Primary prices $5.39 billion in nine tranches; forward calendar grows; Urban One soars

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 11 – As forecast, the week of Jan. 11 came smoking off the starting line in the high-yield new-issue market, with seven issuers pricing a combined nine tranches with a total face amount of $5.39 billion.

Among the deals to price was T-Mobile USA, Inc.’s $3 billion three-tranche offering (Ba3/BB/BB+) and Antero Resources Corp.’s $700 million issue of eight-year senior notes (existing ratings B3/B).

Tuesday also promises to be busy with Vector Group Ltd. and CrowdStrike Holdings, Inc. on the forward calendar.

Meanwhile, the secondary space launched the week on soft footing on Monday as equities backed off their record highs.

However, volume was light with focus on the onslaught of deals in the pipeline.

Urban One, Inc.’s newly priced 7 3/8% senior notes due 2028 (B3/B-) continued to rocket higher in high-volume activity.

However, Realogy Holdings Corp.’s 5¾% senior notes due 2029 (Caa1/B-) and Hilcorp Energy I, LP’s two tranches of senior notes (Ba3/BB-) were coming in from their highs in active trading.

Antero’s 5 5/8% senior notes due 2023 were posting gains on the heels of the company’s latest offering.

Monday’s primary

Executions were tight to ultra-tight, as pricing wound progressively tighter from the time that initial guidance was heard to the time that official price talk circulated, with deals uniformly pricing tight to, and sometimes inside of, final talk.

The explanation for the plummeting price talk: People are starved for paper, a trader said.

T-Mobile USA priced an upsized to $3 billion of amount of senior notes (Ba3/BB/BB+) in three $1 billion tranches.

The deal was heard to be playing to $11 billion of demand across all three tranches.

Although initial guidance had two of the three tranches coming with 3%-handle yields, when the dust cleared all three finished with 2%-handle yields: 2¼% on the five-year, 2 5/8% on the eight-year and 2 7/8% on the 10-year.

And just over two weeks after it priced $500 million issue of 8 3/8% 5.5-year senior notes Antero Resources returned Monday with a bigger, longer, tighter deal, pricing an upsized $700 million issue (from $500 million) of eight-year senior notes (existing ratings B3/B) at par to yield 7 5/8%.

The yield printed 12.5 basis points inside of the 7¾% to 8% yield talk. Initial talk was 8% to 8¼%.

The deal was heard to be playing to $4 billion of orders, and the new 8 3/8% notes were spotted at par 5/8 bid, par 7/8 offered at the Monday close.

When the lights went down on Monday primary market there was a modest deal calendar.

Vector Group plans to price a $850 million offering of eight-year senior secured notes (S&P: BB-) on Tuesday. The deal is in the market with initial guidance of 5¾% to 6%.

And CrowdStrike Holdings is expected to price $750 million of eight-year senior notes on Tuesday. Timing was moved ahead; the deal had initially been announced as Wednesday business. Initial guidance has the deal coming to yield in the high 3% area.

Urban One soars

Urban One’s 7 3/8% senior notes due 2028 skyrocketed in high-volume activity in the aftermarket.

The 7 3/8% notes were changing hands in the 103½ to 104 context throughout Monday’s session.

There was more than $68 million on the tape.

The coupon was decent and proceeds were used to take out two series of notes, which drove demand for the new issue, a source said.

Urban One priced an $825 million issue of the 7 3/8% notes at par on Friday.

Pricing came at the tight end of yield talk in the 7½% area.

Coming in

Several recent issues were coming in from their highs on Monday.

Realogy’s 5¾% senior notes due 2029 came in about 3/8 point to close the day at 101 7/8, according to a market source.

There was more than $21 million of the bonds on the tape.

The notes had been on a 102-handle.

Hilcorp’s two tranches of senior notes were also coming in from their highs.

The 5¾% senior notes due 2029 were down about ½ point. They were changing hands in the 102 to 102 1/8 context heading into the market close.

The 6% senior notes due 2031 were down about ¾ point and were wrapped around 102 heading into the close.

Both tranches had traded as high as 102 7/8 after breaking for trade last Thursday.

Antero gains

Antero’s 5 5/8% senior notes due 2023 were on the rise following the company’s latest offering.

The notes were up about 1 point. They were changing hands in the 99½ to par context during Monday’s session.

There was more than $15.5 million in reported volume.

With proceeds from Antero’s latest offering to be used to redeem its 2022 notes, investors had increased confidence the company would be able to cover its 2023 maturities, a source said.

$272 million Friday inflows

The dedicated high-yield bond funds saw $272 million of net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $207 million of inflows on the day.

Actively managed high-yield funds saw $65 million of inflows on Friday, the source said.

Indexes down

The KDP High Yield Daily index shaved off 5 points to close Monday at 69.15 with the yield now 4.22%.

The ICE BofAML US High Yield index dropped 13 bps with the year-to-date returns now 0.10%.

The CDX High Yield 30 index dropped 40 bps to close Monday at 108.93.

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