Fortrea, Calumet price; Carnival gains; DISH down again

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 12 – The high-yield new-issue market saw a pair of issuers raise a total of $895 million, each bringing a single tranche of notes on Monday.

Both deals came at the tight ends of talk.

Fortrea Holdings Inc. priced a $570 million issue of 7½% five-year senior secured notes (Ba3/BB/BB+) at par, in a deal that was heard to be 6½ times oversubscribed.

The bonds broke to 101¾ bid, 102 offered before settling in at 101 3/8 bid, 101¾ offered at the Monday close.

And in a timing-accelerated drive-by Calumet Specialty Products Partners, LP and Calumet Finance Corp. priced a $325 million issue of 9¾% five-year senior notes (Caa1/B-) at par.

The notes broke to par ¼ bid, 101¼ offered, a trader said, adding that the deal was perceived to have come wide to fair value.

When it was announced on Monday morning the Calumet deal was scheduled to run a brief roadshow through Tuesday.

Meanwhile HighPeak Energy Inc. disclosed plans to run a roadshow through the end of the week for a $575 million offering of five-year senior notes.

The deal kicks off on an investor call set for 11 a.m. ET on Tuesday.

The new issue market continues to watch for a couple big deals that are possible business for the June 12 week, sources say.

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 Inc.’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.

Meanwhile, it was a quiet day in the secondary space with the cash bond market either side of unchanged ahead of a heavy slate of market moving events.

The market was once again in wait-and-see mode as market players awaited the release of the Consumer Price Index report on Tuesday and the Federal Open Market Committee decision on Wednesday, sources said.

While the market widely expects a pause in hikes, debate remains about the trajectory of rates in the second half of the year with some expecting a resurgence of rate hikes while others still call for a cut.

With the market flat and activity surrounding new issues tempering, large, liquid issues and topical news were the drivers of activity in the space.

Carnival Corp.’s senior notes were lifted in heavy volume after the company’s stock was upgraded.

DISH Network Corp.’s senior notes (B3/B-) continued to see selling pressure after the company unveiled its wireless plan to investor dissatisfaction.

Carnival gains

Carnival’s senior notes were in focus on Monday with the notes lifted after an analyst upgrade of stock.

The 5¾% senior notes due 2027 (B3/B) were the most active in the debt stack.

The notes gained 1 point to close the day at 90½ with the yield now 8.8%, according to a market source.

There was $27 million in reported volume.

Carnival’s 7 5/8% senior notes due 2026 (B3/B) added about 3/8 point to close the day at 97 3/8.

The yield was about 8¾%.

There was $22 million in reported volume.

The 10 3/8% senior nots due 2028 (B2/B+) added 1/8 point to close the day at 109 with the yield 7 5/8%.

There was $16 million in reported volume.

Carnival’s senior notes saw strong buying interest on Monday despite a lackluster session for the broader market following an analyst upgrade of the company’s stock, sources said.

JPMorgan analysts upgraded the stock to overweight from neutral due to strong booking trends.

DISH lower

DISH’s senior notes continued their downtrend on Monday with the notes giving back the gains made on market chatter that the company would be selling its wireless plan through Amazon.

The company’s soon-to-mature 5 7/8% senior notes due Nov. 15, 2024 held up the best with the notes relatively unchanged after falling 1½ points last Friday.

The 5 7/8% notes continued to trade on an 84-handle.

They closed the day just shy of 84¾ with the yield 18½%, according to a market source.

The 7¾% senior notes due 2026 fell almost 3 points to close the day at 57½ with the yield 29 7/8%.

The 7 3/8% senior notes due 2028 sank 2½ points to close the day at 52 with the yield 24 3/8%.

Over the past two sessions, DISH’s senior notes have given back all gains made since early June when market chatter the company was in talks to distribute its wireless plans through Amazon sparked an uptrend in the capital structure.

However, investors were left disappointed when DISH unveiled its wireless plan last Friday with no mention of Amazon.

Indexes

The KDP High Yield Daily index added 3 points to close Monday at 50.65 with the yield now 7.29%.

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

The ICE BofAML US High Yield index gained 3.5 basis points with the year-to-date return now 4.952%.

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

The CDX High Yield 30 index fell 7 bps to close Monday at 102.28.

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

Fund flows

High-yield ETFs sustained $195 million of daily cash outflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were positive on the day, posting $43 million of inflows on Friday, the source said.

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