ON Semiconductor, Southwestern Energy, iStar, Hannon Armstrong price; GFL lags

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 18 – The domestic high-yield primary market continued to churn out deals at an active clip with five issuers pricing a cumulative $2.13 billion during Tuesday’s session.

ON Semiconductor Corp. priced an upsized $700 million issue, iStar Inc. priced $400 million, Hannon Armstrong Co. priced an upsized $375 million, and Southwestern Energy Co. priced $350 million.

Range Resources Corp. also priced an upsized $300 million add-on to its 9¼% senior notes due Feb. 1, 2026 (B3/B+).

Wednesday also promises to be busy with offerings from Wynn Macau Ltd., New Fortress Energy Inc., and Pike Corp. on deck.

Meanwhile, the secondary space was little changed on the day with focus remaining on new issues, a source said.

However, the deals to clear the primary market on Monday saw a lackluster reception in the secondary space.

NCR Corp.’s two tranches of senior notes (B3/BB-) saw heavy volume on Tuesday; however, with little movement in price.

GFL Environmental Inc.’s 3¾% senior secured notes due 2025 (Ba1/BB) were lagging their issue price in high-volume activity.

Tuesday’s session

News flow in the new issue market remained heavy on Tuesday.

Five issuers, bringing a tranche apiece, placed $2.13 billion face amount of junk, marking the seventh consecutive session that the hard-cranking primary has churned out a daily issuance total of $2 billion or more (in some cases much, much more). Every session thus far in August has topped the $1 billion mark.

Daily issuance for August, to Tuesday's close, averages a blazing $3.7 billion, according to Prospect News data.

Most of the session's newsmakers were well known to the market, coming with drive-by deals with a tendency of razor-sharp executions, with notes generally pricing tight or rich to talk, or even through talk.

However, with the junk market appearing to go from strength to strength, the dedicated high-yield mutual funds posted a second consecutive day of sizable net outflows - $457 million – on Monday (see details below).

In Tuesday's primary market session ON Semiconductor priced an upsized $700 million (from $500 million) of 3 3/8% eight-year senior notes (Ba2/BB) at the tight end of talk.

iStar Inc. priced a $400 million issue of 5½% 5.5-year senior notes (Ba3/BB/BB) at the wide end of talk.

Hannon Armstrong priced an upsized $375 million (from $350 million) of 3¾% 10-year senior green notes (BB+/BB+) at 99 to yield 3.871%, tight to talk.

Southwestern Energy priced a $350 million issue of 8 3/8% eight-year senior notes (Ba3/BB-) inside of talk.

Range Resources priced an upsized $300 million add-on (from $200 million) to its 9¼% senior notes due Feb. 1, 2026 (B3/B+) at the rich end of talk.

The notes pushed higher in the secondary market, Tuesday afternoon, according to traders, one of whom had the par-pricing Range Resources 9¼% add-on notes 101¼ bid, 102¼ offered, late in the day.

The forward calendar

Looking to Wednesday, Wynn Macau is in the market with a benchmark two-part dollar-denominated offering of senior notes (expected ratings B1/BB-).

The issue is an add-on to the 5½% senior notes due Jan. 15, 2026 talked in the 99.5 area, on top of initial talk. The expected tranche size is $250 million, a trader said.

Wynn Macau also intends to sell new eight-year senior notes talked to yield in the 5¾% area, inside of initial talk in the high 5% area.

The expected size of the new tranche is $600 million, the trader said.

Final tranche sizes remain to be determined.

Wynn Macau takes a place on the active forward calendar with Pike Corp., in the market with a $500 million offering of eight-year notes (B3/CCC) with early talk in the high 5% area.

And New Fortress Energy is selling $800 million of five-year secured notes (B1/B+) with initial guidance in the 7% area.

Like Wynn, they are both expected to price Wednesday (see related stories in this issue).

NCR flat

NCR’s two tranches of senior notes saw heavy volume on Tuesday.

However, the notes had little movement in terms of price with both tranches largely stuck at par.

NCR’s 5% senior notes due 2028 traded as high as 101 on Tuesday.

However, the notes lost steam as the session progressed and were trading at 99 7/8 bid, par 1/8 offered heading into the market close, a source said.

The 5¼% senior notes due 2030 were largely at the same level.

They also traded as high as 101 but were wrapped around par heading into the market close.

Both tranches saw more than $100 million in reported volume during Tuesday’s session.

The financial technology company priced a $650 million tranche of the 5% notes and a $450 million tranche of the 5¼% notes at par in a Monday drive-by.

The 5% notes priced at the tight end of yield talk in the 5 1/8% area.

The 5¼% notes priced at the tight end of yield talk in the 5 3/8% area.

GFL lags

GFL Environmental’s newly priced 3¾% senior secured notes due 2025 became the latest deal to lag their issue price in the aftermarket.

The 3¾% notes traded in a range of 99½ to par ½ during Tuesday’s session.

However, they were on a 99-handle heading into the market close, a source said.

The notes also had heavy volume with more than $90 million on the tape.

Sources attributed the lackluster performance of the notes to their tight pricing.

GFL priced an upsized $750 million issue of the 3¾% notes at par on Monday.

The coupon printed at the tight end of the 3¾% to 4% coupon talk.

The deal was upsized from $600 million.

The coupon is the lowest the serial issuer of senior notes has been able to obtain in recent history.

The Vaughan, Ont.-based waste management company tapped the high-yield market in April with a $500 million issue of five-year senior secured notes, which priced at par to yield 4¼%.

The company also priced a $500 million tranche of six-year senior secured notes at par to yield 5 1/8% in December 2019.

However, while the coupons of GFL’s other secured deals were higher, they were trading with roughly the same yield in the aftermarket.

The 4¼% notes due 2025 and the 5 1/8% notes due 2026 were all trading with a yield around 3¾%, according to a market source.

$457 million Monday outflows

For the second consecutive day the dedicated high yield-bond funds sustained net daily cash outflows on Monday, according to a market source.

High-yield ETFs sustained $422 million of outflows on the day.

Actively managed high-yield funds had $35 million of outflows on Monday, the source said.

Monday's $457 million of combined outflows follows the $523 million of net daily outflows which the dedicated high-yield bond funds sustained in the previous session, Friday, Aug. 14, the market source recounted.

The combined funds are tracking a hefty $1.45 billion of net outflows in the week that will conclude with Wednesday's close, the source added.

Indexes mixed

Indexes were again mixed on Tuesday.

The KDP High Yield Daily index shaved off 3 basis points to close Tuesday at 66.72 with the yield now 5.58%.

The index was down 9 bps on Monday.

The ICE BofAML US High Yield index gained 7.5 bps with the year-to-date return now negative 0.124%. The index was down 2.9 bps on Monday.

The CDX High Yield 30 index gained 29 bps to close Tuesday at 104.77.

The index was up 48 bps on Monday.

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