Junk issuers price $1.9 billion; Crash adds; Glatfelter skyrockets; Gray, Scipps fall

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 7 – Wednesday’s session in the dollar-denominated high-yield primary market had four issuers price a combined $1.9 billion face amount of bonds.

Meanwhile, the secondary space was largely flat on Wednesday although the tone continued to improve with Treasuries stabilizing after yields soared earlier in the week.

Crash Champions LLC’s new 8¾% senior notes due 2029 (B3/B-) continued to shoot higher in heavy volume.

However, Stena International SA’s 7 5/8% senior secured notes due 2031 (Ba3/BB+) remained wrapped around their issue price.

While the market remained new issue focused, topical news sparked outsized moves in outstanding issues.

Glatfelter Corp.’s 4¾% senior notes due 2029 (Caa1/CCC) skyrocketed after news broke that the company would merge with a spinoff of Berry Global’s health, hygiene and specialties segment.

However, news that ESPN, Fox and Warner Bros. were joining forces to launch a new sports streaming service tanked the capital structures of several broadcasters.

Gray Television, Inc.’s senior notes (Caa1/B) sank 3 to 5 points in heavy volume and E.W. Scripps Co.'s senior notes were off 2 to 3 points on the news.

Primary

Three of the four Wednesday primary issuers came with drive-bys.

AssuredPartners, Inc. priced a $500 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 7½%, at the tight end of talk.

Hillenbrand, Inc. priced a $500 million issue of five-year senior notes (Ba1/BB+) at par to yield 6¼%, in the middle of talk.

The deal was heard to have been playing to $800 million of demand at noon ET Wednesday.

Office Properties Income Trust priced a $300 million issue of 9% five-year senior secured notes at 93.5 to yield 10.67%.

The yield came within the 10½% to 10.8% yield talk. The deal was initially guided with a coupon in the 9% area at an issue price of 93 to 94.

The deal was heard to have come with considerable reverse inquiry.

The only Wednesday deal to have been in the market overnight came from Artera Services, LLC which priced a downsized $600 million issue of seven-year senior secured first-priority notes (B3/B-) at par to yield 8½%.

The issue size decreased from $740 million with proceeds shifted to the concurrent bank loan.

The yield printed at the tight end of yield talk.

Prior to downsizing the offer was playing to demand in excess of $2 billion.

Wednesday’s action left in place a $2.7 billion active forward calendar, all of it expected to clear before the end of the week.

Crash Champions adds

Crash Champions’ 8¾% senior notes due 2029 continued to shoot higher in heavy volume on Wednesday with the strong demand for the paper following the issue into the secondary space.

The 8¾% notes were up ¼ to 3/8 point to close the day on a 101-handle.

They were trading in the 101 3/8 to 101 5/8 context heading into the market close, a source said.

There was $95 million in reported volume.

In a heavily oversubscribed offering, Crash Champions priced a downsized $600 million, from $650 million, issue of the 8¾% notes at par on Tuesday.

The yield printed 12.5 basis points tighter than the tight end of yield talk in the 9% area.

Proceeds were shifted to a concurrent bank loan, which was most likely due to intense demand for the loan paper, sources said.

Stena flat

Stena’s 7 5/8% senior secured notes due 2031 were putting in a lackluster performance in the secondary space with the tight pricing of the notes leaving them little room for movement, a source said.

While the notes briefly traded as high as par 3/8, they closed the day wrapped around par.

There was $60 million in reported volume.

Stena priced a $400 million issue of the 7 5/8% notes at par on Tuesday.

The yield printed at the tight end of yield talk in the 7¾% area.

Glatfelter skyrockets

Glatfelter’s 4¾% senior notes due 2029 skyrocketed in heavy volume on Wednesday following news the company would merge with a spinoff from Berry Global to form a new specialty materials company.

The 4¾% notes jumped 14 points on the news to close the day on an 84-handle, a source said.

The yield tightened to 8¼%.

There was $21 million in reported volume.

Prior to the merger announcement, the notes had traded in the 65 to 70 range for the past several months.

The 4¾% notes will remain outstanding following the completion of the merger, a source said.

However, the merger was an enormous credit-positive for Glatfelter.

Berry Global is currently a split-rated company.

The newly formed company of Glatfelter and Berry Global’s health, hygiene and specialties segment is expected to generate pro forma revenue of $3.6 billion and adjusted EBITDA of $455 million, according to a company news release.

Gray, E.W. Scripps take a hit

Television broadcasters were taking a hit across the board on Wednesday after ESPN, Fox and Warner Bros. announced they were joining forces to launch a new sports streaming service.

Gray Television’s senior notes were down 2 to 5 points on the news.

Gray’s 4¾% senior notes due 2030 sank 4¼ points to close the day wrapped around 72 with the yield about 10¾%, a source said.

There was $12 million in reported volume.

The 7% senior notes due 2027 were also down 4¼ points to close the day at 93 with the yield 9½%.

There was $18 million in reported volume.

The 5 3/8% senior notes due 2031 were off 3½ to 4 points to close the day at 72¼ with the yield also about 10¾%.

There was $18 million in reported volume.

While volume was lighter, the news also drove E.W. Scripps’ senior notes down 2 to 3 points.

E.W. Scripps’ 5 3/8% senior notes due 2031 (B3/B+) fell 2½ points to close the day at 71 with the yield 11½%.

The 5 7/8% senior notes due 2027 were down 2 points to 87¾ with the yield 10 1/8%.

The 3 7/8% senior secured notes due 2029 (Ba3/BB) were down 2½ points to close the day at 82½ with the yield now 8¼%.

Fund flows

High-yield ETFs had $481 million of daily cash inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds had $113 million of outflows on the day.

With only Wednesday’s daily fund flows numbers remaining to go into the tally the combined funds are tracking $136 million of net outflows for the week to Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index gained 9 bps to close Wednesday at 50.65 with the yield now 6.81%.

The index gained 21 bps on Tuesday after falling 24 bps on Monday.

The ICE BofAML US High Yield index added 20.4 bps with the year-to-date return now 0.074%.

The index added 19.2 bps on Tuesday and fell 33.6 bps on Monday.

The CDX High Yield 30 index added 7 bps to close Wednesday at 105.74.

The index was off 5 bps on Tuesday and 22 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.