DISH notes lower in junkland; Open Text active; Gap paper climbs on earnings

By Cristal Cody and Paul A. Harris

Tupelo, Miss., Nov. 18 – Aside from conspicuous crossover deals from United Rentals and OpenText – both of which were heard to have gotten attention from some new issue-starved high-yield accounts – the primary market managed to put up just $400 million of new issue volume during the Nov. 14 week.

With the primary market slow, attention turned to the secondary market, though the day felt “quiet,” a source said.

“High yield was soft in the morning, but the CDX is up now,” the market source said. “But it’s been a little bit quiet in some accounts.”

The iShares iBoxx High Yield Corporate Bond ETF added 16 cents, or 0.22%, to move up to $74.23 by the close.

The junk market opened up ¼ point on Friday morning.

On Thursday, ETFs closed with premiums and were expected to be buyers early Friday, a source said.

DISH Network Corp.’s new 11¾% senior secured notes due 2027 (Ba3/B+) slipped nearly ¼ point with the issue among the top junk bonds traded Friday. The bonds were still trading well above issuance since pricing in the prior week.

Open Text Corp.’s new 6.9% senior secured notes due 2027 (Ba1/BBB-/BBB) were quoted late afternoon trading at 100.4 to par ¾ bid, a source said.

The issuer priced the bonds on Wednesday at par at the tight end of talk in the 7% area.

Meanwhile Friday, Gap Inc. bonds gained along with its stock following the release of the retailer’s third-quarter results the previous day.

“The stock is up 7% today,” a source said. “It jumped after they posted better than expected sales and profits.”

Primary week

In a slow primary week, Calgary-based TransAlta Corp. priced the lone new deal, an issue of 7¾% green senior notes due November 2029 (Ba1/BB+) that came at par in a Monday drive-by.

Early in the week ahead Tokyo-based Rakuten Group, Inc. is expected to price a $500 million offering of two-year senior notes (BB+).

And as of midday Friday the Pegasus Merger Co./Tenneco Inc. $1 billion offering of six-year senior secured notes (B2/B-) backing the buyout of Tenneco by Apollo was believed to still be in the market, sources said.

That buyout was completed on Thursday, with the investment banks ponying up their committed financing, even though the bonds and the $1.4 billion term loan continue to await syndication.

Bond investors had been anticipating some accommodation in the form of covenant concessions, earlier in the week, although none materialized, sources said.

Pending such accommodations, debt backing the Tenneco buyout is facing serious headwinds, they add.

DISH softens

DISH’s new 11¾% senior secured notes due 2027 (Ba3/B+) traded down nearly ¼ point Friday to 102 1/8 bid, a source said.

The bonds were among the most active junk issues traded Friday on $16 million of reported volume.

Though lower Friday, the issue was still at a heady print since reaching a new high Tuesday on a 101 handle.

DISH brought the notes in a $2 billion offering on Nov. 7 at 98.171, in line with talk in the 98 area.

Gap bonds gain

Gap’s 3 5/8% notes due 2029 (Ba3/BB) rallied more than 4 points Friday to 75 1/8 bid in active trading, a source said.

Secondary supply totaled $4.9 million.

Gap’s stock closed up 7.38% at $13.67 on Friday.

The shares were trading 8% better at the start of the session after the company reported strong third-quarter profit on Thursday and analysts hiked the price target, another source said.

Inflows

The dedicated high-yield bond funds had $423 million of net daily cash inflows on Thursday, according to a market source.

High-yield ETFs saw $255 million of inflows on the day.

Actively managed high-yield funds saw $168 million of inflows on Thursday.

News of those daily inflows followed a Thursday afternoon report that the combined funds saw $2.93 billion of net inflows for the week to the Wednesday, Nov. 16 close, according to Refinitiv Lipper.

That capped a four-week run of inflows totaling $11.3 billion, according to the market source.

Indexes

The KDP High Yield Daily index finished Friday at 51.82 with a yield of 7.53% after declining 15 points Thursday to 51.74 with a yield of 7.56%.

The index was down 10 points on Wednesday after rising 23 points on Tuesday and 26 points on Monday.

The CDX High Yield 30 index on Friday was 100.75.

The index fell 4 basis points to close Thursday at 100.39, dropped 9 bps on Wednesday, gained 20 bps on Tuesday and fell 23 bps on Monday.

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