CHS jumps on earnings; Twitter active on takeover; Carnival rises; junk funds add $2.79 billion

By Abigail W. Adams

Portland, Me., Oct. 27 – The domestic high-yield primary market marked another day of inactivity with the calendar empty.

However, the secondary space continued to firm with the cash bond market adding another ½ point.

ETF buying continued to lift the overall market with inflows into the asset class strong over the past week.

ETFs reported their eighth consecutive daily inflow on Wednesday, bringing the month-to-date total to $5.29 billion, according to a market source.

High-yield mutual and exchange-traded funds added $2.79 billion in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flows report.

Offers-wanted-in-competition lists continued to outpace bids-wanted-in-competition lists by a large margin.

Carnival Corp.'s capital structure continued to benefit from the ETF buying frenzy, a source said.

Carnival’s 10 3/8% senior priority notes due 2028 (B2/B+) continued to build upward momentum with the notes rising to a 101-handle in heavy volume.

Topical and earnings-related news remained a driver of activity in the space.

Twitter Inc.’s 5% notes due 2030 (Ba2/BB+) were among the most actively traded issues during Thursday’s session with Elon Musk due to close his $44 billion takeover of the company on Friday.

CHS/Community Health Systems Inc.'s senior notes surged higher with the capital structure lifted 3 to 6 points with earnings better than expected or not as bad as feared, a source said.

Carnival’s upward momentum

Carnival’s capital structure continued to benefit from the ETF buying activity lifting the overall market, a source said.

The company’s most recently priced 10 3/8% senior priority notes due 2028 continued to reach new heights with the notes rising another ½ point to a 101-handle.

The 10 3/8% notes, which priced at 98.465, were changing hands in the 101 to 101½ context in heavy volume.

There was $28 million in reported volume.

The 10 3/8% notes have been on a strong uptrend over the past week and set a new high each day of the week.

Carnival’s 7 5/8% senior notes due 2026 (B3/B) gained 1¾ points to close the day at 75 with the yield now 17.875%.

The cruise line operator’s 6% senior notes due 2029 (B3/B) rose 1½ points to close Thursday at 67 with the yield 13 7/8%.

Both tranches were active with $20 million in reported volume during the session.

Twitter’s takeover

Twitter’s 5% notes due 2030 were among the most actively traded issues during Thursday’s session with Musk believed to be closing his $44 billion acquisition on Friday.

The 5% notes were changing hands in the par ½ to par ¾ context in heavy volume.

There was $29 million in reported volume.

While less active, Twitter’s 3 7/8% notes due 2027 also rose to a par handle with the notes trading in the par to par ¼ context on Thursday.

The notes carry a 101 poison put, a source said.

Both tranches have gained 3 points over the past week as the market grew increasingly confident Musk would meet the Friday deadline for closing the deal.

Both notes closed out last Friday on a 97-handle with investors still apprehensive about whether the deal would go through.

While Musk aggressively pursued his $44 billion takeover of the company, he attempted to back out of the deal once it was accepted.

While Twitter initially attempted to thwart Musk’s takeover attempt, it took him to court to enforce the deal.

Musk was given until Oct. 28 to close the deal before Twitter’s lawsuit could proceed, a deadline he stated he intended to keep with the financing package heard to be in its final stages earlier in the week.

Community Health’s earnings

Community Health’s capital structure was bouncing back following earnings after selling off throughout the week in anticipation of poor results.

The hospital chain operator’s senior notes jumped 3 to 6 points in heavy volume.

The 4¾% senior secured notes due 2031 (B2/B) were the most actively traded issue in the secondary space.

The notes jumped 3 points.

They were trading in the 64¾ to 65¼ context heading into the market close with a yield of about 11 3/8%.

There was $41 million in reported volume.

The 8% senior secured notes due 2026 (B2/B) jumped 4½ points to close the day at 84½ with a yield just shy of 14%.

There was $22 million in reported volume.

The 5¼% senior secured notes due 2030 (B2/B) jumped 4 points with the notes trading in the 66½ to 67 context heading into the market close.

Community Health’s senior notes endured an extended sell-off that drove its notes to historic lows following Tenet Healthcare Corp.’s earnings results late last week.

However, Community Health surprised the market with earnings that were not as bad as feared.

While the company missed its EPS estimates by a large margin, it reported inline revenue and a surprise EBITDA beat, a source said.

Indexes

The KDP High Yield Daily index gained 25 points to close Thursday at 51.45 with the yield now 7.67%.

The index gained 21 points on Wednesday, 24 points on Tuesday and 20 points on Monday.

The CDX High Yield 30 index fell 21 bps to close Thursday at 98.54.

The index rose 11 bps on Wednesday, 11 bps on Tuesday and 18 bps on Monday.

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