TransDigm joins junk bond calendar; secondary ‘on fire’; goeasy up; Bombardier jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 14 – Although no dollar-denominated deals priced Tuesday in the high-yield bond market, a $2 billion-plus active calendar shaped up.

All of it is set to price before the end of the week.

The biggest deal announced Tuesday was TransDigm Inc.’s $1 billion offering of eight-year first-lien senior secured notes, in the market with initial guidance of 7½% to 7¾%.

It has already generated $3 billion of tiered demand, according to a bond trader.

In what is shaping up to be a busy week in the European junk primary, B&M European Value Retail SA priced a £250 million issue of seven-year senior secured notes (Ba1/BB+) at par to yield 8 1/8%, at the tight end of talk.

Meanwhile, the secondary space was “on fire” as Treasury yields crumbled in the wake of the latest Consumer Price Index report, a source said.

The cash bond market surged ¾ to 1 point with buyers flooding the space as markets priced in an end to rate increases.

The 10-year Treasury yield plunged 19 basis points to close the day at 4.445%.

However, the week remains young with a hefty load of economic data still to be released that could unwind the tape, a source said.

goeasy Ltd.’s new 9¼% senior notes due 2028 (Ba3/BB-) jumped in heavy volume under the strong market conditions.

Recent issues were also lifted with the tide with Bombardier Inc.’s 8¾% senior notes due 2030 (B2/B) shaking off a weak start in the aftermarket to close the day on a 101-handle.

Some badly battered credits strongly rebounded on Tuesday as the market reassessed the rate environment and its impact on struggling credits.

GrafTech Global Enterprises Inc.’s 9 7/8% senior secured notes due 2028 (B1/BB) pared their losses from the post-earnings sell-off of the previous week.

Buyers also continued to pour into Enviva Partners, LP’s 6½% senior notes due 2026 (B3/CC) with the notes cutting their losses by more than half over the past three sessions following a 32-point post-earnings plunge.

While the broader market was strong, topical news continued to drag down certain issues.

goeasy jumps

goeasy’s 9¼% senior notes due 2028 made strong gains on Tuesday with the notes hefty yield even more attractive with the market’s adjusted rate expectations, a source said.

The 9¼% notes added ½ point in heavy volume.

They were changing hands in the par ¾ to 101 context heading into the market close.

There was $37 million in reported volume.

goeasy priced a $550 million issue of the 9¼% notes at par in a Monday drive-by.

Pricing came in middle of yield talk in the 9¼% area.

Bombardier gains

Bombardier’s recently priced 8¾% senior notes due 2030 shook off a weak start and added 1½ points on Tuesday with the notes now trading with a strong premium to their issue price.

The 8¾% notes jumped to a 101-handle and closed the day in the 101¼ to 101½ context, a source said.

The notes closed the previous session wrapped around par after dropping to a 99-handle last Friday.

The notes were initially sluggish in the aftermarket and have largely traded below their issue price since the $750 million deal priced at par on Nov. 6.

Rebound

Some badly battered credits rebounded under Tuesday’s strong market conditions with several names paring losses from recent earnings-related sell-offs.

GrafTech’s 9 7/8% senior secured notes due 2028 pared losses from a 10-point drop following earnings in early November.

The notes added 3 points and were trading in the 80¾ to 81¼ context heading into the market close, a source said.

The yield narrowed to 15 3/8%.

There was $7 million in reported volume.

GrafTech’s 9 7/8% notes hit an all-time low of 77½ last Friday with heavy selling in the name following its early November earnings report.

The 9 7/8% notes were trading on an 89-handle heading into earnings.

The $450 million issue priced at 97.456 to yield 10½% in June.

Enviva’s badly battered 6½% notes due 2026 continued to rebound from its 32-point drop last Thursday with the notes cutting their losses by more than half.

The notes added another 9 points in heavy volume to close the day at 53.

The yield narrowed to 41 3/8%.

There was $29 million in reported volume.

The biomass company’s 6½% notes plunged to a 32-handle from a 64-handle last Thursday after the company issued a going concern warning alongside earnings.

The notes closed last Thursday with a yield of about 74%.

The company announced last week it has hired an adviser to review its debt including the 6½% notes.

Indexes

The KDP High Yield Daily index gained 54 bps to close Tuesday at 49.21 with the yield 7.63%.

The index inched up 2 bps on Monday.

The ICE BofAML US High Yield index surged 102.6 bps with the year-to-date return now 7.942%.

The index added 6.5 bps on Monday.

The CDX High Yield 30 index gained 64 bps to close Tuesday at 103.24.

The index was up 6 bps on Monday.

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