Sirius active; American Axle improves; Royal Caribbean tops par in junk bond secondary

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 25 – While the domestic high-yield primary market was again dormant on Wednesday, the European market saw some action.

Oslo-based debt collector Axactor SE plans to start a roadshow on Monday for a €300 million offering of five-year senior notes (Ba3/B).

Meanwhile, it was another subdued day in the secondary space with the market strong but volume light with no new paper entering the space.

Several recent issues were active with end-of-month clean-up the driving force for activity.

Sirius XM Radio’s 3 7/8% notes due 2031 were active although with little movement in price.

American Axle & Manufacturing, Inc.’s 5% senior notes due 2029 (B2/B+) were nominally improved with the notes approaching par after largely struggling below since hitting the secondary space.

Royal Caribbean Cruises Ltd.’s 5½% senior notes due 2026 (B2/B) also gained in thin trading with the notes topping par after struggling below for the past several sessions.

European primary

The European high-yield primary market came to life on Wednesday as Oslo-based debt collector Axactor mandated Arctic Securities, DNB Markets and Nordea as joint lead managers for its proposed €300 million offering of five-year senior notes (Ba3/B), set to start a telephone roadshow on Monday.

The week ahead, the pre-Labor Day week in the United States leading to a three-day holiday weekend – the U.S. bond market's traditional summer-fall terminus – promises to be an active one, a London-based sellside source said on Wednesday.

September-October European issuance should be formidable, the source added.

As previously reported, the U.S. market is looking for a possible $60 billion of issuance in September alone, according to market sources.

Sirius active

Sirius’ 3 7/8% notes due 2031 were in focus on Wednesday although the notes were little changed in the high-volume activity.

The 3 7/8% notes were changing hands in the 99 to 99¼ context throughout Wednesday’s session, according to a market source.

There was about $23 million in reported volume, making the issue one of the most actively traded in the secondary space.

The 3 7/8% notes have been stuck below par since the New York-based broadcasting company priced the $1.5 billion tranche at par on Aug. 2.

The notes priced as part of a $2.5 billion two-tranche offering that included a $1 billion tranche of 3 1/8% notes due 2026.

The 3 1/8% notes have fared better than their longer-duration counterpart.

The 3 1/8% notes continued to trade on a 101-handle on Wednesday and closed the day around 101½.

American Axle improves

American Axle’s 5% senior notes due 2029 improved in active trading on Wednesday.

The notes were changing hands in the 99 7/8 to par 1/8 context heading into the market close, according to a market source.

There was about $20 million on the tape.

The 5% notes were on the rise on Wednesday after struggling since breaking for trade.

The notes, which priced at par, have largely traded in the 99¼ to 99¾ context since breaking for trade on Aug. 16.

Royal Caribbean tops par

Royal Caribbean’s 5½% senior notes due 2026 were also on the rise on Wednesday after struggling since pricing.

The 5½% senior notes continued to hover around par on Wednesday.

There was more than $14 million in reported volume during the session.

The notes broke par the previous session after climbing more than 1 point over the past week.

The cruise line operator’s senior notes continued to ride the wave of investor optimism spawned by the Food and Drug Administration’s approval of Pfizer’s Covid-19 vaccine.

The FDA approval reignited the reopening trade with the travel and leisure sectors outperforming as a result of the news.

$243 million Tuesday inflows

The dedicated high-yield bond funds saw $243 million of net inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $174 million of inflows on the day.

Actively managed high yield funds saw $69 million of inflows on Tuesday, the source said.

With only Wednesday's daily flows remaining to go in the tally, the combined funds are tracking $470 million of net inflows for the week that concluded with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index rose 7 basis points to close Wednesday at 69.96 with the yield now 3.74%.

The index gained 9 bps on Tuesday and 4 bps on Monday.

The ICE BofAML US High Yield index gained 9.4 bps with the year-to-date return now 4.115%.

The index gained 19.1 bps on Tuesday and 18.9 bps on Monday.

The CDX High Yield 30 index rose 11 points to close Wednesday at 109.55. The index gained 5 bps on Tuesday and 32 bps on Monday.

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