Morning Commentary: Knife River, Macquarie AirFinance kick off HY new issue market

By Paul A. Harris

Portland, Ore., April 10 – Macquarie AirFinance Holdings Ltd. and Knife River Holding Co. kicked off what could be a comparatively active post-holiday week in the high-yield primary market with a combined $900 million of potential bond issuance, sources said.

Macquarie AirFinance Holdings plans to price a $500 million offering of five-year senior notes (//BB) on Wednesday. The debt refinancing deal comes with initial guidance of 8¾% to 9%.

Meanwhile Knife River, which is being spun off from MDU Resources Group, Inc., expects to sell $400 million of eight-year senior notes (Ba3/BB) on Tuesday. The deal, which comes in relation to the spinoff, is in the market with initial talk of 8% to 8¼%.

The new issue market could see $5 billion of new paper clear ahead of Friday's close, a bond trader said on Monday.

Should that amount of deal volume surface, the April 10 week would come in substantially above the 2023 weekly run-rate of $3.8 billion, according to Prospect News data.

In the secondary market, the Cloud Software Group Holdings Inc. 9% senior second-lien notes due September 2029 (Caa2/B-) continued to trade at a solid-or-better premium to their new issue price on Monday.

The notes, which priced last week at 79, were 82½ bid, 82¾ offered at mid-morning, a trader said, but added that they changed hands earlier in the day at 83 5/8, so were well off the day’s highs.

The massive $3,837,622,000 issue priced last Tuesday, clearing some of the Citrix LBO bridge loan debt that had been hung up on dealer balance sheets since late 2022.

The new Valaris Ltd./Valaris Finance Co. LLC 8 3/8% senior secured second-lien notes due April 2030 (B2/BB-/BB-) were a little lower on the morning at 99 5/8 bid, the trader said.

The upsized $700 million issue (from $600 million) priced last week at par.

The investment-grade paper of Pioneer Natural Resources Co. commandeered the bond market's attention on Monday morning on news that the shale oil producer is in talks to possibly be acquired by Exxon Mobil.

Pioneer Natural Resources’ high-grade bonds were generically 10 basis points tighter on the morning, the junk bond trader said.

The broad high-yield bond market opened the post-holiday week unchanged and was perhaps a touch softer at mid-morning, the trader said.

With the S&P 500 stock index down 0.48% at mid-morning, the Shares iBoxx $ High Yield Corporate Bd (HYG) share price was 0.4% lower, off by 30 cents, at $74.54.

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