Junk primary moves $4.23 billion of new paper; Sirius paper overwhelms; Charter edges up

By Paul A. Harris and Cristal Cody

Tupelo, Miss., Aug. 3 – The high-yield deal machine continued its full-throttle charge into August, with six issuers pricing dollar-denominated tranches to raise a combined $4.23 billion on Tuesday.

Five of the six appeared at the drive-through window.

Two upsized their offerings.

Executions were solid, with one deal pricing inside of talk, one pricing at the tight end, and four coming in the middle of talk (see related stories in this issue).

Tuesday's action raised the new month's drive-by total to eight deals.

The first two sessions of August have seen a whopping $9.48 billion of issuance.

In the secondary, Sirius XM Radio’s $2.5 billion two-part offering of senior notes (Ba3/BB) priced Monday in a deal upsized from $2 billion saw strong demand in the primary market but not as much in the secondary market on Tuesday.

“There is plenty of Sirius paper around,” a source noted. “It tightened and then upsized, so it was well received, but didn’t trade that well at the break because people are overwhelmed with the amount of paper.”

Sirius’ $1 billion of 3 1/8% notes due 2026 headed out 3/8 point better than issuance after trading as low as par during the session.

Sirius’ $1.5 billion of 3 7/8% notes due 2031 were quoted going out ¼ point to ½ point weaker than issuance.

Charter Communications’ upsized $2 billion offering of 4¼% senior notes due 2034 (B1/BB) “had a little bit of a rough start to the day but seemed to recover,” a source said.

The notes were quoted trading by the close about ¼ point to ¾ point higher than issuance.

Overall market tone was unchanged to slightly better going out, according to market sources.

The iShares iBoxx High Yield Corporate Bond ETF rose 10 cents to $87.44 after softening 25 cents on Monday.

The junk bond market saw “some selling early but the market reversed itself,” by the close, a source said. “All the equities ended up in record territories, so the market rebounded a little bit.”

Sirius mixed

Sirius XM Radio’s $2.5 billion of senior notes (Ba3/BB) priced in two tranches on Monday were mixed in secondary trading on Tuesday.

Sirius’ $1 billion of 3 1/8% notes due 2026, priced at par to yield 3 1/8%, improved by the close Tuesday to 100 3/8 after trading as low as par during the session, a source noted.

The tranche was upsized from $750 million, and the yield printed at the tight end of talk in the 3¼% area.

Sirius’ $1.5 billion of 3 7/8% notes due 2031 were quoted going out at 99½, 99¾.

The New York-based broadcasting company sold the notes at par to yield 3 7/8% in an offering upsized from $1.25 billion. The yield printed at the tight end of talk in the 4% area.

Charter edges higher

Charter Communications’ $2 billion of 4¼% senior notes due 2034 (B1/BB) were quoted trading by the close at 100¼ to 100¾ after softening early in the session, a market source said.

The Stamford, Conn.-based telecom priced the notes at par on Monday in a deal upsized from $1.25 billion.

The notes priced on top of talk in the 4¼% area and tight to initial guidance in the 4 3/8% area.

$486 million Monday outflows

The dedicated high-yield bond funds sustained $486 million of net daily outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $491 million of outflows on the day.

Actively managed high-yield funds were flat to slightly positive on Monday, posting $5 million of inflows on the day, the source said.

Indexes mixed

The KDP High Yield Daily index fell to 70.22 Tuesday from 70.26 on Monday, while the yield rose to 3.66% from 3.65% in the prior session.

The index posted a cumulative gain of 7 basis points over the prior week.

The CDX High Yield 30 index rose to 109.14 Tuesday after closing down 9 bps at 109.08 at the start of the week.

The index posted a cumulative loss of 74 bps for the previous week.

The ICE BofAML US High Yield index on Tuesday posted a year-to-date return of 3.95%.

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