205 million of inflows on the day.

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

Indexes mixed

Indexes were mixed at the start of the week.

The KDP High Yield Daily index rose 2 points to close the day at 69.65 with the yield now 3.85%.

The index posted a cumulative gain of 3 points on the week last week.

The ICE BofAML US High Yield index shaved off 5.6 bps with the year-to-date return now 1.808%.

The index posted a cumulative gain of 23.6 bps on the week last week.

The CDX High Yield 30 index dropped 25 bps to close Monday at 109.69.

The index posted a gain of 23 bps on the week last week.

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