Iron Mountain, Yum!, Murphy Oil price; Shutterfly upsizes; Ichan new issue gains

By Cristal Cody and James McCandless

Tupelo, Miss., Sept. 4 – The primary high-yield market continued to awaken on Wednesday after an approximately two-week hiatus.

Iron Mountain Inc., Yum! Brands, Inc. and Murphy Oil USA Inc. all priced new deals in the primary junk market.

Iron Mountain and Yum! Were both upsized.

The high yield secondary space saw rose throughout the Wednesday session.

Icahn Enterprises LP and Icahn Enterprises Finance Corp.’s new senior notes spent its first day gaining.

In health care, DaVita Inc.’s issues saw varying movements amid favorable developments in the California Senate.

Coworking name WeWork’s paper closed the day better after its chief executive officer returned a $5.9 million payment the company paid him.

The junk bond market opened up 1/8 point on Wednesday and closed the day better.

Primary supply adds

Iron Mountain Inc. led robust supply in the junk bond primary market on Wednesday with an upsized $1 billion offering of 10-year guaranteed senior notes that priced on the tight side of guidance.

Yum! Brands, Inc. also sold an upsized $800 million of senior notes due Jan. 15, 2030 tighter than initial talk.

Murphy Oil USA Inc. tapped the primary market with a $500 million registered offering of 10-year guaranteed senior notes during the session.

In other issuance, CYBG PLC priced £400 million of 4% resettable callable senior notes due 2027, while Eurofins Scientific S.E. sold €300 million of 2.875% perpetual hybrid notes tighter than talk in a transaction that was more than 3.5 times oversubscribed.

High-yield calendar

In the meantime, the high-yield deal pipeline is filling up.

Extended Stay America Inc. expects to print $500 million of new notes with investor calls slated for Thursday.

In addition, Shutterfly Inc. increased a bridged offering of senior secured notes to fund the buyout of the company by Apollo Global Management LLC to $500 million.

Week to date

High-yield supply in the dollar-denominated market week to date totals more than $4 billion.

Volume in the first session after the Labor Day holiday included a $500 million offering of five-year senior notes from Icahn Enterprises LP and Icahn Enterprises Finance Corp. in a deal that attracted $1.5 billion of orders, a source said.

Also on Tuesday, ING Groep NV priced $1.5 billion of registered perpetual additional tier 1 contingent convertible capital securities.

Ichan gains

Ichan’s new issue spent its first day gaining, traders said.

The 4¾% senior notes due 2024 added ½ point to close at 101 bid.

The notes saw about $21 million trading by the close.

The New York City-based diversified holding company priced the $500 million senior notes on Tuesday, as previously reported.

The notes priced on top of talk.

Jefferies LLC was the bookrunner of the Rule 144A and Regulation S private placement offering.

“There’s some new paper now that is bringing us back to normal volume,” a trader said.

DaVita varies

Meanwhile, in health care, DaVita’s issues moved in different directions, market sources said.

The 5% senior notes due 2025 dropped 1¼ points to close at 100 bid. The 5 1/8% senior notes due 2024 garnered ½ point to close at 102¼ bid.

The Denver-based dialysis name saw positivity on Tuesday and Wednesday after news broke that the California Senate Appropriations Committee has amended proposed legislation on charitable premium assistance for dialysis premiums.

The amendments would delay the effective date of the legislation and grandfather in existing patients, which an analyst at JPMorgan considered a positive for the company in a note.

WeWork better

WeWork’s paper closed the day better on increased activity, traders said.

The 7 7/8% senior paper due 2025 improved by 1¼ points to close at 103¼ bid.

About $14 million of the paper was on the tape by the end of the afternoon.

On Wednesday morning, news broke that chief executive officer Adam Neumann has returned a $5.9 million payment from the company.

The payment to Neumann was made to acquire the trademark to “We” from its parent company, We Co.

U.S. Steel diverges

United States Steel Corp.’s notes diverged in movement in Wednesday’s session, market sources said.

The 6.65% senior notes due 2037 dropped 6 points to close at 79 bid. The 6¼% senior notes due 2026 improved by ¾ point to close at 88¾ bid.

On Monday, Moody’s Investors Service issued downgrades for the Pittsburgh-based steel manufacturer.

The agency lowered the company’s corporate family rating, probability of default rating and senior unsecured ratings.

On Wednesday, Moody’s said that the downgrade is reflective of several factors, notably the expected weakening of debt protection metrics as steel prices decline and lower demand in key markets.

Concurrently, an analyst at Bank of America cut the forecast for U.S. steel prices and lowered earnings expectations for the name and other steelmakers.

The analyst cut earnings expectations for U.S. Steel from 79 cents to 75 cents.

“As long as trade is as uncertain as it is, names like U.S. Steel are going to pay a price,” a trader said.

Indexes skew better

While noncohesive, three high-yield indexes skewed higher.

The KDP High Yield Daily index fell 6 basis points, ending Wednesday at 71.69 with the yield moving up to 5.41%.

The index dropped 7 basis points on Tuesday, picked up 6 bps on Friday and moved up 11 basis points on Thursday.

The ICE BofAML US High Yield index gained 13.5 bps to close the session with the year-to-date return now at 11.144%.

The index gave back 17.7 bps on Tuesday, inched up 4.5 bps on Friday and gained 17.4 bps on Thursday.

The CDX High Yield 30 index added 34.24 bps, finishing Wednesday at 106.5961.

The index lost 34.77 bps on Tuesday, gained 34.01 bps on Friday and shot up 34.04 bps on Thursday.

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