Junk forward calendar eyed; HUB gains after soft break; Copeland active; DISH down

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 9 – The new issue market was inactive on Friday although the upcoming week promises to be busy with the forward and shadow calendars active.

Fortrea Holdings Inc. is expected to price its $570 million offering of senior secured notes due 2030 (BB/BB+) on Monday and leveraged buyout deals from Univar Solutions Inc. and Viasat Inc. are expected.

Meanwhile, it was a flat end to a sideways week in the secondary space with the market turning its attention to the upcoming Federal Open Market Committee meeting.

While the market is largely anticipating a pause in rate hikes, debate remains about the rate trajectory through the second half of the year.

The steep rate cuts the market priced in following Silicon Valley Bank’s collapse in March are no longer on the table with debate now focused on whether a June pause will be followed by additional rate hikes, a source said.

With the broader market quiet as players awaited the next large catalyst for movement, new paper was the focus of trading activity with HUB International Ltd.’s 7¼% senior secured notes due 2030 (B2/B) dominating the tape.

HUB’s 7¼% notes were making gains in heavy volume after a weak break where the notes dipped below par.

Copeland’s 6 5/8% senior secured notes due 2030 (Ba3/BB-/BB-) were active although with little movement in price with Blackstone completing its acquisition late last week.

DISH Network Corp.’s senior notes were among the worst performers of Friday’s session after the company launched its wireless plan on Friday with no mention of a partnership with Amazon that sparked a rally in the notes over the past two weeks.

Calendar eyed

The new issue market was inactive heading into the weekend, although the week ahead could be an active one, sources say.

Fortrea is on a roadshow with a $570 million offering of senior secured notes due 2030 (BB/BB+), in the market with initial guidance in the high-7% to 8% area. Pricing is expected on Monday.

Two more big deals are believed to be close at hand.

Univar Solutions Inc. is expected soon with a $1.8 billion offering of secured notes backing the buyout of the company by Apollo. Initial talk is in the 8¼% to 8½% area.

And Viasat’s $1.6 billion offering of senior notes, coming in support of its Inmarsat acquisition, and whispered with an all-in yield of 12%, is also near at hand, sources say.

The new issue market presently seems to be an inviting place, with issuers tending to see good executions and deals trading well in the secondary, so activity should pick up, according to market sources.

HUB gains

HUB’s new 7¼% senior secured notes due 2030 dominated activity in the secondary space on Friday with the notes posting gains after a weak break.

The 7¼% notes gained ¾ to 1 point to trade in the par 5/8 to par 7/8 context heading into the close, a source said.

There was $102 million in reported volume.

The notes were weak on the break and closed the previous session below par.

HUB priced a downsized $2.175 billion, from $2.675 billion, issue of the 7¼% notes at par on Thursday with $500 million of proceeds shifted to the concurrent term loan.

Pricing came at the tight end of talk in the 7 3/8% area.

Copeland active

Copeland’s 6 5/8% senior secured notes due 2030 were active on Friday although with little movement in price.

The notes continued to trade on a 99-handle.

They were changing hands in the 99 5/8 to 99 7/8 context heading into the market close.

There was $19 million in reported volume.

Copeland’s notes have largely traded on a 99 handle since the $2.275 billion tranche priced at par on May 4.

The notes priced as part of Blackstone’s financing for the acquisition of a majority stake in Copeland.

The acquisition was completed last week.

DISH down

DISH’s senior notes were among the largest losers of Friday’s session with the company’s capital structure taking a hit after it unveiled a much-anticipated wireless plan with no mention of a partnership with Amazon.

DISH’s 11¾% senior secured notes due November 2027 (Ba3/B) were off about ½ point.

They were wrapped around 98 heading into the close with the yield about 12 3/8%, according to a market source.

DISH’s 7¾% senior notes due 2026 (B3/B-) were off 1½ points to trade in the 58 to 59 context with the yield about 28%.

There was $11 million in reported volume.

The near-dated 5 7/8% senior notes due Nov. 15, 2024 also fell 1½ points.

The notes closed the day at 84 with the yield about 19¼%.

DISH was under pressure on Friday after the company unveiled its wireless plan – much to investor disappointment.

DISH’s capital structure rallied over the past two weeks on rumors that the company was working on a partnership to sell its wireless plans through Amazon.

Fund flows

High-yield ETFs had a chunky $604 million of daily cash inflows on Thursday, according to a market source.

Actively managed high-yield funds were negative on the day, posting $61 million of outflows on Thursday.

News of Thursday’s daily cash flows follows a Thursday afternoon report that the combined high-yield funds had $2.5 billion of net inflows in the week to the Wednesday, June 7 close, according to fund-tracker Refinitiv Lipper.

Boring down into those weekly inflows – the biggest since mid-April – the junk ETFs had $1.7 billion of inflows on the week, according to the market source.

Indexes

The KDP High Yield Daily index added 4 points to close Friday at 50.62 with the yield 7.3%.

The index gained 4 points on Thursday, fell 4 points on Wednesday and 4 points on Tuesday and gained 3 points on Monday.

The index posted a cumulative gain of 3 points on the week.

The ICE BofAML US High Yield index gained 14.7 basis points with the year-to-date return now 4.917%.

The index was up 9 bps on Thursday, 0.9 bp on Wednesday, was down 0.5 bp on Tuesday and added 6.7 bps on Monday.

The index posted a cumulative gain of 30 bps on the week.

The CDX High Yield 30 index gained 7 points to close Friday at 102.35.

The index gained 28 bps on Thursday to close at 102.28, fell 6 bps on Wednesday, added 23 bps on Tuesday and fell 15 bps on Monday.

The index posted a cumulative gain of 17 bps on the week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.