Advisor Group prices; Ardagh at par; Western Digital unchanged; Antero Resources down

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 31 – The largest month for new deal activity in the domestic high-yield primary market’s recent history came to a close with one new deal pricing.

Advisor Group Inc. priced a downsized $350 million issue of 10¾% eight-year senior notes (Caa1/B-) at 96.14 to yield 11½%.

The forward calendar remains thin in the wake of Advisor Group pricing.

Forgitel Group (F-Brasile SpA and F-Brasile US LLC) is marketing a $505 million offering of seven-year senior secured notes (B2/B) on a roadshow which is set to wrap up on Thursday.

Meanwhile, the secondary space was soft in the wake of the Federal Reserve’s much anticipated quarter point rate cut with the market unclear about the direction the central bank will take on future cuts.

While the market dipped about ½ point following the decision, it pared its losses to close the day down about ¼ point, a market source said.

Earnings reports and new paper continued to dominate activity in the secondary space.

Ardagh Group SA’s dollar-denominated tranches were active yet unchanged in secondary trading with both the secured and unsecured notes wrapped around par.

Western Digital Corp.’s split-rated 4¾% senior notes due 2026 (Baa3/BB+) were active post-earnings.

While the notes were soft in intraday trading, they also closed the day largely unchanged.

Antero Resources Corp.’s 5 5/8% senior notes due 2023 were active and trading down following their second quarter earnings.

Biggest July

Advisor Group put the cap on the biggest July in the history of the junk bond market on Wednesday, as it priced a downsized $350 million issue of 10¾% eight-year senior notes (Caa1/B-) at 96.14 to yield 11½%.

The issue size decreased from $400 million. The deal also underwent document revisions.

The coupon came on top of coupon talk. The yield printed at the tight end of the 11½% to 11¾% yield talk.

That brought the July total to $27.5 billion of issuance, according to Prospect News data.

It's the biggest July ever, topping 2014's $25.7 billion. And it was the first time since 2014 that July new issue volume cleared the $20 billion mark.

Average July issuance is $16.3 billion going back to and including 2010.

The market cleared the $20 billion mark three years in a row, in the early part of the decade: 2012 with $21.1 billion, 2013 with $20.4 billion and, as mentioned above, 2014 with $25.7 billion, the record which stood until July 2019.

The lowest amount of July issuance, going back to 2010, was last July which saw just $7.75 billion of new issue volume.

Thin calendar

Advisor Group left in its wake a thin new issue calendar.

Forgitel Group (F-Brasile SpA and F-Brasile US LLC) are in the market with a $505 million seven-year senior secured notes (B2/B).

The deal, which is being helmed by left bookrunner Credit Suisse, has been shopped on a roadshow scheduled to wrap up on Thursday.

Ardagh at par

Ardagh’s dollar-denominated tranches remained wrapped around par in active trading during Wednesday’s session.

The 4 1/8% senior secured notes due 2026 (Ba3/BB) were slightly improved from Tuesday’s close and were seen by one source at par ¼ bid, par ½ offered early in the session.

The 5¼% unsecured notes due 2027 (B3/B) were also changing hands between par ¼ bid, par ½ offered early Wednesday.

However, the notes came in alongside the broader market and were largely wrapped around par towards the market’s close.

Both issues were changing hands around par to par 1/8 after breaking for trade on Tuesday.

The lackluster performance of the notes in the secondary space was attributed to their tight pricing.

Ardagh priced a $500 million issue of the 4 1/8% notes and an $800 million issue of the 5¼% notes at par on Tuesday.

The 4 1/8% notes printed in the middle of the 4% to 4¼% yield talk, and the 5¼% notes priced at the tight end of the 5¼% to 5½% yield talk.

In addition to the dollar-denominated tranches, Ardagh priced a €440 million issue of 2 1/8% notes at par.

The 2 1/8% notes were trading at a slight premium to their issue price and were seen changing hands at par 5/8 early in Wednesday’s session.

Western Digital active

Western Digital’s 4¾% senior notes due 2026 were active on Wednesday after the disk drive manufacturer’s much anticipated earnings reports.

The notes initially sold off about ½ point. However, they pared their losses as the session progressed and closed the day unchanged at 99¼, a market source said.

While Western Digital’s earnings were largely in line, the notes were trading down on weak guidance.

Western Digital reported revenue of $3.63 billion for the fourth quarter, which was largely in line with expectations.

However, forward guidance was light, a market source said.

Antero Resources down

Antero Resources 5 5/8% senior notes due 2023 were also active and trading down following its second quarter earnings report.

The 5 5/8% notes traded down about ½ point to close the day at 94½, according to a market source.

Antero reported mixed earnings, missing on the bottom line but beating on the top.

The hydrocarbon exploration company reported losses per share of 21 cents versus analyst expectations for losses per share of 11 cents.

However, the company posted revenue of $1.3 billion, which beat analyst expectations of revenue of $999 million.

Mixed Tuesday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Tuesday, according to a market source.

High-yield ETFs sustained $85 million of outflows on the day.

However, actively managed funds saw $45 million of inflows on Tuesday, the source said.

With four of the present reporting week's five sessions now in the tally the combined funds are tracking $495 million of net weekly inflows, the market source added.

Indexes mixed

Indexes were mixed on Wednesday with some posting gains while others saw losses.

The KDP High Yield Daily index gained 11 bps to close Wednesday at 71.78 with the yield now 5.42%.

The index shaved off 1 bp on Tuesday and 3 bps on Monday.

The CDX High Yield 30 index dropped 38 bps to close Wednesday at 107.40. The index was down 9 bps on Tuesday and 17 bps on Monday.

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