Two deals upsize in three-issuer junk day; MSCI, Ashland on a 101-handle; Altice at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 4 – The domestic high-yield primary market had three deals totaling $1.65 billion clear the market on Wednesday with Thursday also promising to be an active session.

All eyes will be on Bally’s Corp. on Thursday with pricing of its $2 billion two-tranche megadeal expected.

Infrastructure and Energy Alternatives Inc.’s $300 million offering of eight-year notes may also price on Thursday.

Meanwhile, the high-yield cash bond market was unchanged on Wednesday despite weakness in other asset classes.

While equities and the CDX closed at the lows on a weak day, there was little selling activity in the secondary space.

The secondary space has been strong for so long that there is a prevailing sentiment if you sell a bond on a weak day, you won’t be able to buy it back later because prices have only gone up, a source said.

Even in new and recent deals, volume has been light with little movement in prices after the initial break.

“It’s frustrating,” a source said. “Not much is trading.”

MSCI Inc.’s 3¼% senior notes due 2033 (Ba1/BB+/BBB-) and Ashland LLC’s 3 3/8% senior notes due 2031 (Ba1/BB+) were changing hands on a 101-handle.

Altice Financing SA’s 5¾% senior secured notes due 2029 (B2/B) were trading with a slight premium to their issue price.

While the notes continued to trade at a premium to their issue price, Century Communities, Inc.’s 3 7/8% senior notes due 2029 (Ba3/BB-) were weaker on Wednesday after a strong break.

Wednesday’s primary

Three single-tranche issuers priced a combined total of $1.65 billion as the primary market pace moderated somewhat on Wednesday.

Two deals came as drive-bys.

Two upsized (see related stories in this issue).

The next megadeal is expected to hit the block on Thursday, as Bally’s Corp. (Premier Entertainment Sub, LLC/Premier Entertainment Finance Corp.) attempts to place $2 billion of senior notes (CCC+/B-) in two tranches.

The books across both tranches were heard to be around deal-size early Wednesday afternoon, a trader said.

Also, Infrastructure and Energy Alternatives could price its $300 million of eight-year notes on Thursday.

That deal is going well at its initial guidance in the mid-6% area, the trader said.

The Wednesday session saw a green deal surface from Sunnova Energy Corp., which started a roadshow for a $350 million offering of five-year green senior notes with guidance in the low-to-mid 6% area, and expected to price in the middle of the week ahead.

Sunnova has an outstanding convertible, and convertible investors are expected to show up for the green bond deal, the trader said.

The August pace has been pretty frantic, the trader allowed, adding that high-yield issuance records have been falling left and right since the market reopened in March 2020, following the coronavirus shutdown.

The late summer pace could moderate, the trader said, adding that a formidable September shadow calendar is heard to be taking shape.

101-handle

MSCI’s 3¼% senior notes due 2033 and Ashland’s 3 3/8% senior notes due 2031 were unchanged on Wednesday following a strong break with both continuing to trade on a 101-handle.

MSCI’s 3¼% notes were marked at 101¼ bid, 101½ offered.

“That’s where they opened and that’s where they’re closing,” a source said.

However, there were not a lot of trades on the tape.

MSCI priced a $700 million issue of the 3¼% notes at par on Tuesday.

The yield priced tighter than yield talk in the 3½% area.

Ashland’s 3 3/8% senior notes due 2031 were marked at 101 bid, 101½ offered, a source said.

Ashland priced a $450 million issue of the 3 3/8% notes at par on Tuesday.

The yield printed at the tight end of yield talk in the 3½% area.

Altice at a premium

Altice’s 5¾% senior secured notes due 2029 were also stuck at the level reached after breaking for trade.

The notes continued to trade at par ¾ bid, par 7/8 offered, a source said.

Altice priced a $1.93 billion tranche of the 5¾% notes at par on Tuesday.

The yield printed in the middle of yield talk in the 5¾% area.

The deal also included a €700 million tranche of 4¼% due 2029, which also priced at par.

Century Communities weaker

Century Communities’ 3 7/8% senior notes due 2029 were weaker on Wednesday after a strong break.

The 3 7/8% notes were off about ¼ point after a strong break the previous session, a source said.

They were marked at par ¼ bid, par ½ offered heading into the close.

Century Communities priced an upsized $500 million, from $400 million, issue of the 3 7/8% notes at par on Tuesday.

The yield printed in the middle of yield talk in the 3 7/8% area.

Big ETF outflows on Tuesday

The high-yield ETFs sustained big daily cash outflows of $1.026 billion on Tuesday, the most recent session for which data was available at press time, according to a market source.

It was the biggest daily outflow for the ETFs since June 15, the source said.

Actively managed high-yield funds were positive on Tuesday, posting $85 million of inflows on the day, according to the market source.

Indexes

The KDP High Yield Daily index dropped 11 basis points to close Wednesday at 70.11 with the yield now 3.7%.

The index was down 4 bps on Tuesday after rising 1 bp on Monday.

The CDX High Yield 30 index was down 14 bps to close Wednesday at 109.

The index gained 6 bps on Tuesday after dropping 9 bps on Monday.

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