Cogent, Iris, Maxar on deck; Advanced Drainage holds gains; Tenet notes head lower

By Cristal Cody and Paul A. Harris

Tupelo, Miss., June 6 – The Monday junk session saw a modest volume of new issue news.

Cogent Communications Group, Inc. announced a $450 million offering of five-year senior notes (B3/B) that are set to price on Tuesday.

The deal, which was scheduled to launch on a Monday investor call, is in the market with initial guidance in the low-to-mid 7% area.

Meanwhile, in a deal that began being telegraphed to the market nearly a week ago, Iris Holdings Inc. plans to start a roadshow on Tuesday for a $400 million offering of 6.5-year senior notes (Caa2/CCC+) backing the buyout of Intertape Polymer Group Inc. by Clearlake Capital Group LP.

Initial guidance has the notes coming with a 10% coupon at an issue price in the low 90s with an all-in yield in the high 11% area to the low 12% area. Pricing is expected in the early part of the June 13 week.

Those two offers take places on an active new-issue calendar that featured one deal carried over from last week.

Maxar Technologies Inc. is scheduled to be on the road through Wednesday with a $500 million offering of five-year senior secured notes (B2/B), initial guidance in the mid-to-high 7% area.

No high-yield deals priced on Monday.

The high-yield secondary market opened Monday 1/8 point better and remained in the black on the back of no new issuance expected, a source reported.

“The market seems to be doing relatively well today,” one source noted by late afternoon. “It’s not on fire or anything but up overall, maybe a ¼ point.”

Stocks moved higher as oil futures ended modestly lower.

The iShares iBoxx High Yield Corporate Bond ETF was off 59 cents at $78.05.

West Texas intermediate crude oil benchmark futures for July deliveries settled down 37 cents to $118.50 a barrel.

Junk secondary action was quieter as the week kicked off, sources said.

Advanced Drainage Systems Inc.’s new 6 3/8% senior notes due June 2030 (Ba2/B+) held onto gains over the session.

Also in new issues, Tenet Healthcare Corp.’s 6 1/8% senior secured notes due 2030 (B1/BB-/BB-) saw some recovery during the session but moved lower by the end of the day.

The average junk spread above Treasuries dropped 68.55 basis points to 415 bps for the week ended Thursday and declined from a recent peak of 494 bps hit on May 24, according to a Fitch Ratings report Friday.

Advanced Drainage steady

Advanced Drainage’s 6 3/8% senior notes due 2030 were quoted trading Monday flat at 101, 101½, a source said.

The issue was last seen unchanged at 101½ bid on $14 million of volume.

The bonds went out Friday at the 101¼ to 101½ range after trading as high as 101¾ during the session.

Advanced Drainage priced a $500 million issue of the 6 3/8% notes at par in a Thursday drive-by.

Pricing came at the tight end of yield talk in the 6½% area.

The deal from the water management systems supplier was reported oversubscribed by more than four times.

The issue traded as high as 102 1/8 after breaking for trade.

Tenet paper active

Tenet Healthcare’s 6 1/8% senior secured notes due 2030 (B1/BB-/BB-) traded late Monday afternoon up at the par to 100½ range before the issue softened 3/8 point to 99¾ bid, market sources reported.

Secondary supply totaled $14 million.

The bonds were seen Friday down ½ point at the 99 7/8 to par 1/8 range.

Tenet priced an upsized $2 billion offering of the notes on Wednesday at par at the tight end of the 6¼% talk and better than initial guidance in the 6½% area.

The health care service provider’s deal was upsized from $1.8 billion and was reported to have seen as much as $5 billion of demand.

Mixed daily fund flows Friday

The cash flows of the dedicated high-yield bond funds were mixed on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $180 million of inflows on the day.

High-yield ETFs were negative on Friday, however, posting $219 million of outflows on the day. Those Friday outflows from the ETFs come on the heels of big daily inflows of $1.12 billion on Thursday, the opening session of the present reporting week for fund flows.

Hence the combined funds are tracking $1.43 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index was at 57.66 with a 6.43% yield on Monday, compared to 57.84 with a yield of 6.36% on Friday.

The index posted a cumulative loss of 32 points last week.

The CDX High Yield 30 index dropped to 100.94 on Monday from 101.1 on Friday.

The CDX also posted a cumulative loss of 66 bps over the prior week.

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