First Quantum, Royal Caribbean, Tallgrass price; EQM edges up; funds add $10.7 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 22 – Three issuers combined to raise $3.25 billion in Thursday’s high-yield primary market session.

Each priced a single dollar-denominated tranche of bonds.

Executions were sharp, with one deal pricing through talk. The other two priced at the tight ends of talk.

First Quantum Minerals Ltd. priced a $1.6 billion issue of five-year second-lien secured notes (B/B) at par to yield 9 3/8%, 12.5 basis points inside of the 9½% to 9¾% yield talk. Initial guidance was in the 10% area.

Royal Caribbean Cruises Ltd. priced an upsized $1.25 billion issue of eight-year senior notes (Ba2/BB+) at par to yield 6¼%.

The issue size increased from $1 billion.

The yield printed at the tight end of yield talk.

And Tallgrass Energy Partners, LP priced a $400 million issue of Prairie Acquiror LP 5.5-year senior secured notes (B3/B) at par to yield 9%, at the tight end of the 9% to 9 ¼% talk.

Meanwhile, a risk-on sentiment returned to the market on Thursday with the cash bond market adding ¼ to 3/8 point with year-to-date returns once again swinging to positive territory.

The AI-fueled stock market rally after Nvidia’s earnings results and a strong Purchasing Managers’ Index that reflected continued economic expansion helped lift market sentiment, sources said.

New paper and earnings-related news continued to drive activity in the secondary space.

EQM Midstream Partners, LP’s new 6 3/8% senior notes due 2029 (Ba3/BB-/BB) edged higher after a decent break in heavy volume.

First Quantum remained in focus with its shorter-duration notes continuing to rally in the wake of the company’s refinancing deal.

Ardagh Holdings USA Inc.’s senior notes and ARD Finance SA’s 6½% senior secured toggle notes due 2027 (Caa3/CCC+) were among the major gainers of Thursday’s session with the company’s earnings not as bad as anticipated.

Meanwhile, high-yield mutual funds and exchange-traded funds saw nominal inflows of $10.7 million in the week through Wednesday, a market source said of the Refinitiv Lipper Fund Flow report.

EQM edges higher

EQM’s 6 3/8% senior notes due 2029 edged higher in heavy volume on Thursday with the notes adding to the nominal premium gained on the break.

The 6 3/8% notes added about ½ point.

They were trading in the par ¼ to par ¾ context throughout the session with the notes wrapped around par 5/8 heading into the market close, a source said.

There was $44 million in reported volume.

EQM priced a $600 million issue of the 6 3/8% notes at par in a Wednesday drive-by.

The yield printed at the tight end of the 6 3/8% to 6½% yield talk.

First Quantum in focus

First Quantum’s senior notes remained in focus with its short-duration notes continuing to rally on the heels of the company’s refinancing deal.

The 6 7/8% senior notes due 2027 added another 2 points to climb to a 95-handle after a 2 to 3 point gain the previous session.

The notes were trading in the 95¼ to 95¾ context throughout the session, a source said.

The yield was about 8¼%.

There was $43 million in reported volume.

The 8 5/8% senior notes due 2031 were volatile.

The notes were lower early in the session and traded down to a 91-handle.

However, they added ½ to 1 point to trade on a 93-handle by the market close, a source said.

The notes were trading in the 93 to 93½ context late in the session with the yield just shy of 10%.

The pricing of the new notes were affecting the trading level of the 8 5/8% notes.

First Quantum has been in focus since the company announced a refinancing deal to take out its 2025 and 2026 notes.

While the shorter-duration notes rallied on the news, the longer-duration notes were active but largely flat with First Quantum’s latest offering priming them over, a source said.

Ardagh higher

Ardagh’s senior notes were among the major gainers of Thursday’s session with the packaging company’s earnings not as terrible as anticipated, a source said.

Ardagh’s 5¼% senior notes due 2027 (Caa1/CCC+) jumped 5 points to close the day on a 73-handle.

They opened the day on a 70-handle and continued to move higher as the session progressed.

They were trading in the 73¼ to 73¾ context heading into the market close, a source said.

The yield tightened to 15¼%.

There was $10 million in reported volume.

Ardagh’s 4 1/8% senior secured notes due 2026 (B1/B+) rose 3 points to close the day at 91 3/8 with the yield about 8%.

There was $5 million in reported volume.

ARD Finance’s 6½% senior secured toggle notes due 2027 jumped 8 points to close the day wrapped around 47 with the yield 34 3/8%.

There was $15.5 million in reported volume.

Ardagh’s senior notes have been under pressure for the past month with market expectations low heading into earnings.

While Ardagh’s earnings were not good with revenue down 4% year-over-year and Ebitda down 42% year-over-year, they also were not as terrible as had been expected, sources said.

Indexes

The KDP High Yield Daily index added 13 bps to close Thursday at 50.48 with the yield now 6.91%.

The index fell 7 bps on Wednesday and inched up 2 bps on Tuesday.

The ICE BofAML US High Yield index gained 28.2 bps with the year-to-date return now 0.138%.

The index was down 4.8 bps on Wednesday and added 10.4 bps on Tuesday.

The CDX High Yield 30 index jumped 49 bps to close Thursday at 106.46.

The index shaved off 3 bps on Wednesday and 3 bps on Tuesday.

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