Junk: $2.2 billion of new paper; Consolidated Communications falls; Ranger Oil spikes

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 28 – The Tuesday high-yield primary market session supported two issuers bringing a total of three tranches, to raise a combined total of $2.2 billion.

Meanwhile, it was a largely sideways day in the secondary space with the market soft but activity light as market players awaited deals in the pipeline.

The market continued to express indecision about the Federal Reserve’s rate hike schedule with no major macro catalyst to move the needle in either direction on Tuesday, sources said.

While the broader market was flat, topical news sparked large price movements in outstanding issues, both to the upside and downside.

Consolidated Communications Holdings, Inc.’s 6½% senior secured notes due 2028 (B3/B-) sank more than 6 points following earnings.

However, Ranger Oil Corp.’s (formerly known as Penn Virginia Corp.) 9¼% senior notes due 2026 (B+) jumped more than 6 points following news Baytex Energy Corp. would acquire the company in a cash and stock transaction valued at $2.5 billion.

DISH Network Corp.’s 11¾% senior secured notes due 2027 (Ba3/B+) were pressured in heavy volume with the notes sinking to a 101-handle after a ransomware attack and an analyst’s double downgrade of the stock sparked selling in the name.

$2.2 billion

Executions appeared solid on the $2.2 billion of new junk bonds which priced on Tuesday, with demand for the two deals exceeding the offering sizes.

Triumph Group, Inc. priced $1.2 billion of 9% five-year senior secured first-lien notes (B2/CCC+) at par, at the tight end of talk. Initial guidance was 9½% to 9¾%.

The deal played to significant reverse inquiry, and was heard to have been playing to $3 billion of demand at price talk, a sellside source said.

And Adient Global Holdings Ltd. priced an upsized $1 billion amount of junk in two tranches.

The deal, which was increased from $850 million, included an upsized $500 million tranche (from $350 million) of 7% five-year senior secured notes (Ba3/BB+) and a $500 million tranche of 8¼% eight-year senior unsecured notes (B3/BB-).

Both tranches priced at par. And both came in the middle of talk.

Demand was skewed toward the secured notes, which played to $1 billion of orders, according to a sellside source.

The unsecured notes saw $700 million of demand, the source added.

The deal priced on an accelerated timeline. When announced on Tuesday morning it had been expected to remain in the market until Wednesday.

Meanwhile Israel's Teva Pharmaceutical Industries Ltd. set price talk in its $2.06 billion equivalent public offering of sustainability-linked senior notes (Ba2/BB-/BB-) coming in four bullet tranches: $500 million and €500 million, apiece, of 6.5-year notes and 8.5-year notes.

Books close at 8 a.m. ET Wednesday, and the deal is set to price thereafter (see related stories in this issue).

Consolidated Communications

Consolidated Communications’ 6½% senior secured notes due 2028 were the major losers of Tuesday’s session with the notes sinking 6 points after disappointing earnings were reported.

The 6½% notes opened Tuesday at 78 and quickly descended.

The notes were “all over the place,” a source said.

They traded between 71 and 75 during the session with the market for the notes seeming to level off on a 73-handle, the source said.

There was $24 million in reported volume.

Investors were “running for the hills” following earnings, a source said.

Consolidated Communications’ senior notes experienced heavy selling after the company forecast adjusted EBITDA of $310 million to $330 million in 2023, a more than 20% reduction from the adjusted EBITDA of $413.6 million reported for 2022.

Ranger Oil soars

Ranger Oil’s 9¼% senior notes due 2026 soared in heavy volume on Tuesday following news Baytex Energy would acquire the company in a cash and stock transaction.

The 9¼% notes shot up about 6½ points to 105½ in the late afternoon, a source said.

There was $17 million in reported volume.

The notes soared following news Baytex Energy would acquire Ranger Oil, formerly known as Penn Virginia, in a deal with an enterprise value of about $2.5 billion.

Part of the announced acquisition plan includes a redemption of Ranger’s outstanding senior notes.

DISH under pressure

DISH’s 11¾% senior secured notes due 2027 were under pressure on Tuesday after a ransomware attack that caused a network outage and an analyst’s double downgrade of stock sparked selling in the name.

The 11¾% notes fell more than 1 point to a 101-handle.

The notes were changing hands in the 101 3/8 to 101 5/8 context heading into the market close, a source said.

There was $29 million in reported volume.

Tuesday’s trading level marked the lowest for the notes since late December with the notes giving back all premium gained since the company priced a $1.5 billion add-on at 102 on Jan. 17.

Indexes

The KDP High Yield Daily index inched up 2 points to close Tuesday at 51.16 with the yield now 7.46%.

The index sank 67 points on Monday.

The index posted a cumulative decline of 27 points on the week last week.

The CDX High Yield 30 index fell 19 bps to close Tuesday at 101.38.

The index rose 27 bps on Monday.

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