Junk: Citrix in focus, first-lien, second-lien notes gain; Ford improves; Nexstar active

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 6 – As expected, the high-yield primary market remained dormant on Holy Thursday, ahead of a long holiday weekend in the bond market.

Meanwhile, it was a quiet day in the secondary space with the market either side of unchanged as the strong rally from the previous week continued to wane.

The release of the U.S. non-farm payrolls report, scheduled for Friday, is typically a high vol. event for the market, with the economic data an important indicator for the rate and recession debates that continue to rage.

While there was some prepositioning leading into the report, few were making moves on Thursday with volume light as activity surrounding the flood of new issuance tempered.

Cloud Software Group Holdings Inc.’s (Citrix) 9% second-lien notes due 2029 (Caa2/B-) remained in focus with the notes continuing their strong upward momentum.

Citrix’s 6½% senior secured first-lien notes due 2029 (B2/B) also continued their upward momentum with the notes now trading on an 89-handle.

Ford Motor Credit Co. LLC’s new 6.8% senior notes due 2028 (Ba2/BB+/BB+) improved on Thursday after a lackluster start in the aftermarket.

Nexstar Media Group Inc.’s 5 5/8% senior notes due 2027 (B2/BB+) also added in active trade after an S&P Global Ratings upgrade and revised recovery ratings.

Citrix in focus

Citrix’s 9% second-lien notes due 2029 continued to dominate trading activity in the secondary space with the notes adding to strong gains.

The 9% notes opened the day on an 82-handle and climbed as the session progressed to close the day up 1 point at 83, a source said.

The yield narrowed to about 12 7/8%.

There was $54 million in reported volume.

Citrix priced the $3,837,622,000 issue of the 9% notes at 79 to yield 14.047% on Tuesday.

Citrix’s 6½% senior secured first-lien notes due 2029 also continued to add with the notes up another ½ point.

The notes were changing hands in the 89 to 89½ context on Thursday.

There was $7 million in reported volume.

The 6½% notes have climbed 2 points since dealers began a roadshow for the hung debt remaining from Citrix’s LBO financing.

While the 9% notes offer a juicy yield, it is the riskiest part of the debt issued to back the Vista Equity Partners and Elliott Investment Management buyout of Citrix.

The LBO deal broke records for the losses suffered by banks that had committed financing before market conditions deteriorated amid rising rates in 2022.

The discounts offered to get the deals out the door were also among the largest in the high-yield market’s history, a source said.

Citrix priced a $4 billion issue of the 6½% notes at 83.561 to yield 10% in September 2022.

Ford improves

Ford’s new 6.8% senior notes due 2028 improved in active trade on Thursday after a lackluster start in the aftermarket.

The notes gained about 3/8 point to close the day at par 3/8, according to a market source.

There was $14 million in reported volume.

The 6.8% notes have been wrapped around par since breaking for trade.

Ford priced a $1.5 billion issue of the 6.8% notes at 99.987 to yield 6.8% in a Monday drive-by.

Nexstar’s upgrade

Nexstar’s 5 5/8% senior notes due 2027 improved in active trade following an S&P upgrade.

The notes rose about 3/8 point to close the day at 93½.

The yield was 7.4%, according to a market source.

There was $16 million in reported volume.

S&P upgraded Nexstar’s senior unsecured rating to BB+ from BB and B+ on Wednesday, citing the company’s improved leverage, which S&P expects will continue to improve.

The recovery rating for Nexstar’s unsecured debt was also revised to 4 from 6.

Indexes

The KDP High Yield Daily index inched up 1 point to close Thursday at 51.76 with the yield 7.12%.

The index fell 8 points on Wednesday and 3 points on Tuesday after gaining 18 points on Monday.

The index posted a cumulative gain of 9 points on the week.

The CDX High Yield 30 index gained 21 basis points to close Thursday at 100.44.

The index was down 55 bps on Wednesday, 48 bps on Tuesday and 23 bps on Monday.

The index posted a cumulative loss of 105 bps on the week.

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