Junk primary sees $1.69 billion; J.B. Poindexter jumps on break; funds add $2.05 billion

By Abigail W. Adams

Portland, Me., Dec. 7 – The domestic high-yield primary market continued to unleash deals at a steady pace with three issuers pricing a cumulative $1.69 billion, and two deals totaling $1.3 billion were slated to price during Friday’s session.

XPO Inc. priced $585 million of eight-year senior notes (Ba3/BB-/BB+), J.B. Poindexter & Co., Inc. priced an upsized $600 million issue of eight-year senior notes (B2/B+), and Permian Resources Operating LLC priced a $500 million add-on to its 7% senior notes due Jan. 15, 2032 (B1/BB-/BB).

Two deals remain on the forward calendar with pricing expected on Friday: CQP Holdco LP and BIP-V Chinook Holdco LLC’s $700 million offering of 10-year senior secured notes (B1/BB) and CVR Energy Inc.’s $600 million offering of five-year senior notes (B1/B+/BB-).

The new paper continued to play to strong demand with money being put to work in new issuance, a source said.

J.B. Poindexter’s new notes saw a strong break with the notes shooting up to a 101-handle.

PennyMac Financial Services Inc.’s 7 7/8% senior notes due 2029 (Ba3/B+/BB-) were trading at a healthy premium to their discounted issue price.

Alliant Holdings Intermediate LLC and Alliant Holdings Co-Issuer Inc.’s 7% senior secured notes due 2031 (B2/B) were also holding a nominal premium in active trade.

Meanwhile, inflows continued with high-yield mutual funds and exchange-traded funds seeing $2.05 billion enter the space in the week through Wednesday’s close, according to a market source.

While new paper was putting in a strong performance, DISH Network Corp.’s embattled senior notes were the major gainers of the session with the notes up 2 to 3 points in active trade after clearing a key regulatory hurdle in its merger with EchoStar.

XPO prices

XPO priced $585 million of eight-year senior notes (Ba3/BB-/BB+) on Thursday at par with a coupon of 7 1/8%, according to a market source.

Pricing came toward the tight end of talk for a yield in the 7¼% area.

Early guidance was for a yield of 7¼% to 7½%.

Permian adds on

Permian Resources priced a $500 million add-on to its 7% senior notes due Jan. 15, 2032 (B1/BB-/BB) in a Thursday drive-by at 99.5 to yield 7.082%, according to a market source.

Pricing came at the midpoint of talk for a reoffer price of 99.25 to 99.75.

Initial guidance was for a reoffer price in the 99 area.

The 7% notes were trading at a strong premium to their reoffer price late Thursday with the notes poised to close the day in the 99 7/8 to par 1/8 context, a source said.

Poindexter strong on break

J.B. Poindexter priced an upsized $600 million, from $550 million, of eight-year senior notes (B2/B+) on Thursday at par with a coupon of 8¾%, according to a market source.

Pricing came at the midpoint of talk for a yield in the 8¾% area.

Initial guidance was for a yield in the low 9% area.

While the investor call raised some concerns about the company’s fundamentals, the deal played to strong demand and jumped on the break.

The 8¾% notes shot up over 1 point to trade in the 101¼ to 101¾ context after breaking for trade, a source said.

The deal priced wide to the B index.

Its move up on the break brought the yield down to 8.37% which was more in line with where the B index trades, a source said.

Friday’s primary

The domestic high-yield primary market stood poised to cap an active week with an active session.

Two deals remain on the forward calendar with pricing expected Friday.

CQP talked its $700 million offering of 10-year senior secured notes (B1/BB) with a yield in the 7½% area, according to a market source.

Initial guidance was for a yield in the mid-7% area.

Books were heard to have closed at 5 p.m. ET with pricing expected on Friday.

CVR Energy joined the calendar with a $600 million offering of five-year senior notes (B1/B+/BB-).

The notes are guided in the mid-8% area with pricing also expected on Friday.

At a premium

New and recent deals continued to put in strong aftermarket performances despite their tight pricing.

PennyMac’s new 7 7/8% senior notes due 2029 were trading at a healthy premium to their discounted issue price.

The notes were marked 99 7/8 bid, par 1/8 offered early in the session, a source said.

They stood poised to close the day on a par handle with the notes trading in the par to par ¼ context.

There was $141 million in reported volume.

PennyMac priced an upsized $750 million, from $650 million, issue of the 7 7/8% notes at 99.407 to yield 8% in a Wednesday drive-by.

Pricing came at the tight end of talk for a yield of 8% to 8¼%.

Alliant Holdings’ new 7% senior secured notes due 2031 were also trading with a nominal premium to their issue price in heavy volume.

The 7% notes were trading in the par 1/8 to par 3/8 context throughout the session.

There was $52 million in reported volume.

Alliant priced a $750 million issue of the 7% notes at par on Wednesday.

Pricing came at the midpoint of talk for a yield in the 7% area.

DISH rises

DISH’s embattled senior notes were on the rise on Thursday after the Federal Communications Commission gave its nod of approval to the DISH/EchoStar merger.

The notes added 2 to 3 points in active trade on the news.

DISH’s 7¾% senior notes due 2026 (Caa2/B-) added 3 points to close the day at 64½ with the yield about 28 1/8%, a source said.

There was $18 million in reported volume.

The short-dated 5 7/8% senior notes due Nov. 15, 2024 shot up 2 points with the notes opening the day on an 88-handle and closing in the 90½ to 91 context, a source said.

The yield narrowed to 17 3/8%.

The FCC’s approval on Thursday paved the way for the completion of the merger.

Indexes

The KDP High Yield Daily index inched up 2 basis points to close Thursday at 49.73 with the yield flush with the previous close at 7.21%.

The index was up 9 bps on Wednesday, added 7 bps on Tuesday and was flat on Monday.

The ICE BofAML US High Yield index added 8.5 bps with year-to-date returns now 10.345%.

The index gained 15.7 bps on Thursday, 24.1 bps on Tuesday and 6.5 bps on Monday.

The CDX High Yield 30 index gained 10 bps to close Thursday at 103.81.

The index was down 16 bps on Wednesday, 15 bps on Tuesday and 15 bps on Monday.

© 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.