TransAlta drives-by; Ahern skyrockets on buyout; Carnival hits new heights; Citrix improves

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 14 – Calgary-based TransAlta Corp. priced Monday's sole deal, a $400 million issue of green senior notes (Ba1/BB+) that came at par in a drive-by.

The yield printed at the tight end of talk and was heard to have come into market on the back of reverse inquiry amounting to twice the offer size, according to a sellside source.

Meanwhile, the secondary space opened the week on soft footing with the cash bond market swinging from positive territory at the open to negative territory by the close.

The cash bond market was up ¼ point at the open but ended the day down 1/8 point, sources said.

While the market moved from positive to negative territory, volatility was low with the distance between the intraday peak and trough narrowing, a source said.

Trading volume was also thin as activity in new and recent deals waned.

Ahern Rentals, Inc.’s 7 3/8% senior notes due 2023 were the major winners of Monday’s session with the notes skyrocketing almost 30 points following news United Rentals will acquire the company.

Carnival Corp.’s 10 3/8% senior priority notes due 2028 (B2/B+) continued their upward momentum despite the pullback in the broader market with the notes hitting their highest level since pricing.

Carnival’s 10½% senior notes due 2030 (B3/B) also posted strong gains on Monday.

Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) continued to improve in active trading after catapulting back to 87 last Thursday.

Ahern skyrockets

Ahern’s 7 3/8% senior notes due 2023 were the shining star of Monday’s session with the notes skyrocketing following news United Rentals was acquiring the company.

The 7 3/8% notes shot up 29 points to trade in the 99 to par context on Monday, a source said.

The illiquid issue had not traded since early November; however, the notes were marked 70 bid, 70¾ offered last Thursday, a source said.

The notes are currently callable at par.

United Rentals announced it was acquiring Ahern for $2 billion in cash with the company planning to issue new debt and use its existing capacity under its asset backed loan facility to fund the transaction.

The deal is expected to close by Dec. 31.

Carnival’s new heights

Carnival’s 10 3/8% senior priority notes due 2028 hit their highest level on Monday since they broke for trade on Dec. 18.

The 10 3/8% notes hit a 103-handle in active trading in the 103 to 103½ context heading into the market close, a source said.

The yield on the notes was about 9½%.

There was $21 million in reported volume.

Carnival’s 10 3/8% notes have been on a strong uptrend since the $2.03 billion issue priced at 98.465 on Oct. 18.

The notes rank as one of the top three performing deals of 2022.

Carnival’s 10½% senior notes due 2030, the cruise line operator’s first deal of 2022, also saw strong gains on Monday.

The 10½% notes climbed 3½ points to an 83-handle.

They were changing hands in the 83 to 83½ context heading into the close with the yield just north of 14%, a source said.

The notes have made strong gains over the past month since hitting an all-time low in the 73 area in mid-October.

However, the notes remain among the worst performers of 2022 with the $1 billion issue seeing heavy losses since it priced at par in May.

Citrix improves

Citrix’s 6½% senior secured notes due 2029 continued to inch higher after catapulting back to 87 during last Thursday’s rally.

The 6½% notes gained ¼ point with the notes trading in the 87 to 87½ context throughout the session, a source said.

The yield was about 9¼%.

There was $19 million in reported volume.

The 6½% notes climbed from an 84-handle to 87 as the market skyrocketed following last Thursday’s Consumer Price index report.

The 6½% notes have gyrated between an 84-handle and an 87-handle since the $4 billion issue, which priced at 83.561, broke for trade on Sept. 20.

Indexes

The KDP High Yield Daily index gained 26 points to close Monday at 51.76 with the yield now 7.55%.

The ICE BofAML US High Yield index gained 33.6 basis points with the year-to-date return now negative 11.614%.

The CDX High Yield 30 index fell 23 bps to close Monday at 100.32.

ETFs see record daily inflows

High-yield ETFs took in a record $2.62 billion amount of daily cash inflows last Thursday, according to market sources.

With that amount in the tally the junk ETFs have now seen $12.3 billion of inflows since Oct. 14, a source said.

Actively managed high-yield funds sustained $332 million of outflows on Thursday, a market source said.

The actively managed junk funds saw $448 million of daily inflows on Friday, while high-yield ETF cash flows were absolutely flat on the day, according to the source.

On the heels of seeing net inflows of $1.3 billion in the week to the Nov. 9 close, capping a three-week run of inflows totaling $8.3 billion, the combined funds are tracking another $2.9 billion of net inflows on the week that will conclude with Wednesday's close, the market source said.

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