Morning Commentary: Ball, Spirit Airlines on deck in junk primary; Roblox, Unisys slide

By Paul A. Harris

Portland, Ore., Nov. 9 – A purposefully paced November revival in the high-yield new issue market continued on Wednesday with the announcement of a pair of drive-by deals.

Ball Corp. plans to price a $750 million public offering of senior notes due March 15, 2028 (expected ratings Ba1/BB+), in the market with initial guidance in the low 7% area.

And Spirit Airlines, Inc. plans to price $500 million of notes mirroring the Spirit Loyalty Cayman Ltd./Spirit IP Cayman Ltd. 8% senior secured first-lien notes due Sept. 20, 2025 (expected ratings Ba2//BB+), talked at 97.5 to 98.5, rich to earlier guidance of 97.5.

Both companies will use proceeds primarily to repay debt.

Among existing issues, bonds of Unisys Corp. continued to sustain a precipitous price decline that got underway on Tuesday when the company reported disappointing earnings and guidance and disclosed an ongoing internal investigation into its accounting practices.

With the Pennsylvania-based IT service provider’s stock (NYSE: UIS) down 6¼% on the morning, the Unisys 6 7/8% senior secured notes due 2027 were down 2 points at 71 bid, 72 offered after falling 11 points to 12 points on Tuesday, traders said.

Prior to earnings, and the accounting investigation disclosure, those bonds were 85 bid, 86 offered, a trader recounted.

Meanwhile, Roblox Corp.’s bonds nosedived trailing an earnings call in which the California-based video game-maker reported steep third-quarter losses.

With its stock (NYSE: RBLX) down 15½% at mid-morning, the Roblox 3 7/8% senior notes due May 2030 were down 4-plus points on the day at 76, yielding 8%, a trader said.

Among recent issues, the Spirit AeroSystems 9 3/8% senior secured notes due November 2029 (Ba2/BB-) were trading at 101½ on Wednesday morning, representing a solid premium to their issue price.

The upsized $900 million issue (from $800 million) issue priced at par on Tuesday, playing to demand that ended up being three-times to four-times the size of the issue, sources said.

Elsewhere, the Neptune BidCo US Inc./Nielsen Holdings plc 9.29% senior secured notes due April 15, 2029 (B2/B/BB) were 92 3/8 bid, 92 5/8 offered in active trading, a sellside source said.

A trader, meanwhile, had them 93 bid, 93¼ offered.

The $1.96 billion buyout deal priced at 92.294 to yield 11% on Tuesday, playing to a book that built to around $3 billion following some investor-friendly concessions in the covenant package.

The broad high-yield bond market opened unchanged on Wednesday morning, sources said.

With the S&P 500 stock index off 0.75% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 0.45%, or 33 cents, at $72.49.

Fund flows

Actively managed high-yield funds sustained $159 million of daily cash outflows on Tuesday, according to a market source.

High-yield ETFs were positive on the day, posting $49 million of inflows on Tuesday, the source said.

The combined funds are tracking $1.4 billion of net inflows for the week that concludes with Wednesday's close, according to the market source.

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