Junk market has three issuers; Superior Plus, CPI, Norwegian, Tronox perform well; ACCO lags

By Paul A. Harris and Abigail W. Adams

Portland, Ore., March 2 – Three issuers sold notes in Tuesday’s junk bond primary market.

All three issues will be used to fund redemptions or tenders for older issues.

Meanwhile, the secondary space was largely unchanged on Tuesday after Monday’s strong performance.

New paper dominated the tape with the deals to clear the primary market on Monday putting in mixed performances.

Superior Plus LP and Superior General Partner Inc.’s 4½% senior notes due 2029 (Ba3) and CPI Card Group’s 8 5/8% senior notes due 2026 (B3/B-) outperformed with both issues trading well above their issue prices.

Norwegian Cruise Line Holdings Ltd.’s new 6 1/8% senior notes due 2028 (Caa1/B-) were also putting in a strong performance in high-volume activity.

While at a premium, Tronox Inc.’s 4 5/8% senior notes due 2029 (B3/B) remained on a par-handle in high-volume activity.

However, ACCO Brands Corp.’s 4¼% senior notes due 2029 (B1/BB-/BB) were well below their issue price.

Macy’s, Clearway, Murphy Oil

Department store operator Macy's Retail Holdings LLC showed up Tuesday with a refinancing deal the market had been anticipating since early in the year.

Sources say it went well, noting that it played to a big book, enabling the company to price its $500 million issue of 5 7/8% eight-year senior notes (B1/B) through price talk and deep inside of initial guidance.

Macy's new 5 7/8% notes due 2029, which priced at par, played to $2.5 billion of demand, and were trading at 101 bid, 101½ offered around Tuesday's close, a trader said.

Also coming with a Tuesday drive-by was Clearway Energy Co. which priced a green-eligible issue, $925 million of 3¾% 10-year senior notes (Ba2/BB) that came at par, at the tight end talk.

And Murphy Oil Corp. priced a $550 million issue of 6 3/8% long seven-year senior notes (Ba3/BB/BB+) at par, in the middle talk.

The new Murphy Oil 6 3/8% notes due 2028 were wrapped around par late Tuesday, a trader said.

Meanwhile the active forward calendar saw a modest build-up on Tuesday (see related stories in this issue).

Outperformers

While several recent deals have fallen flat or only traded with slight premiums in the aftermarket, Superior’s 4½% senior notes due 2029 and CPI’s 8 5/8% senior notes due 2026 bucked the trend with both trading 2 to 3 points above their issue prices.

The deals carried decent yields and were relatively cheap given the market, sources said.

Superior’s 4½% notes traded in a range of 101¾ to 102½ during Tuesday’s session.

They gained momentum as the session progressed and stood poised to close the day on a 102-handle, a source said.

There was more than $32 million of the bonds on the tape.

Superior Plus priced an upsized $600 million, from $500 million, issue of the 4½% notes at par on Monday.

The yield printed at the tight end of the 4½% to 4¾% yield talk.

CPI Card’s 8 5/8% senior notes due 2026 traded in a range of 102½ to 104 during Tuesday’s session.

They were changing hands at 103¾ heading into the close, a source said.

While the issue was small, the notes were active with $33 million on the tape.

CPI priced a $310 million issue of the 8 5/8% notes at par on Monday.

Pricing came tighter than talk for a yield in the 9% area.

Norwegian at a premium

Norwegian’s new 6 1/8% senior notes due 2028 were also putting in a strong performance in the secondary space with the notes gaining momentum as the session progressed.

The 6 1/8% notes were on a par-handle as the market opened but climbed to a 101-handle as the session progressed, a source said.

The 6 1/8% notes were trading in the 101¾ to 101 7/8 context heading into the market close.

The notes had more than $87 million in reported volume.

Norwegian’s 5 7/8% senior notes due 2026 were also active and making gains following Monday’s add-on.

The notes traded as low as 99¾ during Tuesday’s session but were changing hands in the par 3/8 to par 5/8 context by the market close, a source said.

Norwegian priced a $1.1 billion two-tranche offering on Monday which included a $525 million issue of the 6 1/8% notes and a $575 million add-on to the 5 7/8% notes due 2026.

The 6 1/8% notes priced at par. Pricing came richer than the 6¼% to 6½% yield talk.

The add-on priced at par, richer than talk for a reoffer price of 99 to 99.5 price talk.

Par-handle

While Tronox’s 4 5/8% senior notes due 2029 were at a premium to their issue price, the notes remained on a par handle.

The 4 5/8% notes traded in a range of par ¼ to par 7/8 during Tuesday’s session. They were changing hands at par ½ heading into the market close.

Tronox priced an upsized $1.075 billion, from $625 million, issue of the 4 5/8% notes at par on Monday.

Pricing came at the tight end of yield talk in the 4¾% area.

ACCO lags

ACCO’s 4¼% senior notes due 2029 were struggling in the aftermarket with the notes well below their issue price.

The 4¼% notes traded in a range of 98¼ to 99 during Tuesday’s session.

They were on a 98-handle heading into the market close.

There was more than $55 million of the bonds on the tape.

ACCO priced a downsized $575 million, from $650 million, issue of the 4¼% notes on Monday.

Pricing came at the wide end of the 4% to 4¼% yield talk.

$918 million Monday inflows

The dedicated high-yield bond funds had $918 million of net inflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw a very hefty $828 million of inflows on the day.

Actively managed high-yield funds saw $90 million of inflows on Monday, the source added.

The combined funds are tracking $1.4 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes mixed

Indexes were mixed on Tuesday after starting the week firmly in the green.

The KDP High Yield Daily index gained 2 points to close the day at 69.52 with the yield now 3.98%.

The index was up 11 points on Monday.

The ICE BofAML US High Yield index rose 9.8 bps with the year-to-date return now 1.032%.

The index was up 26.3 bps on Monday.

The CDX High Yield 30 index sank 18 bps to close Tuesday at 108.85.

The index gained 82 bps on Monday.

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