Carnival sails again; Coinbase lifted in HY secondary; Altice active; Shutterfly lower

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 19 – Carnival Corp. was again part of the primary junk bond landscape on Tuesday with a $2 billion offering, against the backdrop of a $5.93 billion session.

Meanwhile, the secondary space was quiet on Tuesday as market players awaited the onslaught of new paper in the pipeline.

While the 10-year Treasury yield again ticked above 1.6% to close the day at 1.638%, the cash bond market was largely unchanged, sources said.

While there were some Bids-Wanted-in-Competition lists circulating the market, volume remained muted.

However, Coinbase Global, Inc.'s two tranches of senior notes (Ba1/BB+) were on the rise as bullish momentum returned to the crypto space.

Altice’s capital structure was active with several of Altice France SA’s and Altice subsidiary CSC Holdings LLC’s junk bonds seeing heavy volume.

Shutterfly Inc.’s 8½% senior secured notes due 2026 (B1/B), an off-the-run issue that rarely trades, were trading down in above-average volume.

Six for nearly six

A big Tuesday in the high yield new issue market, including multiple drive-by deals, saw five issuers price a total of six dollar-denominated tranches to raise a combined total of $5.93 billion.

Executions tended to be solid, with one tranche pricing inside of talk, two pricing at the tight/rich ends of talk, two in the middle of talk and one on the wide end of talk (see related stories in this issue).

Making its seventh pass at the primary market since the onset of the coronavirus pandemic, Carnival Corp. priced an upsized $2 billion issue (from $1.5 billion) of 6% 7.5-year senior notes (B2/B) at par, in the middle of talk.

The deal was heard to be playing to $2.6 billion of orders.

The Miami-based cruise line's impressive string of Covid-era issues dates back to April 1, 2020 when it became something of a pandemic high-yield pioneer.

On that date Carnival more or less reopened the market, which had been sidelined along with nearly all of the world's capital markets by Covid-related volatility, when it priced an upsized $4 billion issue (from $3 billion) of 11½% first-priority senior secured notes due April 2023 at 99 to yield 11.901%.

The deal, which came with investment grade ratings, was priced on the high-yield syndicate desk.

The total face amount of Carnival's seven Covid-era issues comes to just over $15 billion.

Coinbase lifted

Coinbase’s beleaguered senior notes were lifted on Tuesday as bullish momentum returned to the crypto space.

The crypto-exchange’s 3 5/8% senior notes due 2031 rose about ½ point to close the day at 96 5/8, according to a market source.

There was more than $14 million in reported volume.

The other part of that deal, the company’s 3 3/8% senior notes due 2028 gained ¾ point to close the day at 97¾.

There was about $30 million in reported volume for that series.

The notes were lifted alongside the company’s capital structure as Bitcoin stood on the verge of breaking its all-time high of $65,000.

Bitcoin was trading at $64,290, an increase of 4.91%, shortly before 5 p.m. ET.

Coinbase stock has surged more than 20% over the past five sessions as Bitcoin broke past $60,000, a key resistance level.

The upward momentum was largely the result of Securities and Exchange Commission approval for a futures-based Bitcoin ETF, the ProShares Bitcoin Strategy ETF, which rose 4.85% on its trading debut on Tuesday.

While Coinbase’s junk bonds were on the rise on Tuesday, they remain severely underwater.

The notes have struggled since the cryptocurrency exchange priced a $1 billion tranche of the 3 5/8% notes and a $1 billion tranche of the 3 3/8% notes at par on Sept. 14.

The notes were heavily shorted, sources said.

Altice active

Several junk bonds in Altice’s capital structure were active on Tuesday although with little movement in price.

Altice France’s 6% senior notes due 2028 were changing hands around 96¾ with about $20 million in reported volume, according to a market source.

Alice France’s recently priced 5½% senior secured notes due 2029 (B2/B) continued to hover around par with $16 million in reported volume.

Altice subsidiary CSC Holdings’ 4 5/8% senior notes due 2030 were changing hands at 93 with about $18 million in reported volume.

The trading activity did not appear to be sparked by any headlines, a source said.

However, there has been a spat of negative press for the company over the past few weeks.

Altice USA announced in late September that it anticipated a loss of up to 20,000 broadband customers and signaled that it may explore going private at some point.

Shutterfly flutters lower

Shutterfly’s 8½% senior secured notes due 2026, an off-the-run issue that rarely makes it on to the volume charts, were trading down in above-average volume on Tuesday.

The 8½% notes were off about 5/8 point to close the day at 106, according to a market source.

There was more than $14 million in reported volume.

Shutterfly’s chief executive officer presented at the Milken Global Conference on Tuesday, which most likely sparked the trading activity, a source said.

While down on Tuesday, the notes have appreciated handsomely since the $785 million issue priced at 95 in September 2019.

Fund flows

High-yield ETFs saw $77 million of inflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $38 million of inflows on the day.

The combined funds are tracking $1.09 billion of net inflows for the week that will conclude with Wednesday's close, the market source said.

By comparison, the combined funds sustained $1.8 billion of net outflows in the week to the Oct. 12 close.

Indexes

The KDP High Yield Daily index shaved off 1 point to close Tuesday at 69.42. However, the yield was unchanged at 3.84%.

The index slid 2 points on Monday.

The CDX High Yield 30 index gained 16 bps to close Tuesday at 109.33. The index slipped 5 bps on Monday.

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