NortonLifeLock reopens junk primary market; Carvana, Charter, Royal Caribbean climb

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 7 – After a warmup Tuesday with no new business, the primary junk bond market was finally ready to get into the swing of things on Wednesday with an announced deal from NortonLifeLock Inc.

Meanwhile, it was a strong day for the secondary space with the CDX index climbing more than 1 point and the cash bond market up 3/8 point as equities broke their rout.

Recent deals that had taken a beating in the sell-off sparked by Federal Reserve chair Jerome Powell’s Jackson Hole speech pared their losses in active trading on Wednesday.

Charter Communications, Inc. subsidiary CCO Holdings, LLC’s 6 3/8% senior notes due 2029 (B1/BB-) and Royal Caribbean Group’s 11 5/8% senior notes due 2027 (B3/B) reversed course during Wednesday’s session.

CCO Holdings’ 6 3/8% notes broke out of its 96-handle to close the day above 97 with buying strong into the close.

Royal Caribbean’s 11 5/8% senior notes due 2027 shot back to a 99-handle in active trading.

Carvana Co.’s 10¼% senior notes due 2030 (Caa2/CCC) were bouncing off their lows in high volume with the notes attempting to break above a 79-handle amid the market strength.

Norton

The post-Labor Day primary market reopened on Wednesday as NortonLifeLock Inc., formerly known as Symantec Corp., rolled out a $1.2 billion two-part offering of senior notes (B1/BB-/BB+) set to price before the end of the week.

The offer includes five-year notes with initial talk in the low-7% area, and eight-year notes with initial talk in the 7 3/8% area.

There is $100 million of reverse inquiry in the deal, a sellside source said (see related story in this issue).

Meantime the market awaits news on high profile LBO-financing deals from Citrix Systems Inc., Nielsen Holdings and Tenneco Inc., the source said, adding that with the Fed believed to be primed to bring further interest rate increases investors and issuers are keen to get a fix on the price of syndicating debt related to mergers and acquisitions.

Charter gains

In the secondary, Charter subsidiary CCO Holdings’ recently priced 6 3/8% senior notes due 2029 were on the rise in active trading after hitting a new low the previous session.

The notes broke above a 96-handle in active trading after breaking below it the previous session.

The 6 3/8% notes were on a 96-handle for the majority of the session but climbed into the close alongside the broader market, a source said.

The notes ended the day up 7/8 point with the final trades in the 96 7/8 to 97 1/8 context.

There was $15 million in reported volume.

The notes were changing hands in the 96 to 96½ context on Tuesday with rate-sensitive names under pressure.

The $1.5 billion issue priced at par on Aug. 4.

Royal Caribbean reverses

Royal Caribbean’s 11 5/8% senior notes due 2027 saw a strong rebound on Wednesday.

The notes shot up 1½ points to return to a 99-handle.

They closed the day at 99½, according to a market source.

The yield fell to 11¾%.

There was $11 million in reported volume.

The 11 5/8% notes fell as low as 97¼ last Thursday as rate, recession and refinancing concerns weighed on the market.

Royal Caribbean priced the $1.25 billion issue at par on Aug. 15.

Carvana bounces off lows

Carvana’s 10¼% senior notes due 2030 bounced off their lows in high-volume trading on Wednesday with the notes attempting to break above 80.

The struggling notes were up 5/8 point to reclaim a 79-handle and were trading in the 79 3/8 to 79 5/8 context for the majority of the session, a source said.

However, the final print for the notes was above 80, although the trade was an outlier.

There was $18 million in reported volume.

Carvana’s notes again hit rock bottom in the recent market weakness with the notes returning to a 78-handle after trading as high as 88 mid-August when the rally was at its peak.

However, the notes have been on a strong downtrend since.

Indexes

The KDP High Yield Daily index rose 20 points to close Wednesday at 54.12 with the yield 7.21%.

The index was down 12 points on Tuesday.

The ICE BofAML US High Yield index gained 27.8 basis points with the year-to-date return now negative 11.068%.

The index slid 14.7 bps on Tuesday.

The CDX High Yield 30 index jumped 107 bps to close Wednesday at 100.11.

The index gained 88 bps on Tuesday.

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