Cinemark, Sabre, Burlington price; TransDigm, Ferrellgas add-on; fallen angels weaken

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 13 – The domestic high-yield primary market cranked out new deals on Monday with three new deals and two add-ons pricing in quick-to-market trades.

Sabre GLBL Inc. priced an upsized $775 million issue of five-year senior secured bullet notes (Ba3/B+).

Burlington Stores, Inc. priced a $300 million issue of five-year senior secured notes (Ba1/BB+/BB).

Cinemark USA, Inc. priced a $250 million issue of 8¾% five-year senior secured notes (Ba2/BB+).

TransDigm Inc. priced a $400 million add-on to its 6¼% senior secured notes due March 15, 2026 (Ba3/B+).

And Ferrellgas, LP and its wholly owned subsidiary Ferrellgas Finance Corp. priced a $125 million add-on to the 10% senior secured first lien notes due April 15, 2025 (B3/CCC) it priced last week.

Meanwhile, the secondary space opened the week soft as market participants brace for earnings.

While a soft day, trading volume remained light with activity continuing to focus on fallen angels.

After skyrocketing following the Federal Reserve’s latest stimulus measures, Ford Motor Co., Occidental Petroleum Corp. and Continental Resources Inc.’s junk bonds were giving back some of their gains during Monday’s session.

Sabre’s 5¼% senior secured notes due 2023 were active and trading off on the heels of the company’s latest offering.

Post-Easter primary cranks

On the heels of last week's announcement from the Federal Reserve Bank that in certain circumstances it will dive below the speculative grade corporate credit boundary as part of its attempts to revivify a U.S. economy wracked by the coronavirus pandemic, the Monday new issue market fired on all cylinders, sources said.

The post-Easter session saw solid or better executions for five drive-by issuers.

Sabre GLBL priced an upsized $775 million issue of five-year senior secured bullet notes (Ba3/B+) at par to yield 9¼%.

The issue size increased from $500 million.

The yield printed on top of final yield talk and inside of earlier official talk in the 9½% area.

The deal was heard to be playing to $4 billion of orders early Monday afternoon.

TransDigm priced a $400 million add-on to its 6¼% senior secured notes due March 15, 2026 (Ba3/B+) at 101.00, resulting in a 6.045% yield to maturity.

The issue price came at the rich end of the par to 101 price talk, which was also the initial talk.

Burlington Stores priced a $300 million issue of five-year senior secured notes (Ba1/BB+/BB) at par to yield 6¼%.

The yield printed at the tight end of the 6¼% to 6 3/8% final yield talk, which had been revised lower from the 6½% area.

The deal was heard to be playing to $3 billion of orders early Monday afternoon, a trader said.

Cinemark USA priced a $250 million issue of 8¾% five-year senior secured notes (Ba2/BB+) at par to yield 8.747%.

The yield printed at the tight end of the 8¾% to 9% yield talk.

The deal was playing to $1.2 billion of orders early Monday afternoon.

And Ferrellgas, LP and its wholly owned subsidiary Ferrellgas Finance Corp. priced a $125 million add-on to their 10% senior secured first lien notes due April 15, 2025 (B3/CCC) at 103.00 in a Monday drive-by, according to market sources.

The issue price came at the rich end of the 102 to 103 price talk.

The original $575 million issue priced late last week

Sabre trades off

While Sabre was prepping its latest offering, the Southlake, Texas-based travel services provider’s 5¼% senior notes due 2023 were active and trading off.

The senior secured notes dropped 4 5/8 points during Monday’s session.

They were changing hands at 93 7/8 in the late afternoon with more than $10.5 million in reported volume, according to a market source.

While the notes have a shorter duration than the Sabre’s current offering, the 5¼% notes only yield about 7½%, a source said.

The yield pales in comparison to the 9¼% yield on Sabre’s latest offering.

Coming in

After skyrocketing on Friday, the junk bonds of several fallen angels were coming in in high volume activity on Monday.

Ford’s 5.113% senior notes due 2029 shaved off 1½ points and stood poised to close the day at 93.

The bonds saw more than $23 million in reported volume during Monday’s session.

The notes jumped 10 points last Thursday.

The 4.271% senior notes due 2027 dropped 3¼ points to 89¼ in the late afternoon with about $16.5 million in reported volume.

The 7.45% senior notes due 2031 dropped almost 4 points to an 86-handle with more than $14 million in reported volume. The notes jumped almost 19 points last Thursday.

Ford’s capital structure was up 10 to 25 points last Thursday.

Continental Resources 4.9% senior notes due 2044 dropped more than 8 points to close Monday at 65.

The notes were up 12 points last Thursday.

The 4½% senior notes due 2023 dropped 6¼ points to 84 after jumping more than 12 points last Thursday.

The 5% senior notes due 2022 dropped 4¾ points to 88.

Both Ford and Continental Resources are fallen angels that fit the criteria for participation in the Federal Reserve’s primary and secondary market credit facility.

While Occidental Petroleum is not eligible to participate in the Federal Reserve’s programs, the company’s junk bonds were moving up in sympathy last Thursday.

They were also giving back some of their gains during Monday’s session.

The 2.7% senior notes due 2022 dropped 2 points to 86½ with more than $21 million in reported volume, according to a market source.

The 2.9% senior notes due 2024 were up more than 4 points to 78½ with more than $16 million in reported volume.

The Federal Reserve announced last Thursday that it was expanding the scope of its primary and secondary corporate credit facility to include fallen angels that carried an investment grade rating as of March 22.

$1.63 billion Thursday inflows

The dedicated high-yield bond funds saw a huge $1.63 billion of net inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $1.255 billion of inflows on the day.

Actively managed high yield funds saw $375 million of inflows on Thursday, the sources added.

Indexes

Indexes were mixed at the start of the week after all posted strong gains the previous week.

The KDP High Yield Daily index dropped 11 bps to close Monday at 63.29 with the yield now 7.58%.

The index was up 332 bps on the week last week.

The ICE BofAML US High Yield index gained 120.7 bps with the year-to-date return now negative 9.556%.

The index gained 447.2 bps on the week last week.

The CDX High Yield 30 index sank 109 bps to close Monday at 97.77.

The index shot up 974 bps on the week last week.

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