Junk primary quiet; Entegris gains; secondary pares losses; Tenet on the rise

By Abigail W. Adams

Portland, Me., June 17 – The domestic high-yield primary market remained dormant on Friday with the forward calendar empty heading into the coming week.

Sources were unsure what to expect from the primary market with volatility high and borrowing costs expensive.

Real rates saw a major jump in the past week with financial conditions now the tightest they have been since 2018, according to a BofA Global Research report.

Two deals totaling $1.295 billion cleared the market in the June 13 week – both came with substantial discounts, which has been a growing trend in primary market pricing.

The discounted offer price may be a reaction to the poor performance of deals issued at par, a source previously said.

As of Friday, only three of the 114 deals that have priced year to date were trading above their issue prices, according to a market source.

Entegris Inc.’s newly priced 5.95% senior notes due 2030 (Ba2/BB/BB) was one out those three with the notes posting strong gains on Friday after falling flat on the break.

The overall market firmed on Friday after Thursday’s brutal sell-off with the cash bond market better by 3/8 to ½ point although volume was thin.

Few accounts were making moves ahead of the long weekend, a source said.

Tenet Healthcare Corp.’s 6 1/8% senior secured notes due 2030 (B1/BB-/BB-) were among the benefactors of the rally with the notes gaining 1 point in active trading.

While firm on Friday, the market has still fallen more than 2½ points on the week with outflows reaching historic proportions.

The $5.7 billion outflow from high-yield mutual and exchange-traded funds recorded through Wednesday’s close was one of the largest on record.

It was the heftiest outflow the market had seen since Feb. 14, 2018 when $6.3 billion left the space, a source said.

Entegris gains

Entegris’ newly priced 5.95% senior notes due 2030 (Ba2/BB/BB) saw strong gains on Friday with the deal one of three to have priced in the past year to trade above the discounted issue price.

The 5.95% notes rose 1½ points.

It was trading in the 91¾ to 92¼ context early in the session and was marked at 92 bid, 92½ offered heading into the market close, sources said.

The notes were flat on Thursday’s break, closing the previous session at 90½ bid, 91¼ heading.

The $895 million issue priced with a coupon of 5.95% and a discounted offer price of 90.832 to yield 7½% in a Thursday drive-by, according to a market source.

Pricing came in the middle of official talk for a yield in the 7½% area.

Pricing was in line with initial guidance for a 5.95% coupon and in the middle of initial guidance for a discounted offer price of 90.1 to 91.5.

The deal priced with a significant discount and was trading with a yield that was wide to the BB index, which is currently yielding 6.86%, sources said.

Tenet gains

Tenet’s recently priced 6 1/8% senior secured notes due 2030 were among the benefactors of Friday’s rally.

The notes gained 1 point to return to a 95-handle.

They were changing hands in the 95 to 95½ context heading into the market close with the yield about 6.89%.

There was $16 million in reported volume.

The 6 1/8% notes have been on a strong downtrend since the $2 billion issue priced at par on June 1.

The notes hit their lowest level on Thursday since pricing with the notes closing the previous session wrapped around 94.

Indexes

The KDP High Yield Daily index gained 15 points to close Friday at 54.8, an increase of 7.55%.

The index sank 55 points on Thursday, gained 45 points on Wednesday, fell 18 points on Tuesday and plummeted 143 points on Monday.

The index posted a cumulative loss of 156 points on the week.

The ICE BofAML US High Yield index gained 20.7 basis points with year-to-date returns negative-12.9189%

The index fell 91.6 bps on Thursday, rose 73 bps on Wednesday, fell 54.47 bps on Tuesday and plummeted 212 bps on Monday.

The index posted a cumulative loss of 264 bps on the week.

The CDX High Yield 30 index rose 49 bps to close Friday at 97.06.

The index sank 156 bps on Thursday, rose 95 bps on Wednesday, inched up 1 bp on Tuesday and sank 162 bps on Monday.

The index posted a cumulative loss of 175 bps on the week.

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