AAR prices; junk market firms; TransDigm regains par; Alteryx falls on tender offer

By Abigail W. Adams

Portland, Me., Feb. 14 – The domestic high-yield primary market was quiet but not dormant on Wednesday with one deal pricing on an accelerated timeline.

AAR Corp. priced an upsized $550 million of AAR Escrow Issuer LLC five-year senior notes on Wednesday.

While the deal came amidst markets repricing in revised rate expectations following Tuesday’s U.S. Consumer Price Index report, the offering played to strong demand and priced tight.

The primary market is expected to operate at a slower pace in the coming days after the junk bond market marked its single highest volume day for issuance in three years on Monday.

However, it will not stop – with sources expecting at least one more deal to surface before the week draws to a close.

Tallgrass HoldCo (Prairie Acquiror LP) telegraphed its intention to price a secured notes offering as it announced plans to launch a $1.05 billion five-year first-lien term loan.

Meanwhile, the secondary space pared losses from the sell-off sparked by Tuesday’s CPI print, which reflected an uptick in inflation and further squashed market hopes for rate cuts in the first half of 2024.

While the cash bond market closed the previous session down ½ point, it nearly slashed its losses in half with the market up 1/8 to ¼ point.

Recent deals that struggled under Tuesday’s heavy market conditions improved on Wednesday. TransDigm Inc.’s two tranches of first-lien senior secured notes (Ba3/B+) returned to their issue prices after falling to a 99-handle the previous session.

AmWINS Group, Inc.’s 6 3/8% senior secured notes due 2029 (Ba3/B+) also returned to a par-handle in heavy volume.

Outside of recent issues, Alteryx, Inc.’s 8¾% senior notes due 2028 (B3/B) were under pressure after acquiring entity Azurite Intermediate Holdings, Inc. initiated a low-ball tender offer for the notes.

AAR prices

AAR priced an upsized $550 million, from $500 million, offering of AAR Escrow Issuer LLC five-year senior notes (Ba2/BB) on Wednesday at par with a coupon of 6¾%.

Pricing came at the tight end of talk for a yield in the 7% area. Early guidance for the notes was for a yield of 7% to 7¼%.

The deal was upsized from $500 million with timing accelerated. The offering was initially slated to price on Thursday.

TransDigm regains par

TransDigm’s two tranches of senior secured notes reclaimed par on Wednesday after falling to a 99-handle under the heavy market conditions of the previous session.

The 6 3/8% senior secured notes due 2029 and the 6 5/8% senior secured notes due 2032 continued to trade in the same context.

The notes added ¼ to 3/8 point.

They were trading in the 99 7/8 to par 1/8 context throughout the session with the notes set to close the day wrapped around par, sources said.

The notes closed the previous session in the 99 3/8 to 99 5/8 context.

The 6 5/8% notes had $34 million in reported volume; the 6 3/8% notes had $26 million in reported volume.

Both tranches priced at par in a Monday drive-by.

AmWINS rises

AmWINS’ 6 3/8% senior secured notes due 2029 improved alongside the broader market on Wednesday with the notes reclaiming a par-handle after sinking underwater the previous session.

The 6 3/8% notes added 3/8 to ½ point in active trade.

They were changing hands in the par to par ½ context throughout the session, a source said.

There was $24 million in reported volume.

AmWINS priced the notes at par on Monday.

The notes closed the previous session in the 99¾ to par context.

Low-ball tender

Alteryx’s 8¾% senior notes due 2028 sank in active trade on Wednesday after acquiring entity Azurite Intermediate Holdings announced a tender offer for the notes with the tender consideration well below the market price of the notes.

The 8¾% notes have traded in the 106 to 107 context since mid-December when Clearlake Capital Group, LP and Insight Partners announced their $4.4 billion acquisition of the company.

However, the notes sank more than 3 points on Wednesday to close the day on a 103-handle following the tender offer announcement.

There was $15 million in reported volume.

Azurate Intermediate is offering an early tender consideration of $1012.50 per $1,000 principal amount of the notes.

The tender offer is for $962.50 per $1,000 in principal after the expiration of the early tender deadline.

Sources used unprintable words to describe the offer.

“No one is going to tender their notes,” a source said. “They’re going to have to come back with a higher offer if they want to take them out.”

Indexes

The KDP High Yield Daily index added 13 basis points to close Wednesday at 50.44 with the yield now 6.93%.

The index fell 38 bps on Tuesday after inching up 2 bps on Monday.

The ICE BofAML US High Yield index added 11.3 bps with the year-to-date return now negative 0.251%.

The index fell 58.9 basis points on Tuesday and added 4.3 bps on Monday.

The CDX High Yield 30 index was off 16 bps to close Wednesday at 105.91.

The index sank 40 bps on Tuesday and added 11 bps on Monday.

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