Uniti accelerates pricing; junk secondary rips; DISH, Citrix hit new heights; Medline up

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 2 – The first junk bond deal of February in the dollar market, from Uniti Group LP, was a blowout with the deal wrapped and delivered faster than expected.

Meanwhile, the secondary space ripped on Thursday as the strong upward momentum sparked by Federal Reserve chair Jerome Powell’s Wednesday press conference gained momentum.

Powell’s acknowledgement that inflation was decreasing and a pause may be in order in the second half of the year sent credit soaring.

The cash bond market climbed more than 1 point on Thursday with some pockets of the market “up a lot more,” a source said.

Buyers were out in full force with offers-wanted-in-competition lists flooding the space.

Activity surrounding new paper slowed on Thursday with large, liquid issues dominating trading activity in secondary trading.

DISH Network Corp.’s 11¾% senior secured notes due 2027 (Ba3/B+) were the most actively traded issue on Thursday with the notes jumping to a new all-time high.

Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) also set a record all-time high during the session.

Medline Industries Inc.’s junk bonds were also on the rise in heavy volume with the health care company’s secured tranche outperforming.

Junk primary

February new issue activity got underway in the dollar-denominated high-yield sector with a blowout deal from telecom infrastructure real estate investment trust Uniti Group which priced an upsized $2.6 billion issue (from $1.75 billion) of 10½% five-year senior secured notes (B2/B/BB+) at par.

The yield printed at the tight end of yield talk, and inside of initial guidance.

It played to $7 billion of orders, according to a trader who added that the notes broke to 101¼ bid, 101 5/8 offered.

Timing was accelerated. When the offer was announced on Thursday morning it had been expected to remain in the market until Friday (see related story in this issue).

Although the active new issue calendar finished the Thursday session empty, market conditions are the best that they've been in months, sources say, adding that deals are bound to come in the near term.

A shadow calendar is taking shape.

Look for U.K.-based chemical company Ineos Group Holdings to show up with secured notes in the week ahead, according to a market source.

The company set a Friday lender call to launch a new U.S. term loan B and a fungible add-on euro term loan B.

All told, Ineos seeks to raise €2 billion equivalent between the loans and the expected secured notes.

DISH in focus

DISH’s 11¾% senior secured notes due 2027 were the most actively traded issue of Thursday’s session with the notes hitting an all-time high.

The 11¾% notes added more than 1 point with the notes breaking above a 105-handle.

The notes traded as high as 106½ in intraday activity but came in heading into the close.

The notes ended the day in the 105¾ to 106¼ context, a source said.

The yield fell to about 9¾%.

There was $56 million in reported volume.

The 11¾% notes have made strong gains since DISH priced a $1.5 billion add-on at 102 to yield 11.079% on Jan. 17.

DISH priced the initial $2 billion issue at 98.171 to yield 12¼% in November 2022.

Citrix’s new high

Citrix’s 6½% senior secured notes due 2029 flew higher in heavy volume on Thursday with the market rally lifting the notes to new heights.

The 6½% notes rose 1½ points to break above a 90-handle.

The notes were changing hands in the 90¾ to 91¼ context heading into the market close, a source said.

The yield fell to 8.4%.

There was $38 million in reported volume.

Thursday’s level marked the highest for the notes since the $4 billion issue priced at 83.56 to yield 10%.

The previous high for the notes was hit late last week when they traded up to an 88-handle.

However, the notes gave back some gains and launched the week on an 87-handle.

Medline lifted

Medline’s junk bonds were also lifted in heavy volume in the market rally with the health care company’s secured tranche outperforming.

Medline’s 3 7/8% senior secured notes due 2029 (B1/B+/BB-) jumped 3 points to close Thursday at 88½ with the yield about 6 1/8%.

There was $22 million in reported volume

Medline’s 5¼% senior notes due 2029 (Caa1/B-/B-) gained 1½ points to close the day at 87½.

There was $30 million in reported volume.

Indexes

The KDP High Yield Daily index gained 61 points to close Thursday at 54.06 with the yield now 6.6%.

The index gained 14 points on Wednesday and 8 points on Tuesday after shedding 14 points on Monday.

The ICE BofAML US High Yield index jumped 137.7 basis points with the year-to-date return now 5.64%.

The index gained 35.3 bps on Wednesday, 15.5 bps on Tuesday after falling 22.7 bps on Monday.

The CDX High Yield 30 index rose 34 bps to close Thursday at 103.62.

The index gained 53 bps on Wednesday and 55 bps on Tuesday after falling 46 bps on Monday.

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