Coty prices $500 million; Warrior Met Coal gains; Hertz down again

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 22 – With the coming holiday weekend already in play, the dollar-denominated high-yield new-issue market saw a sole deal price in a Monday drive-by.

Coty Inc. priced a $500 million issue of 4¾% senior secured notes due Jan. 15, 2029 (B1/B+) at par, in the middle of talk.

The deal was heard to be playing to $530 million of orders at lunchtime.

The bonds were trading in the context of 99.5 bid, par offered at Monday’s close, a New York-based bond trader said.

Away from that trade both the primary and secondary markets appeared dead on Monday, the trader said.

It’s possible that there could be new-issue action on Tuesday, but some of the banks (JPMorgan was mentioned) are telegraphing that they have now wrapped up pre-Thanksgiving business, the source added.

Meanwhile, it was a soft day in the secondary space with the cash bond market down about 3/8 point as the 10-year Treasury yield resumed its climb following President Joe Biden’s nomination of Federal Reserve Chairman Jerome Powell for a second term.

While there was some selling pressure in the market, many continued to hold on the sidelines with trading activity outside of new and recent issues light.

Warrior Met Coal, Inc.’s 7 7/8% senior notes due 2028 (B1/BB) continued to gain after a strong break with the notes rising to a 101-handle.

However, Hertz Corp.’s two tranches of senior notes (Caa1/B) continued to drop in active trading with both tranches wrapped around par heading into the close.

Meanwhile, DISH Network Corp. and DISH DBS Corp.’s 5¾% notes due 2028 (Ba3/B+) were active although little changed with the notes remaining on a 99-handle.

Friday fund flows

The daily cash flows of the dedicated high-yield mutual funds were mixed on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $357 million of outflows on the day.

Actively managed high-yield funds saw $100 million of inflows on Friday, the source said.

Warrior Met Coal gains

Warrior Met Coal’s new 7 7/8% senior notes due 2028 (B1/BB) continued to gain after a strong break with the notes now several points above their discounted issue price.

The 7 7/8% notes rose about 7/8 point to a 101-handle.

They were changing hands in the 101 1/8 to 101 3/8 context heading into the market close.

The notes were currently yielding 7.5%.

The 7 7/8% notes remained active despite the small size of the issue with more than $38 million in reported volume, according to a market source.

The notes were changing hands in the par ¼ to par ½ context at market close on Friday.

Warrior Met Coal priced a $350 million offering of the 7 7/8% at a discounted offer price of 99.343 to yield 8%.

Hertz down again

Hertz’s two tranches of senior notes continued to succumb to selling pressure in the secondary space with both tranches now wrapped around par.

The 5% senior notes due 2029 and 4 5/8% senior notes due 2026 were both off another ¼ point.

Both tranches were changing hands in the 99 7/8 to par 1/8 context heading into the market close.

The 5% senior notes were the more active of the two tranches with about $15 million in reported volume.

Both tranches have come in about 1 point since the heights reached after breaking for trade.

Hertz priced a $500 million tranche of the 4 5/8% notes and a $1 billion tranche of the 5% notes at par on Nov. 17.

While initially strong in the aftermarket, the notes have come in as market conditions weakened over the past two sessions.

DISH active

DISH’s recently priced 5¾% notes due 2028 were active on Monday although with little movement in price.

The 5¾% notes continued to trade on a 99-handle and were marked at 99 3/8 bid heading into the close, according to a market source.

There was about $15 million in reported volume.

While DISH’s 5¾% notes briefly traded above par, they have largely been stuck on a 99-handle since hitting the aftermarket in mid-November.

DISH priced a $2.5 billion tranche of the 5 ¾% notes at par on Nov. 11.

The deal included a $2.75 billion tranche of 5¼% notes due 2026. While the 5¼% notes were not as active on Monday, the shorter-duration notes were faring better than their higher coupon counterpart.

The notes were changing hands in the 99 7/8 to par 1/8 context.

Indexes

The KDP High Yield Daily index shaved off 4 points to close Monday at 68 with the yield now 4.01%.

The index posted a cumulative loss of 73 bps on the week.

The CDX High Yield 30 index dropped 28 basis points to close Monday at 108.71.

The index posted a cumulative loss of 28 bps on the week last week.

© 2015 Prospect News.
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