Bioventus moves in junk primary; Carvana needs a tow; Mineral Resources at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 28 – It was Bioventus LLC’s turn in the spotlight on Thursday in the subdued junk bond primary market.

Meanwhile, the high-yield secondary market felt firmer on Thursday although volume in the space remained thin outside of recent issues.

While Treasuries have been the focus of the market, earnings are now taking center stage with the results thus far mixed, a source said.

Carvana Co.’s senior notes continued to dominate the tape.

The used car e-commerce company’s new 10¼% senior notes due 2030 (Caa2/CCC) remained under water despite a firm day for the market with its existing notes continuing to trend lower.

While volume in the tranches was light, Mineral Resources Ltd.’s recently priced tranches (Ba3/B+/BB) continued to trade with a slight premium.

Outside of recent issues, Pilgrim’s Pride Corp.’s 3½% senior notes due 2032 (B1/BB+) were on the rise following earnings after hitting an all-time low earlier in the week.

Meanwhile, outflows from high-yield mutual and exchange-traded funds tempered over the past week with funds losing $118 million through Wednesday’s close, according to the Refinitiv Lipper US Fund Flow report.

One piece at a time

High-yield new issue news came in mean amounts on Thursday.

In the dollar-denominated market Bioventus talked its $415 million offering of five-year senior notes (Caa1/CCC+) to yield 9¾% to 10%, slightly wide to initial guidance in the mid-to-high 9% area.

The Durham, N.C.-based company's debut high-yield bond offering is heard to be playing to significant reverse inquiry, and was expected to price later on Thursday.

However, no terms were available at press time.

In the European market, Miller Homes set price talk in its £815 million equivalent two-part offering of senior secured notes (B1/B+/BB-).

A sterling-denominated tranche of seven-year fixed-rate notes was talked to yield 8% to 8¼%, wide to initial guidance in the high 7% area.

A euro-denominated tranche of six-year floating-rate notes was talked with a 525 basis points spread to Euribor, no Euribor floor, at OID 97 to 98. The spread and floor come on top of initial guidance. The proposed discount is cheap to initial price guidance which was set at 98.

The deal is set to price Friday. If it does price Friday it will be the first Western European speculative-grade corporate to price in over 10 weeks, sources say.

Carvana under pressure

Carvana was the name of the day on Thursday as the used car e-commerce company’s new $3.28 billion issue of 10¼% senior notes due 2030 flooded the secondary space.

The 10¼% notes remained under water on Thursday following a weak break.

The notes traded as low as 98¼ during Thursday’s session. They were changing hands in the 98 5/8 to 99 1/8 context heading into the market close.

The yield on the notes was 10½%.

There was $219 million in reported volume.

Carvana’s new offering struggled during bookbuilding with the large unsecured offering coming as investors shed risk.

Carvana priced an upsized $3.275 billion, from $2.275 billion, issue of the 10¼% notes at par on Wednesday.

The yield printed of top of yield talk.

The notes current yield was the same as the CCC index, which was about 10½%, a source said.

Carvana’s capital structure continued to trend lower on the heels of the latest offering.

The 4 7/8% senior notes due 2029 fell another 1 point to close Thursday at 75¾ with the yield now 9½%.

There was $25 million in reported volume.

The 5 7/8% senior notes due 2028 fell back to an 81-handle and closed the day at 81½ with the yield 9.829%.

There was $21 million in reported volume.

The 5½% senior notes due 2027 fell about ½ point to close the day at 82¾ with the yield just shy of 10%.

Carvana’s notes have gyrated between gains and losses since the company reported earnings and announced the new debt offering late last week.

The existing notes have fallen 2 to 4 points since last week, a source said.

In addition to a general risk-off atmosphere, Carvana’s newest offering was relatively cheap compared to its existing issues.

Mineral Resources at a premium

Mineral Resources’ newly priced tranches continued to trade at a premium to their issue price although activity in the name tempered after a strong break.

The Australian mining company’s 8% senior notes due 2027 were changing hands in the par to par ½ context throughout Thursday’s session.

There was $18 million in reported volume.

The 8½% senior notes due 2030 were changing hands in the par ¼ to par ¾ context on Thursday.

The notes carried a decent yield from a solid credit, a source said.

Mineral Resources priced a $625 million tranche of the 8% notes and a $625 million tranche of the 8½% notes at par on Wednesday.

The 8% notes priced at the tight end of talk for a yield of 8% to 8¼%; the 8½% notes priced at the tight end of talk for a yield of 8½% to 8¾%.

Pilgrim’s Pride bounces off lows

Pilgrim’s Pride’s 3½% senior notes due 2032 were bouncing off of their all-time lows on Thursday following earnings.

The notes rose 1 point to return to an 85-handle.

They were changing hands in the 85 1/8 to 85 3/8 context heading into the close.

There was $11 million in reported volume.

The notes hit an all-time low of 84 during Wednesday’s session in anticipation of earnings.

However, the multinational food company bested expectations, a source said.

Indexes

The KDP High Yield Daily index fell 7 points to close Thursday at 59.03 with the yield now 6.28%.

The index fell 12 points on Wednesday, rose 2 points on Tuesday and shaved off 9 points on Monday.

The ICE BofAML US High Yield index fell 16.2 basis points with the year-to-date return now negative 7.534%.

The index was down 16.9 bps on Wednesday, was up 13.4 bps on Tuesday and was down 18.3 bps on Monday.

The CDX High Yield 30 index gained 23 bps to close Thursday at 102.24.

The index was down 23 bps on Wednesday and 96 bps on Tuesday after gaining 46 bps on Monday.

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