Home Point prices; Melco Resorts, CP Atlas add on; calendar grows; Vector, CrowdStrike surge

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 13 – The domestic high-yield primary market saw one new offering and two add-ons price during Wednesday’s session, in addition to a steady buildup in the forward calendar.

Home Point Capital Inc. priced an upsized $550 million issue of five-year senior notes (B2/B).

Melco Resorts & Entertainment Ltd. priced a $250 million add-on to the Melco Resorts Finance Ltd. 5 3/8% senior notes due Dec. 4, 2029 (Ba2/BB).

And CP Atlas Buyer, Inc., also known as American Bath Group LLC, priced a $175 million add-on to its 7% senior notes due Dec. 1, 2028 (existing ratings Caa2/CCC).

Life Time Inc., Mohegan Gaming & Entertainment and California Resources Corp. all joined the forward calendar with pricing expected before the week comes to an end.

Meanwhile, the secondary space was volatile on Wednesday with the market soft at the open but up about ¼ point heading into the close.

New paper continued to lead the tape with the deals to price during Tuesday’s session performing well.

Vector Group Ltd.’s 5¾% senior notes due 2029 (Ba3/BB-) continued to gain momentum after a strong break with the notes priced relatively cheap compared to some recent offerings.

CrowdStrike Holdings, Inc.’s 3% senior notes due 2029 (Ba3/BB) were also putting in a strong performance with the issuer an unusual one for the junk bond market.

T-Mobile USA, Inc.’s three tranches of senior notes (Ba3/BB/BB+) remained active in the secondary space with the notes catching a bid on a stronger day for the market.

Wednesday’s primary

The Wednesday session generated a steady news flow in the high yield primary market.

Home Point Capital priced an upsized $550 million issue (from $500 million) of five-year senior notes (B2/B) at par to yield 5%, at the tight end of talk.

The deal played to $1.7 billion of orders across 95 account, a trader said.

It is expected to trade fairly well, the source said, spotting the new Home Point Capital 5% notes trading at par ¾ bid, 101¼ offered at Wednesday's close.

There were also two add-on deals that came as Wednesday drive-bys.

Melco Resorts & Entertainment priced a $250 million add-on to the Melco Resorts Finance Ltd. 5 3/8% senior notes due Dec. 4, 2029 (Ba2/BB) at 103.25 to yield 4.918%, at the rich end of price talk.

And CP Atlas Buyer, also known as American Bath Group, priced a $175 million add-on to its 7% senior notes due Dec. 1, 2028 (existing ratings Caa2/CCC) at 104.5 with a 6.265% yield to maturity.

The issue price came through the rich end of price talk in the 104 area.

Calendar buildup

The active new issue calendar also saw a substantial buildup on Wednesday.

Life Time plans to price a $750 million offering of five-year senior secured notes (B3/B-) on Thursday. Initial talk is in the low-to-mid 6% area.

Mohegan Gaming & Entertainment started a roadshow for a $1.175 billion offering of five-year senior secured notes, in the market with initial guidance in the low 8% area, and expected to price on Friday.

And California Resources Corp. started a roadshow for a $600 million offering of five-year senior notes (expected ratings B2/B+), with initial talk is in the mid-to-high 7% area (see related stories in this issue).

Vector gains

Vector Group’s 5¾% senior notes due 2029 continued to gain momentum in active trading on Wednesday following a strong break.

The 5¾% notes traded up to 102 heading into the market close.

The bonds had more than $25 million in reported volume.

The notes traded up to a 101-handle after breaking for trade on Tuesday.

The notes were relatively cheap compared to the market.

“There was still some juice left in them,” a source said.

Vector priced an upsized $875 million, from $850 million, issue of the 5¾% notes at par on Tuesday.

The yield printed at the tight end of the 5¾% to 6% yield talk.

There was a significant amount of reverse inquiry involved in the deal, a source said.

CrowdStrike

CrowdStrike’s 3% senior notes due 2029 were in focus on Wednesday with the notes continuing to gain despite their tight pricing.

The 3% notes were up about 5/8 point. They were changing hands in the 101¼ to 101½ context in the late afternoon.

There was more than $60 million on the tape.

The notes were on a par-handle after breaking for trade on Tuesday.

There was a lot of interest in CrowdStrike’s offering, a source said.

The cybersecurity firm, which has a market cap of $50 billion, is not the typical high yield issuer, the source said.

CrowdStrike priced a $750 million issue of the 3% notes at par on Tuesday.

Pricing came at the tight end of the 3% to 3¼% yield talk.

T-Mobile

T-Mobile’s newly priced tranches of senior notes were catching a bid on Wednesday after largely falling flat in the aftermarket.

T-Mobile’s 2¼% senior notes due 2026 gained 1 point to trade up to 101¼ in the late afternoon.

While the notes carried the tightest coupon of the three tranches, they performed the best in the aftermarket due to their short duration, a source said.

The notes were trading in the par ¼ to par ½ context on Tuesday.

T-Mobile’s 2 7/8% senior notes due 2031 rose about ¾ point to par ¾. The notes were wrapped around par the previous session.

T-Mobile’s 2 5/8% senior notes due 2029 traded as high as par ½ during Wednesday’s session.

However, they sank back down to close the day at par 1/8.

Each tranche saw about $20 million in reported volume.

The notes were trading up alongside the broader market.

$708 million Tuesday outflows

The dedicated high-yield bond funds saw a substantial $708 million of net outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $403 million of outflows on the day.

Actively managed funds saw $305 million of outflows on Tuesday, the source said.

Indexes gain

Indexes were on the rise on Wednesday after a soft start to the week.

The KDP High Yield Daily index gained 4 points to close Wednesday at 69.10 with the yield now 4.28%.

The index fell 9 points on Tuesday and 5 points on Monday.

The ICE BofAML US High Yield index gained 13.7 bps with the year-to-date return now 0.14%.

The index fell 9.7 bps on Tuesday and 13 bps on Monday.

The CDX High Yield 30 index rose 25 bps to close Wednesday at 109.11.

The index was down 7 bps on Tuesday and 40 bps on Monday.

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