Morning Commentary: Spirit AeroSystems kicks off $800 million secured deal; DISH on deck

By Paul A. Harris

Portland, Ore., Nov. 7 – The high-yield new issue market generated news on Monday morning, with offering announcements from New York and London.

Spirit AeroSystems showed up with a new debt refinancing deal in the form of an $800 million offering of seven-year senior secured notes, in the market with early guidance of 9½% to 9¾%.

Commitments are due on Wednesday.

Meanwhile, France-based automotive supplier Faurecia SLB upsized its offering of senior sustainability-linked notes due June 15, 2026 (expected ratings Ba2/BB/BB+) to a minimum of €550 million from €400 million and circulated initial talk in the 7½% area.

That deal kicked off on Monday, early in the European session.

Turning to the active calendar, DISH Network Corp.'s $2 billion offering of five-year senior secured notes (Ba3/B+), talked with an 11½% to 11¾% coupon at a discount to yield 11¾% to 12%, was playing to $2.2 billion of demand following document changes, a trader said, adding that the deal could price later on Monday.

There could be a substantial upsize, the trader added.

Meanwhile “shadow demand” is building for the Neptune BidCo US Inc./Nielsen Holdings plc $1.96 billion offering of senior secured notes due April 15, 2029, the trader said.

With early guidance specifying a 9¼% to 9½% coupon at a discount to yield in the 10% to 11% range, much of the demand is in the high 10% area to 11%, the source added.

Pricing is expected later in the week.

Among existing issues, the bonds of IAA, Inc. were active on news that Ritchie Bros Auctioneers Inc. intends to acquire IAA in a cash-and-stock deal valued at approximately $7.3 billion, including debt.

The IAA Spinco Inc. (Insurance Auto Auctions, Inc.) 5½% senior notes due 2027 were trading in the context of 98½, unchanged at mid-morning, the trader said.

The most recent deal to clear the market, the Ford Motor Credit Co. LLC 7.35% senior notes due November 2027 (Ba2/BB+/BB+), traded into par bids a couple of times on Monday morning, the trader said, spotting them at 99¾ bid, par ¼ offered.

The $1.5 billion issue priced at par a week ago.

The junk bond market opened 1/8 of a point better on Monday, sources said.

With the S&P 500 stock index up 0.35% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was underperforming stocks, down 0.12%, or 9 cents, at $72.81.

Fund Flows

The daily cash flows of the dedicated high-yield bond funds were flat to slightly negative on Friday, according to a market source.

Actively managed high-yield funds sustained $142 million of outflows on the day.

High-yield ETFs took in cash on Friday, posting $131 million of inflows on the day, the source said.

As reported, the combined funds posted a huge $4.3 billion amount of net inflows in the week to the Nov. 2 close, according to fund-tracker Refinitiv Lipper.

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