Clear Channel, USA Compression, Cleveland-Cliffs price; calendar balloons; Spirit Aero gains continue

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 4 – A news-heavy session in the Monday high-yield primary market saw three issuers combine to raise $2.69 billion.

USA Compression Partners, LP and USA Compression Finance Corp. priced a $1 billion issue of five-year senior notes (B2/B+/BB), Clear Channel Outdoor Holdings, Inc. priced an $865 million issue of six-year senior secured notes (B1/B), and Cleveland-Cliffs Inc. priced an upsized $825 million issue of eight-year senior guaranteed notes (Ba3/BB-/BB-).

The calendar almost ballooned with Rithm Capital Corp., New Fortress Energy Inc., CoreCivic, Inc., and Xerox Holdings Corp. announcing offerings.

Meanwhile, it was a flat day in the secondary space with the cash bond market either side of unchanged.

Market focus was firmly on new issuance.

However, topical news continued to spark movement in outstanding issues.

Spirit AeroSystems Inc.’s senior notes continued their upward momentum after soaring on Friday after news broke Boeing Co. was in talks to acquire the aerostructure manufacturer.

E.W. Scripps Co.'s senior notes were trading higher after the company announced a leadership change.

Busy Monday

Executions appeared solid, with one issuer pricing its deal at the tight end of downwardly revised talk, while the other two came in the middle of talk.

In a drive-by. USA Compression Partners priced a $1 billion issue of 7 1/8% five-year senior notes (B2/B+/BB) at par, in the middle talk. Initial guidance was in the 7¼% area.

Meanwhile, Clear Channel priced an $865 million issue of 7 7/8% six-year senior secured notes (B1/B) at par, in the only Monday trade to price following a roadshow.

The yield printed at the tight end of the 7 7/8% to 8% revised yield talk. Earlier talk was 8% to 8¼%. Initial guidance was 8¼% to 8½%.

The deal is heard to be playing to $3.5 billion of investor demand ahead of price talk revision, a trader said.

And Cleveland-Cliffs drove through with an upsized $825 million issue (from $750 million) of 7% eight-year senior guaranteed notes (Ba3/BB-/BB-) that priced at par, in the middle of talk.

Forward calendar

There were additions to the forward calendar on Monday, primarily concerning business expected to clear the market by mid-week.

Rithm Capital Corp. plans to price a $775 million offering of five-year senior notes (expected ratings B3/B-) on Tuesday. Initial guidance has the deal coming to yield in the mid-8% area.

New Fortress Energy Inc. expects to price a $500 million offering of five-year senior secured notes (B1/BB/BB-), also on Tuesday. Initial guidance is in the high-8% to low-9% area.

CoreCivic, Inc. expects to price $450 million of five-year senior notes due 2029 (Ba2/BB-) on Tuesday. Initial guidance is in the low-to-mid 8% area.

And Xerox Holdings Corp. expects to price a $400 million offering of five-year senior guaranteed notes (Ba3/BB) on Wednesday. The deal is in the market with initial guidance in the mid-to-high 9% area.

And while winter clings to the northern hemisphere the junk bond market continues to heat up.

In the euro-denominated market, on Monday, Paris-based conductive cable and fiber optic supplier Nexans SA priced an upsized €350 million issue (from €300 million) of 4¼% six-year senior bullet notes (expected S&P: BB+) at par, at the tight end of yield talk in the 4 3/8% area, and deep inside of initial guidance in the 4¾% area.

While there was a fair share of carping about the coupon, on the buyside, the tight-pricing Nexans deal was almost four-times oversubscribed, a London-based market source said.

Spirit AeroSystems rally

Spirit AeroSystems continued to rally on Monday with market enthusiasm high for Boeing’s potential takeover of the company.

The 4.6% senior notes due 2028 (Caa1/CCC+) climbed another 1½ points in heavy volume.

They were trading at 96 with a yield of 5 5/8% in the late afternoon, according to a market source.

There was $30 million in reported volume.

The notes surged 5 to 6 points the previous session after news broke that Boeing was in talks to acquire its parts supplier and one-time business unit.

E.W. Scripps gains

E.W. Scripps’ senior notes were on the rise on Monday, breaking a strong downtrend over the past month.

Its 5 3/8% senior notes due 2031 (B3/B+) jumped almost 4 points.

They traded up to 63¼ in the late afternoon with the yield 13 7/8%, a source said.

There was $9 million in reported volume.

The 5 7/8% senior notes due 2027 were up 2 points to 84 with the yield 11¾%.

The broadcaster’s senior notes have seen heavy selling over the past month after the ESPN, Fox and Warner Bros. sports streaming alliance sparked a sell-off in broadcasters.

The notes were dragged down further by negative earnings.

However, news the company was shaking up its leadership attracted buying interest on Monday, a source said.

Indexes

The KDP High Yield Daily index closed Monday unchanged at 50.57 with the yield 6.91%.

The index gained 3 bps on the week last week.

The ICE BofAML US High Yield index was up 8.3 bps with the year-to-date return now 0.564%.

The CDX High Yield 30 index was up 8 bps to close Monday at 106.58.

The index gained 14 bps on the week last week.

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