Ryman drives by junkland; HUB megadeal on deck; United Natural Foods sinks on earnings

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 7 – The primary junk bond market was still waiting for anticipated larger transactions when a midsized deal from Ryman Hospitality Properties, Inc. priced on Wednesday.

Meanwhile, the secondary space was soft on Wednesday with Treasury yields on the rise as new supply flooded the market following the passage of the debt-limit deal, a source said.

While the cash bond market was either side of unchanged, the tone was weak with the CDX index launching the day with gains but closing with nominal losses.

There was some profit taking in the market following the gains of the previous week, a source said.

Ford Motor Credit Co. LLC’s newly priced tranches (Ba2/BB+/BB+) remained active with the notes weaker alongside the broader market.

However, United Natural Foods Inc.’s 6¾% senior notes due 2028 (B2/B-) were among the largest losers of the session with the notes off more than 5 points following disappointing numbers.

While the broader market was soft, Carnival Corp.’s senior notes were on the rise with real money accounts chasing the notes.

Muted primary

News flow in the high-yield new issue market remained muted on Tuesday.

One deal came and went in a drive-by.

Ryman Hospitality Properties, Inc. priced an upsized $400 million issue (from $300 million) of five-year senior notes (B1/B+) at par to yield 7¼%.

The yield printed at the tight end of talk.

The deal played to $2 billion of orders, according to a sellside source who added that the upsize was contingent on printing the notes with a 7¼% coupon at par.

Also on Tuesday, HUB International Ltd. kicked off a widely telegraphed $2.675 billion offering of seven-year senior secured notes (B2/B), which are set to price on Thursday.

The dollar amount of interest in the HUB bonds was heard to be at deal-size, late Wednesday afternoon, a trader said.

The notes are in the market with initial talk in the mid-7% area, however accounts are being canvassed as to how support for the deal might fare with a 7¼% coupon, the source added.

Meanwhile in an otherwise quiet euro-denominated new issue market InfoPro Digital set initial price talk in its €975 million two-part offering of IPD 3 BV five-year notes (expected ratings B2/B/B+).

The deal includes fixed-rate notes with initial talk set at 8½% to 8¾%, and floating-rate notes talked with a 500 basis points spread to Euribor at 97.5 to 98.

Tranche sizes remain to be determined.

The deal is expected to price Thursday.

Away from that news details are filling in on a substantial $4.2 billion shadow calendar, sources say.

Univar Solutions Inc. could show up before the end of the week with a $2 billion offering of secured notes backing the buyout of the company by Apollo.

Viasat Inc.’s $1.6 billion offering of senior notes is heard to be whispered with an all-in yield of 12%. That deal is also near at hand, sources say.

And Fortrea is expected to show up with $570 million of senior secured notes (S&P: BB) to fund its spinoff from Labcorp. Initial talk is in the high-7% to 8% area.

The pace of the primary market seems sluggish to one portfolio manager who took a call on Wednesday.

“Lately we’re seeing some strength, and the banks are telling their clients that now is the time,” the investor said, adding that the banks are almost certainly correct in that assertion.

People may have been waiting until the U.S. federal debt ceiling snag was resolved, the investor said, noting that there has been a big – and possibly disruptive – upward move in the yield of the 10-year Treasury.

Ford weaker

Ford’s newly priced tranches were weaker in active trade alongside the broader market on Wednesday.

Both tranches shaved off about 1/8 point.

Ford’s 6.95% senior notes due 2026 were changing hands in the par to par ¼ context, a source said.

There was $31 million in reported volume.

Ford’s 7.2% senior notes due 2030 were changing hands in the par ¼ to par ½ context, a source said.

There was $20 million in reported volume.

The notes have traded with a nominal premium since pricing at par in a Monday drive-by.

United Natural Foods falls

United Natural Foods’ 6¾% senior notes due 2028 were among the largest losers of Wednesday’s session with the notes falling more than 5 points following an earnings announcement.

The 6¾% notes closed the day wrapped around 88 with the yield rising to 9 5/8%, according to a market source.

There was $12 million in reported volume.

The notes were under pressure after a large earnings miss and another cut to forward guidance after a previous cut earlier in the year.

The organic and natural foods distributor cited lower inflationary benefits in its forecast cut.

Analysts are now projecting a significant reduction to adjusted EBITDA by year end, a source said.

Carnival rises

Several of Carnival’s tranches were on the rise in active trade on Wednesday despite a weak day in the secondary space.

Carnival’s 5¾% senior notes due 2027 (B3/B) rose about ½ point to close the day at 89 with the yield just shy of 9 3/8%, a source said.

The 6% senior notes due 2029 were up about 1/8 point to close the day at 85¾ with the yield 9 1/8%.

There was $13 million in reported volume.

The 7 5/8% senior notes due 2026 were also up 1/8 point to close the day at 97.

There was $12.5 million in reported volume.

While Carnival is a name in the ETF basket that tends to rise and fall with ETF inflows, real money accounts have been seeking out the notes in recent sessions, a source said.

Indexes

The KDP High Yield Daily shaved off 4 points to close Tuesday at 50.5 with the yield 7.35%.

The index was down 4 points on Tuesday and gained 3 points on Monday.

The ICE BofAML US High Yield index closed 0.9 basis point higher with the year-to-date return now 4.671%.

The index was 0.5 bp lower on Tuesday and added 6.7 bps on Monday.

The CDX High Yield 30 index was down 6 bps to close Wednesday at 102.

The index added 23 bps on Tuesday after falling 15 bps on Monday.

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