Clear Channel on tap; NCR jumps; GTT, Rayonier tank; Realogy up; record outflows for year

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 8 – While no deals priced during Thursday’s session, the domestic high-yield primary market has one deal on deck for Friday.

Clear Channel Outdoor Holdings, Inc. talked its $1.26 billion offering of eight-year senior secured notes with pricing expected on Friday.

US Farathane, LLC’s $600 million offering of five-year senior secured notes was on the calendar for Friday’s business.

However, some heard the deal had been postponed due to market conditions.

In the European primary market, Swissport Group Sarl talked its €780 million two-part offering with pricing also expected on Friday.

Meanwhile, the secondary space firmed on Thursday as equities and crude oil futures rebounded.

New paper and earnings-related news drove trading activity in the secondary space.

NCR Corp.’s newly priced senior notes (B2/BB) were in focus with the notes jumping in active trading.

GTT Communications Inc.’s 7 7/8% senior notes due 2024 nosedived following its second-quarter earnings report.

Rayonier Advanced Materials Inc.’s 5½% senior notes due 2024 also tanked in high-volume activity after the company reported it was in discussion with banks regarding potential covenant violations.

However, Realogy Group LLC’s junk bonds were on the rise following its earnings report.

While the secondary space firmed on Thursday, high-yield mutual funds and exchange-traded funds saw the largest outflow year-to-date with $4.072 billion leaving the space for the week ended Wednesday, according to fund-flow statistics generated by AMG Data Services Inc.

Looking to Friday

Primary market news flow remained light on Thursday, although junk improved on the day, sources said.

High-yield ETFs, which had been inundating the market with bids-wanted-in-competition (BWICs) earlier in the week, were buyers on Thursday, according to a New York-based trader.

Clear Channel Outdoor Holdings took up a position in the on-deck circle for Friday.

The San Antonio-based outdoor advertising company talked its $1.26 billion offering of eight-year senior secured notes (B1/B+) to yield 5¼% to 5½%, on Thursday.

Look for the deal to come at the tight end of that talk, an investor said.

Official talk comes tight to early guidance in the mid-5% area, a trader said.

One other dollar-denominated deal was on the calendar as Friday business.

US Farathane conducted a roadshow for a $600 million offering of five-year senior secured notes (B2) during the present week.

The offer was heard to be postponed due to market conditions, sources said late Thursday.

However, there was no press release to that effect.

And the privately held Auburn Hills, Mich.-based automotive plastics company did not immediately return a late Thursday afternoon telephone call from Prospect News.

Meanwhile, a sizable euro-denominated offer is also expected to clear the market ahead of the weekend.

Swissport Group set price talk in its €780 million two-part offering on Thursday.

The Barclays deal features €500 million of five-year senior secured notes (B2/B-) talked to yield 5¼% to 5½%, and €280 million of 5.5-year senior unsecured notes (Caa2/CCC) talked to yield in the 9% area.

NCR jumps

NCR’s newly priced senior notes were in focus on Thursday with the notes jumping more than 1 point.

NCR’s 5¾% senior notes due 2027 gained 1 3/8 points to trade up to 101¾, according to a market source.

The 6 1/8% senior notes due 2029 also gained 1 3/8 points to close out the day at 101¾.

Both tranches saw about $37 million in reported volume during Thursday’s session.

NCR priced a $500 million tranche of the 5¾% notes and a $500 million tranche of the 6 1/8% notes at par late Wednesday.

The 5¾% notes priced in the middle of yield talk in the 5¾% area and tight to earlier guidance in the high 5% area.

The 6 1/8% notes priced in the middle of yield talk in the 6 1/8% area and in line with earlier guidance in the low 6% area.

While the notes priced late in the session, they traded up after breaking despite a down day for the market.

GTT nosedives

GTT Communications’ 7 7/8% senior notes due 2024 nosedived following the telecommunications company’s earnings report.

The 7 7/8% senior notes dropped 11 points in high-volume activity to 63¾, according to a market source.

More than $38 million of the bonds were on the tape during Thursday’s session.

GTT reported revenue of $433.8 million which missed analyst expectations for revenue of $448 million.

The company also announced that it hired advisors to explore an asset sale to reduce debt.

Rayonier tanks

Rayonier’s 5½% senior notes due 2024 also tanked on Thursday following its earnings report and news that it was in discussion with lenders regarding potential covenant violations.

The 5½% notes dropped 8½ points to close out Thursday’s session at 74¼, according to a market source.

More than $10 million of the bonds were on the tape during the session.

Rayonier reported a net loss of $15 million in the second quarter versus an income of $54 million in the same period the previous year.

The chemical company also reported that it would be in violation of certain covenants under its senior secured credit facility at the end of the third quarter and is in active discussions with lenders to amend its loans.

Realogy on the rise

Realogy’s junk bonds were on the rise on Thursday following its earnings report.

The 9 3/8% senior notes due 2027 rose 4 3/8 points to 90. The residential real estate services company’s 4 7/8% senior notes due 2023 rose 3¾ points to 88.

Realogy’s second-quarter earnings were in line with expectations with reported revenue of $1.73 billion.

Realogy’s junk bonds recently snapped a negative trend with a new partnership with Amazon called TurnKey.

The bonds had been under pressure in early July following a lawsuit Realogy filed against competitor Compass Inc. alleging Compass was responsible for a series of questionable business practices.

Big outflows

The daily cash flows of the dedicated high-yield bond funds were decidedly negative on Wednesday, a market source said.

High-yield ETFs sustained $444 million of outflows on the day.

Actively managed high-yield funds saw a whopping $930 million of outflows on Wednesday, the source added.

News of Wednesday's daily flows preceded a report that the combined high-yield funds sustained $4.072 billion of outflows in the week to Wednesday's close, according to Lipper US Fund Flows.

That's the biggest weekly outflow thus far in 2019, market sources say.

Indexes gain

Indexes were on the rise on Thursday after all posted losses during Wednesday’s session.

The KDP High Yield Daily index rose 11 bps to close the day at 70.78 with the yield now 5.68%.

The index dropped 22 bps on Wednesday, 14 bps on Tuesday and 51 bps on Monday.

The ICE BofAML US High Yield index was again flirting with 10% returns after sliding below it on Monday. The index gained 52.3 bps with the year-to-date return now 9.965%.

The index dropped 28.9 bps on Wednesday, gained 20.9 bps on Tuesday, and dropped 77.9 bps on Monday.

The CDX High Yield 30 index gained 31 bps to close Thursday at 106.41.

The index shaved off 10 bps on Wednesday, gained 37 bps on Tuesday and sank 93 bps on Monday.

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