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Morning Commentary: Lumen brings $1 billion drive-by; Tuesday deals trade higher
By Paul A. Harris
Portland, Ore., June 2 – With the high-yield summer underway in the wake of the extended Memorial Day weekend, it has been something of a shade tree primary market.
There was only one Wednesday new deal announcement by mid-morning.
Lumen Technologies is driving by with a $1 billion offering of eight-year senior notes, in the market with initial guidance in the low 5% area.
Meanwhile, in a deal announced Tuesday afternoon, Precision Drilling Corp. is on deck with a $400 million offering of senior notes due January 2029 (expected ratings B3/B/B+) talked to yield in the 7¼% area, inside of early guidance in the 7½% area.
The post-Memorial Day primary opened Tuesday to a trio of drive-by transactions, all of which were trading above new issue prices (par, in each case) on Wednesday morning.
Cinemark USA Inc.’s 5¼% senior notes due July 2028 (Caa1/B/B) were par 3/8 bid, par 7/8 offered. The deal came in the middle of talk, in a $765 million issue.
The GFL Environmental Inc. 4¾% senior notes due June 2029 (B3/B-) were par ¾ bid, 101¼ offered on Wednesday morning.
The deal upsized to $750 million from $600 million and priced at the tight end of talk.
And Switch Ltd.’s new 4 1/8% senior notes due June 2029 (B1/BB) were par ½ bid, 101 offered.
The deal upsized to $500 million from $430 million and also came at the tight end of talk, playing to an order book that was four-times to five-times oversubscribed, a trader said.
Tuesday fund flows
The daily cash flows for the dedicated high-yield bond funds were comparatively moderate on Tuesday, according to a market source.
High-yield ETFs saw $87 million of inflows on the day.
Actively managed high-yield funds sustained $35 million of outflows on Tuesday, the source said.
For the actively managed funds it was the 13th consecutive daily outflow, but the lightest outflow in that series, according to a Prospect News analysis of the data.
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