Univar starts roadshow; junk secondary flat post-Fed; Veritas up on earnings; Nielsen lower

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 14 – While no deals cleared the domestic high-yield bond primary market on Wednesday, the long-awaited Univar deal, which began being telegraphed to the market in mid-to-late May, was formally announced.

Windsor Holdings III, LLC started a roadshow for a $1.8 billion offering of seven-year senior secured notes (B2/B+/BB+) backing the buyout of Univar Solutions Inc. by Apollo.

Meanwhile, it was Fed Day in the secondary space with all eyes on the Federal Open Market Committee’s afternoon announcement and chair Jerome Powell’s press conference.

And while the secondary space had a temporary bout of volatility surrounding a more hawkish tone than anticipated, the market closed the day largely unchanged.

While there was some selling in the market, many remained on the sidelines with wait-and-see remaining the prevailing market theme.

The Fed met expectations with the first pause in hikes since it launched its rate-hike campaign in February 2022.

However, it signaled two additional rate hikes in coming months with hopes for a cut in the second half of the year dashed.

While the announcement triggered a brief moment of selling with short-dated Treasury yields jumping, markets stabilized after Powell expressed a non-committal attitude about a rate hike in July, a source said.

Whether the market was again fighting the Fed or calling the Fed’s bluff on further rate increases remains to be seen.

With the broader market largely quiet with little resolution to the rate debate, earnings and topical news was the driver of activity in the space.

Veritas US Inc. and Veritas Bermuda Ltd.’s 7½% senior secured notes due 2025 (B3/B-) were among the largest gainers of the session following an earnings beat.

Nielsen Holdings plc’s 9.29% senior secured notes due 2029 (B2/B/BB) were lower in heavy volume with investors unimpressed as the company unveiled a new program to aid its transition.

Univar on the road

The Univar deal, which began being telegraphed to the market in mid-to-late May, hit the high-yield new issue market on Wednesday.

Windsor Holdings III started its roadshow for a $1.8 billion offering of seven-year senior secured notes backing the buyout of Univar Solutions Inc. by Apollo.

The deal is in the market with initial talk in the 8½% area, and set to price in the week ahead.

The Univar bond deal arrived with $1 billion of reverse inquiry behind it, according to a sellside source who added that the dollar-denominated term loan tranche – a $1.75 billion seven-year term loan B – has $1.25 billion of reverse inquiry.

Veritas’ earnings

Veritas’ 7½% senior secured notes due 2025 were major movers in Wednesday’s session with the notes jumping almost 5 points after positive earnings news.

The notes were changing hands in the 81¾ to 82¼ context heading into the market close, according to a market source.

The yield fell to 17 5/8%.

There was $14 million in reported volume.

The notes jumped after the company beat earnings expectations with EBITDA steadily increasing over the previous three quarters.

“EBITDA is going in the right direction, the trend is improving, so people are buying,” a source said.

Nielsen lower

Nielsen’s 9.29% senior secured notes due 2029 were lower in heavy volume with investors unimpressed by a new program to support its big data transition.

The 9.29% notes fell ¾ to 1 point to break below an 89-handle in heavy volume.

They were changing hands in the 88¾ to 89¼ context heading into the market close.

The yield rose to 11 7/8%.

There was $20 million in reported volume.

There was selling in the name after the data and analytics company introduced its new Nielsen Media Data Room, a part of its modernization strategy.

The market was unimpressed, a source said.

Fund flows

The daily cash flows of the dedicated high-yield bond funds were muted on Tuesday, in the runup to the Federal Open Market Committee’s decision on whether or not to push the benchmark rate higher.

The junk funds took in $99 million of net inflows on the day.

High-yield ETFs saw $98 million of inflows on Tuesday.

Actively managed high-yield funds were flat on the day, posting $1 million of inflows on Tuesday, a source said.

With Wednesday’s daily fund flows remaining to go into the tally the combined funds are tracking $299 million of net inflows on the week to Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index shaved off 1 point to close Wednesday at 50.67 with the yield 7.3%.

The index added 3 points on Tuesday and 3 points on Monday.

The ICE BofAML US High Yield index shaved off 2.2 basis points with the year-to-date return now 5.149%.

The index rose 21.9 bps on Tuesday and 3.5 bps on Monday.

The CDX High Yield 30 index fell 15 bps to close Wednesday at 102.32.

The index gained 10 bps on Tuesday and fell 7 bps on Monday.

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