Carnival ‘gaps’ higher in junkland; Weatherford gains continue; NCR lifted; Xerox losses mount

By Abigail W. Adams

Portland, Me., Oct. 26 – The domestic high-yield primary market saw another quiet session with the calendar empty heading into the final days of the October.

While the prospects for new issuance are low given the degree of uncertainty in the market, the activity in the high-grade and European high-yield market was promising, a source said.

Cirsa Finance International Sarl priced an upsized €425 million of 10 3/8% senior secured notes due 2027 (B3/B-) on Wednesday at 98.105 to yield 10 7/8%, according to a market source.

Pricing came tighter than talk for a yield of 11% to 11¼% and the size was increased from the initially announced €350 million.

Meanwhile, the secondary space extended gains on Wednesday although selling pressure dragged the market off the intraday high heading into the market close.

ETF buying was continuing to lift the market with inflows strong and offers-wanted-in-competition lists far outnumbering bids-wanted-in-competition, a source said.

Carnival Corp.'s capital structure “gapped higher” amid the market strength early in the session although its senior notes also closed off the highs of the day.

Earnings continued to drive activity in the space with Weatherford International Ltd.’s 8 5/8% senior notes due 2030 (B3/CCC+) continuing their upward momentum after a strong report.

While volume was light, NCR Corp.’s senior notes were also on the rise post-earnings with investors expressing renewed confidence in the company after it clarified its capital structure goals.

And losses continued to mount for Xerox Holdings Corp.’s senior notes following a disappointing earnings report.

Carnival gaps up

Carnival’s senior notes made strong gains amid the market strength early in Wednesday’s session although the notes came in as selling pressure took hold of the market heading into the close.

“The whole structure gapped up,” a source said, with Carnival’s notes up 1 to 2 points in early trading.

Carnival’s 10 3/8% senior priority notes due 2028 (B2/B+) broke above a par-handle in heavy volume.

The notes were trading in the par 7/8 to 101 1/8 context midway through the session.

However, they lost steam and were changing hands in the par ¾ to 101 context heading into the close.

The notes remained among the most actively traded in the secondary space with $41 million in reported volume.

Carnival’s 10½% senior notes due 2030 (B3/B) jumped 2 points to trade as high as 77 in intraday activity.

However, they also came in and were wrapped around 76 with a yield of 16% heading into the market close.

There was $19 million in reported volume.

Weatherford gains continue

Weatherford’s 8 5/8% senior notes due 2030 (B3/CCC+) continued their upward momentum after earnings beat expectations.

The 8 5/8% notes jumped another 1 point in active trading.

They traded as high as 95¾ early in the session.

However, the notes also lost steam alongside the broader market and were wrapped around 95 heading into the close with the yield 9½%, a source said.

There was $25 million in reported volume.

The oilfield services company bested analyst expectations and provided strong guidance.

The notes have been on an upward surge in anticipation of positive earnings, gaining more than 5 points over the past four sessions.

NCR earnings

While volume was light, NCR’s senior notes were lifted after reporting earnings with the capital structure up 1 to 3 points.

NCR’s 5¼% senior notes due 2030 (B3/B) traded up to 3 points to 79 with the yield 9%.

While the ATM kiosk provider missed analyst expectations on revenue, its EBITDA was inline.

The company also assuaged investor concern after discussing its capital structure goals during its earnings presentation, a source said.

It was that discussion that moved NCR’s bonds to the upside, a source said.

Xerox losses mount

Xerox’s senior notes continued to lose ground on Wednesday following a disappointing earnings report.

The company’s 5½% senior notes due 2028 sank another 1 point to a 78-handle.

The notes were changing hands at 78¼ with a yield just shy of 10 5/8% heading into the market close, a source said.

There was $11.5 million in reported volume.

The notes fell 3 points on Tuesday after the company reported disappointing EBITDA and reduced its forward guidance.

Indexes

The KDP High Yield Daily index gained 21 points to close Wednesday at 51.2 with a yield of 7.78%.

The index rose 24 points on Tuesday and 20 points on Monday.

The ICE BofAML US High Yield index rose 45.4 basis points with the year-to-date return now negative 12.759%.

The index gained 52.4 bps on Tuesday and 21.7 bps on Monday.

The CDX High Yield 30 index rose 11 bps to close Wednesday at 98.75.

The index gained 11 bps on Tuesday and 18 bps on Monday.

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