Century Aluminum, TMS, Uniti price; Royal Caribbean, Goodyear improve; energy gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 6 – The domestic high-yield primary market returned to action on Tuesday with three deals pricing and several more joining the forward calendar.

Uniti Group Inc. priced a $570 million issue of seven-year senior secured notes (B2/B).

TMS International Corp. priced an upsized $325 million issue of eight-year senior notes (Caa1/B).

And Century Aluminum Co. priced a $250 million issue of seven-year secured notes (Caa1/B).

Meanwhile, it was a sideways day in the secondary space with volume relatively light as market players awaited the new deals in the pipeline.

Uniti’s 7 7/8% senior notes due 2025 were active as market players awaited the company’s latest offering.

Several recent deals were also improved in active trading amid a shortage of new paper in recent sessions.

After a lackluster break, Goodyear Tire & Rubber Co.’s 5¼% senior notes due 2031 (B2/B+) continued to gain traction.

Royal Caribbean Cruises Ltd.’s 5½% senior notes due 2028 (B2/B) also continued to rise after sinking below par their initial days in the aftermarket.

Tuesday’s primary

On the heels of a sleepy Easter Monday the high-yield new issue market sprang back to life on Tuesday.

Among the session's issuers Uniti Group priced a $570 million issue of 4¾% seven-year senior secured notes (B2/B) at par, at the tight end of talk, in a drive-by.

The deal saw “pretty good” reverse inquiry, a trader said, adding that it was oversubscribed at 5¼%, prior to price talk tightening, but nevertheless is expected to trade fine.

Not long after Tuesday's close, however, another trader spotted the new Uniti notes trading with a softer tone, hanging in just above par.

TMS International priced an upsized $325 million issue (from $300 million) of 6¼% eight-year senior notes (Caa1/B) at par, at the tight end of talk, in a deal that was heard to be three-times oversubscribed in the early-to-mid part of Tuesday afternoon.

And Century Aluminum priced a $250 million issue of 7½% seven-year secured notes (Caa1/B) at par, at the tight end of talk.

At the close those bonds were up one to two points in strong trading, a trader said.

The calendar

Tuesday also saw a substantial buildup in the active calendar.

Lannett Co. Inc. expects to price a $350 million offering of five-year first-lien notes (B1) on Thursday.

Noting that the deal is in the market with initial guidance in the 8% area, a trader said that Lannett is doing an exchange, and it is expected that a lot of CLOs and leverage funds won't roll into the notes being offered in the exchange.

Presently, Lannett's convertible is trading around 60, yielding approximately 12%, the source noted, adding that the new bonds could come wider than the 8% area.

There was also chatter in the market about the Michaels Cos., Inc. $2.3 billion megadeal backing that buyout of the Texas-based specialty merchandise supplier by Apollo.

The deal, which was announced ahead of the Easter break, features $1 billion of seven-year secured notes (Ba3/B) guided in the 5½% area, and $1.3 billion eight-year unsecured notes (B3/CCC+) guided at 8% to 8¼%.

The secured tranche is going well, sources say.

However, noting that Apollo has a reputation in the market for its preference for covenant packages that leave it room to move, document changes are expected on the unsecured tranche, those sources add.

The Michaels deal is in roadshow mode through Thursday.

Uniti active

Uniti’s 7 7/8% senior notes due 2025 were active on Tuesday as market players awaited the company’s latest offering.

While active, the 7 7/8% notes were trading largely flat with most prints in the 107 7/8 to 108¼ context, according to a market source.

There was about $23 million in reported volume.

The notes were trading with a yield of about 2 7/8%, a source said.

With Uniti’s latest offering pricing with a 4¾% yield, holders of the old notes may have been switching to the latest offering, a source said.

Goodyear gains

Goodyear’s 5¼% senior notes due 2031 continued to gain traction after initially falling flat in the aftermarket.

The 5¼% notes gained ½ point to close Tuesday at 101 bid, a source said.

The notes were active with about $24 million in reported volume.

The 5¼% notes initially fell flat in the aftermarket and were wrapped around their issue price after breaking for trade on March 31.

Royal Caribbean gains

Royal Caribbean’s 5½% senior notes due 2028 continued to shoot higher after also initially struggling in the aftermarket.

The 5½% notes rose about ¾ point to close Tuesday at 102¼ bid, a source said.

The notes also saw a lackluster break after the cruise line operator priced a $1.5 billion offering on March 24.

The notes initially dropped below par on the break but have steadily improved over the past two weeks.

$939 million Monday inflows

The dedicated high-yield bond funds had $939 million of net inflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $779 million of inflows on the day.

Actively managed high-yield funds saw $160 million of inflows on Monday, the source said.

The combined funds are tracking a hefty $2.75 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

Indexes continued to gain on Tuesday.

The KDP High Yield Daily index rose 9 points to close Tuesday at 69.46 with the yield now 4%.

The index was up 8 points on Monday.

The ICE BofAML US High Yield index gained 16.9 bps with the year-to-date return now 1.462%.

The index was up 19.9 bps on Monday.

The CDX High Yield 30 index climbed 6 bps to close Tuesday at 109.56.

The index gained 15 bps on Monday.

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