Dry spell breaks in junkland; Seaspan higher; Endo down; AMC stronger; Talen skids

By Paul A. Harris and Cristal Cody

Tupelo, Miss., July 9 – After more than a week of dormancy the dollar-denominated high-yield new issue market awoke on Friday, seeing its second, third and fourth July tranches clear the market.

Three issuers raised a combined total of $1.63 billion in solid executions, with two tranches coming at the tight ends of talk, while the third priced in the middle of talk.

The Friday session also saw the first post-Independence Day dollar-denominated drive-by, as Masonite priced an upsized $375 million 3½% unsecured bullet (from $300 million) at par, on the tight end of talk (see related stories in this issue).

Friday's deals were the first to clear the dollar market since APX Group, Inc. (Vivint Smart Home Inc.) priced July's only previous deal, an $800 million issue of 5¾% senior notes, priced on July 1.

Seaspan trades higher

In secondary trading, Seaspan’s new 5½% senior notes due 2029 (BB-) added ¾ point to 100¾ going out after pricing at par earlier Friday, a source said.

The issue climbed in heavy aftermarket trading totaling $35 million.

Endo declines continue

Endo Finance LLC’s bonds continued to slide over Friday’s session.

Endo’s 6% senior notes due 2028 (Caa2/CCC+) traded late afternoon down about 1¼ points at the 60¾ area on more than $8.5 million of secondary supply, a source said.

The notes have softened in heavy trading over the week, including declining 1 7/8 points on $26.8 million of volume on Thursday and softening 2¾ points on $7 million of volume on Wednesday.

Endo’s 9½% senior secured notes due 2027 dropped 1 1/8 points to 97¾ by the close Friday on over $10.5 million of secondary supply.

The notes sank more than 2 points to close Thursday at 99½ on more than $18 million in reported volume.

Endo is currently facing several lawsuits related to its role in the opioid epidemic.

Parent Dublin-based pharmaceuticals maker Endo International plc will release second-quarter results on Aug. 5.

AMC notes gain

Meme stock contender AMC Entertainment Holdings, Inc.’s bonds improved during the session as the company moves out of the distressed space.

AMC’s 12% second lien senior secured notes due 2026 (Ca/C) rose 1/8 point to 99 3/8 on $14.25 million of trading activity, a source said.

The Leawood, Kansas-based movie theater has raised about $1.83 billion in total equity so far this year, according to S&P Global Ratings.

Talen softens further

Talen Energy Supply LLC’s bonds sank nearly 2 to 2½ points Friday as the company’s paper moves further into distressed territory.

Talen’s 6½% senior notes due 2025 (B3/CCC+/B) dropped 2½ points to 58 on $5 million of paper traded Friday, a source said.

The notes fell 2 points on Tuesday, ½ point on Wednesday and were off 2½ points on Thursday.

Talen’s 10½% senior notes due 2026 (B3/CCC+/B) fell more than 1¾ points to the 64 area on $1 million of secondary volume during the session.

The notes softened 3 points on Tuesday, shed ¼ point Wednesday and traded down about 3 points Thursday.

Talen’s 7.625% senior secured notes due 2028 (Ba3/BB-/BB) traded nearly 2 points lower at 87 on $4.5 million of trading volume Friday.

The Woodlands, Texas and Allentown, Pa.-based power company’s outlook was dropped to negative from stable on June 16 by Moody’s Investors Service.

Carnival improves

Carnival Corp.’s 5¾% notes due 2027 (B2/B+) climbed ¾ point on $12.25 million of secondary supply as the cruise ship operator resumes operations following the pandemic, a source said Friday.

The notes went out at 104¾.

$217 Thursday outflows

The dedicated high-yield bond funds sustained $217 million of net outflows on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $304 million of outflows on the day.

Actively managed high-yield funds were positive on Thursday, posting $87 million of inflows on the day.

News of Thursday's daily flows follows a Thursday report that the combined high-yield funds saw $728 million of net inflows in the week to the Wednesday, July 7 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

It was the third consecutive weekly inflow, and the largest since the first week of April, the market source said.

The combined funds have sustained $13.2 billion of net outflows, year to date.

However, outflows moderated during the second quarter, during which the combined funds sustained $3.4 billion of net outflows, versus $10.6 billion of net outflows during the first quarter.

Indexes mixed

Indexes were flat to better after softening Thursday following gains early in the week.

The KDP High Yield Daily index was unchanged Friday at 70.35 with a higher yield of 3.63% after falling 5 points on Thursday to 70.35 with the yield 3.61%.

The index rose 8 points on Wednesday and 7 points on Tuesday.

The CDX High Yield 30 index jumped to 110.05 on Friday after declining 35 basis points to 109.75 in the prior session.

The index was down 9 bps on Wednesday and 18 bps on Tuesday.

The ICE BofAML US High Yield index rose 5.6 bps with the year-to-date return now 4.082%.

The index dropped 11.7 bps with a year-to-date return of 4.024% on Thursday after climbing 10.2 bps on Wednesday and 15.5 bps on Tuesday.

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