Primary prices fresh $5.5 billion; new deals in focus, trade up in secondary

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 15 – The domestic high-yield primary market continued its breakneck pace, pricing a cumulative $5.5 billion over six deals with razor-sharp executions.

Meanwhile, the secondary space remained firm amid the influx of new paper.

Despite the abundance of supply, demand remained strong. “It’s been a frenzy really,” a source said.

Park Hotels & Resorts Inc.’s 5 7/8% senior secured notes due 2028 (B1/BB-), Cheniere Energy Inc.’s 4 5/8% senior secured notes due 2028 (Ba3/BB) and Nexstar Broadcasting, Inc.’s 4¾% senior notes due 2028 (B3/B) all saw strong breaks after freeing for trade.

Shea Homes LP’s recently priced 4¾% senior notes due 2029 (B1/BB-), Hologic, Inc.’s 3¼% senior notes due 2029 (Ba2/BB-), Gartner, Inc.’s 3¾% senior notes due 2030 (existing ratings Ba3/BB) and Uber Technologies Inc.’s 6¼% senior notes due 2028 (B3/CCC+) continued to gain in active trading on Tuesday.

However, New Residential Investment Corp.’s 6¼% senior notes due 2025 (B3/B-) stood poised to close Tuesday flat.

Tuesday’s primary

Six issuers priced single tranches of dollar-denominated junk, for a combined total of $5.5 billion on Tuesday, as news volume in the primary market maintained its heavy post-Labor Day flow.

Two of Tuesday's issuers came with drive-by deals.

Two of the six upsized their offers.

Conspicuous among these was Cheniere Energy, which doubled the size of its deal to $2 billion from $1 billion, and priced its new 4 5/8% secured notes due 2028 (Ba3/BB) at the tight end of talk.

Executions were razor sharp, although Specialty Building Products Holdings, LLC, which does business at U.S. Lumber Group, captured the spotlight by pricing its upsized $600 million (from $575 million) issue of 6 3/8% secured notes due 2026 (B3/B-) 12.5 basis points inside of talk.

Meanwhile, the active new issue calendar continued to build (see related stories in this issue).

Strong breaks

Several of the deals to price during Tuesday’s session had strong breaks.

Park Hotels’ 5 7/8% senior secured notes due 2028 traded as high as 101 but were seen in the par ¼ to par ¾ context heading into the market close.

More than $92 million of the bonds were on the tape.

Park Hotels priced an upsized $725 million issue of the 5 7/8% notes at par.

Pricing came at the tight end of yield talk in the 6% area. Initial guidance was in the low-to-mid 6% area.

The initial size of the offering was $650 million.

Cheniere’s 4 5/8% senior notes jumped to a 101-handle shortly after breaking for trade.

The notes were marked at 101 bid, 101½ offered heading into the late afternoon, a source said.

There was more than $50 million in reported volume shortly after the bonds freed to trade.

Cheniere priced an upsized $2 billion issue of the 4 5/8% notes at par.

Pricing came at the tight end of yield talk in the 4¾% area. The deal doubled in size and was initially launched as a $1 billion offering.

Nexstar’s 4¾% senior notes due 2028 were seen at par ¾ bid in the late afternoon with more than $90 million in reported volume, a source said.

Nexstar priced $1 billion issue of the 4¾% notes at par.

The yield printed at the tight end of yield talk in the 4 7/8% area.

Shea Homes skyrockets

While volume was light, Shea Homes’ 4¾% senior notes due 2029 continued to skyrocket in the aftermarket.

Following a strong break, the notes continued to gain and hit a 102-handle on Tuesday.

The 4¾% notes were marked at 102 bid, 102¼ offered heading into the market close.

Shea Homes priced a $300 million issue of the 4¾% notes at par on Monday.

The yield printed in the middle of yield talk in the 4¾% area.

The recent offerings from homebuilders have performed well with Weekley Homes LLC’s 4 7/8% senior notes due 2028 (B1/BB-) also trading up to 102, a source said.

Hologic gains

Hologic’s 3¼% senior notes due 2029 were on the rise in active trading on Tuesday.

The notes opened the day at par ¼ bid, par ¾ offered. However, they climbed to a 101-handle as the session progressed.

They were seen changing hands in the 101 to 101½ context heading into the market close, a source said.

The bonds had more than $56 million in reported volume during Tuesday’s session.

The medical technology company priced a $950 million issue of the 3¼% notes at par on Monday.

Pricing came on top of talk in the 3¼% area.

Gartner on the rise

Gartner’s 3¾% senior notes due 2030 also continued to gain in active trading on Tuesday.

The notes opened the day at par ¼ bid but traded up steadily throughout the session, a source said.

They were changing hands in the 101 to 101½ context heading into the market close with more than $73 million in reported volume, sources said.

The technology research and advisory service provider priced an $800 million issue of the 3¾% senior notes at par on Monday.

The yield came through talk for a yield in the 4% area. Initial talk was 4% to 4 1/8%.

Uber on a 101-handle

Uber’s 6¼% senior notes due 2028 became the latest deal from a lower credit tier to trade with a large premium in the aftermarket.

The notes rose to a 101-handle and were marked at 101 1/8 bid, 101 5/8 offered heading into the market close.

The bonds saw more than $35 million in reported volume during Tuesday’s session.

Uber priced a $500 million issue of the 6¼% notes at par in a Monday drive-by.

Pricing came at the tight end of yield talk in the 6 3/8% area.

New Residential flat

While the majority of deals to price on Monday were putting in strong performances in the aftermarket, New Residential’s 6¼% senior notes due 2025 fell flat.

The notes shaved off the premium gained after breaking for trade and closed Tuesday at par, according to a market source.

The notes were active with more than $57 million in reported volume.

The REIT, which is focused on mortgage origination and servicing, priced a $550 million issue of the 6¼% notes at par on Monday.

The yield printed at the wide end of the 6% to 6¼% yield talk.

$269 million Monday outflows

The dedicated high-yield bond funds saw $269 million of net daily outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs disgorged a meaningful $464 million on the day.

Actively managed high yield funds, meanwhile, were well into the green on Monday, with $195 million of inflows on the day, the source said.

The combined funds are tracking $287 million of net inflows for the week which will conclude with Wednesday's close, according to the market source.

Indexes gain

Indexes continued to gain on Tuesday after starting the week on firm footing.

The KDP High Yield Daily index rose 5 basis points to close Tuesday at 67 with the yield 5.36%.

The index was up 2 bps on Monday.

The ICE BofAML US High Yield index gained 9.7 bps with the year-to-date return now 0.495%.

The index was up 4.7 bps on Monday.

The CDX High Yield 30 index gained 41 bps to close Tuesday at 106.72.

The index was up 25 bps on Monday.

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