Spirit AeroSystems, Marriott price; Sabre, Cinemark, Burlington trade up; TransDigm active

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 14 – The domestic high-yield primary market continued to churn out the new deals with two sizable drive-bys clearing the market during Tuesday’s session.

Spirit AeroSystems, Inc. priced an upsized $1.2 billion issue of five-year senior secured second-lien notes (Ba2/BB-).

Marriott International Inc. priced an upsized $1.6 billion issue of five-year series EE senior notes.

Both deals were heavily oversubscribed – a theme among the deals to clear the primary market in recent days.

Meanwhile, the new paper was in focus in the secondary space with all putting in a strong performance.

Sabre GLBL Inc.’s 9¼% senior notes due 2025 (Ba3/B+), Burlington Stores, Inc.’s 6¼% senior notes due 2025 (Ba1/BB+/BB) and Cinemark USA, Inc.’s 8¾% senior notes due 2025 (Ba2/BB+) were all trading with steep premiums in the secondary space.

TransDigm Inc.’s 6¼% senior notes due 2026 (Ba3/B+) were also active and trading well above the reoffer price of their add-on.

Outside of the new paper, Avon Products Inc.’s 7% senior notes due 2023 (B3/B+) jumped in active trading.

Big demand for new issues

A high-yield new issue market, revivified last week when the Federal Reserve Bank announced a $750 billion special purpose vehicle that can be used, in certain circumstance, to buy bonds as far down the credit spectrum as low double B, has been playing to massive demand, sources say.

This has allowed drive-by issuers to finalize rates that run from 75 basis points to 100 bps below initial price talk, often while increasing the announced issues sizes.

Tuesday was no exception.

Spirit AeroSystems priced an upsized $1.2 billion issue of five-year senior secured second lien notes (Ba2/BB-) at par to yield 7½% in a drive-by.

The issue size increased from $1 billion.

The yield printed at the tight end of the 7½% to 7¾% yield talk.

The oversubscribed deal had initially been in the market with guidance in the low 8% area, according to a trader.

In a trade featuring high-grade ratings, but that was priced high yield-style, Marriott International priced an upsized $1.6 billion issue of five-year series EE senior notes (Baa3/BBB-) at par to yield 5¾%.

The massively oversubscribed deal was upsized from $1 billion and was at one point playing to a book containing $20 billion of orders.

The new Marriott 5¾% notes were actively trading late Tuesday at 103½ bid, a high-yield bond trader said, adding that high-yield accounts were very active in the name.

The deal, which was priced on the investment grade desks, but marketed by the high-yield syndicates, ended up pricing 12.5 bps through final yield talk in the 6% area.

During the hours that the offer was in the market, pricing was force-marched lower from initial guidance in the 7¼% area.

The coupon is subject to step-ups based on downward ratings actions by Moody's Investors Service and/or S&P Global Ratings (see related story in this issue).

Sabre skyrockets

Sabre’s 9¼% senior notes due 2025 skyrocketed in active trading in the secondary space.

The notes were changing hands in the 104½ to 104¾ context during Tuesday’s session and stood poised to close the day at 104½, sources said.

The bonds saw more than $95 million in reported volume during Tuesday’s session.

Sabre priced an upsized $775 million issue of the 9¼% notes at par in a Monday drive-by.

The yield printed on top of final talk and tight to early talk in the 9½% area.

The deal was heavily oversubscribed during bookbuilding, sources said.

The initial size of the deal was $500 million.

Burlington Stores trades up

Burlington Stores’ 6¼% senior notes due 2025 were also trading with a steep premium in the secondary space.

The notes were up 2 points in the mid-afternoon and stood poised to close the day at 102 1/8, sources said.

Despite the small size of the issue, the notes were active with more than $44 million in reported volume during Tuesday’s session.

Burlington priced a $300 million issue of the 6¼% notes at par in a Monday drive-by.

The yield printed at the tight end of final talk for a yield of 6¼% to 6 3/8%. Talk had been tightened from earlier talk in the 6½% area.

The deal was heard to be playing to $3 billion of orders during bookbuilding, a market source said.

Cinemark at a premium

Cinemark’s 8¾% senior notes due 2025 were putting in a strong performance in the secondary space.

The 8¾% notes traded up to 102 5/8 during Tuesday’s session and stood poised to close the day at 102¼.

The notes were also active despite the small size of the issue with more than $46 million on the tape.

Cinemark priced a $250 million issue of 8¾% at par on Monday.

The yield printed at the tight end of the 8¾% to 9% yield talk.

The deal was heavily oversubscribed, a source said.

TransDigm active

TransDigm’s 6¼% senior notes due 2026 saw heavy volume after the company priced an add-on during Monday’s session.

The 6¼% notes were changing hands in the 102½ to 103 context during Tuesday’s session.

The bonds saw more than $45 million in reported volume during the session.

TransDigm priced a $400 million add-on to the 6¼% notes at 101.00 to yield 6.045% in a Monday drive-by.

The add-on priced at the rich end of the par to 101 price talk.

The 6¼% notes were trading on a 98-handle last week but skyrocketed alongside the broader market following the Federal Reserve’s latest stimulus announcement and closed out last week at 104, according to Trace data.

Avon jumps

Avon’s 7% senior notes due 2023 jumped in active trading during Tuesday’s session.

The notes gained 5¼ points to close the day at 95½, according to a market source.

There was more than $19 million in reported volume during Tuesday’s session.

There were no headlines behind the sudden spike in the notes.

However, the notes have a short duration and a “nice coupon,” a source said. The notes were yielding 8.78%, the source said.

$2.82 billion Monday inflows

The dedicated high-yield bond funds saw a whopping $2.82 billion 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 saw $1.27 billion of inflows on the day.

Actively managed high-yield funds saw $1.55 billion of inflows on Monday, the source added.

The combined funds are tracking $4.7 billion of inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes mixed

Indexes remained mixed on Tuesday, which is how they started the week.

The KDP High Yield Daily index gained 66 bps to close Tuesday at 64.29 with the yield now 7.12%. The index was down 11 bps on Monday.

The ICE BofAML US High Yield index gained another 91.4 bps with the year-to-date returns now 8.642%.

The index was up 120.7 bps on Monday.

The CDX High Yield 30 index dropped 11 bps to close Tuesday at 97.66. The index sank 109 bps on Monday.

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