Benteler, Talen Energy price; Six Flags struggles; Citrix/Cloud rises; funds add $594 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 27 – Following a ride on the high yield rate rollercoaster, which saw rate talk arc relative to early guidance during the midweek only to ultimately retreat to the level proffered at the outset, first-time issuer Benteler International AG priced a $500 million tranche of five-year senior secured notes (Ba3/BB-) at par to yield10 ½% on Thursday.

The Benteler dollar-denominated notes finished tight to final talk of 10½% to 10¾%. Pricing was well inside of initial talk in the high-10% area but in the middle of early guidance in the 10½% area.

The new Benteler 10½% secured notes due May 2028 rocketed into the secondary market, where they were seen trading as high as 102¼ bid, 103 offered on Thursday afternoon, according to a bond trader in New York.

The dollar-denominated tranche ended up playing to $1.4 billion of demand, the trader added.

The Salzburg, Austria-based automotive components and technology supplier concurrently priced €525 million of the notes at par to yield 9 3/8%.

The euro-denominated notes underwent a rollercoaster ride similar to that of the dollar notes, with talk at midweek jumping to the mid-to-high 9% area from early guidance in the low-to-mid 9% area before the euro notes ultimately came at the tight end of formal talk in the 9½% area.

In the meantime, Talen Energy Supply, LLC had been expected to price an $825 million offering of seven-year senior secured notes (Ba3/BB/BB+) on Thursday.

That deal, which is heard to be undergoing covenant changes, is now expected to price on Friday.

There were no Thursday updates on pricing, a trader said.

Initial guidance was 8¾% to 9%.

‘People still don’t know’

Meanwhile, it was a strong day in the secondary space on Thursday with the cash bond market adding ¼ to 3/8 point as equities surged on the back of strong earnings from the bellwethers of tech.

However, the heavy slate of macro data released on Thursday continued to paint a murky picture of the economy.

While a weaker-than-forecast GDP print renewed optimism about the end of the Federal Reserve’s rate hike campaign, a hotter-than-expected Consumer Price Expenditure report increased forecasts for rate increases in May and June.

“People still don’t know,” a source said.

While the broader market was strong on Thursday, some were selling into the rally with real money accounts circulating bids-wanted-in-competition lists, a source said.

New issues continued to drive trading activity with Six Flags Entertainment Corp.’s 7¼% senior notes due 2031 (B3/B) in focus on Thursday as they struggled in the aftermarket.

Cloud Software Group Holdings Inc.’s (Citrix’s) 9% senior second-lien notes due 2029 (Caa2/B-) resumed their uptrend on Thursday after trading flat throughout the week.

Earnings-related news sparked activity in Sunnova Energy Corp.’s 5 7/8% senior notes due 2026 (B1/), which improved in active trade.

Meanwhile, high-yield mutual funds and exchange-traded funds continued to see inflows with $594 million entering the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flows report.

Six Flags struggles

Six Flags new 7¼% senior notes due 2031 struggled in the aftermarket with the notes sinking further below their discounted issue price in heavy volume.

The 7¼% notes were marked at 98 5/8 bid, 98 7/8 offered early in the session and continued to move lower as the session progressed.

They closed the day in the 98¼ to 98¾ context, a source said.

There was $138 million in reported volume.

“It’s the yield people don’t like,” a source said.

Six Flags priced an $800 million issue of the 7¼% notes at 99.248 to yield 7 3/8% in a Wednesday drive-by.

The yield printed on top of yield talk.

Citrix/Cloud Software gains

Cloud Software’s 9% senior second-lien notes due 2029 made strong gains in active trade on Thursday after a largely sideways week.

The 9% notes added 1 point to rise to an 85-handle.

They were trading in the 85 to 85½ context heading into the market close with the yield about 12 3/8%, a source said.

There was $18 million in reported volume.

The 9% notes have made strong gains in the aftermarket since the $3.84 billion deal, which cleared hung debt from the leveraged buyout of Citrix Systems Inc., priced at 79 to yield 14.047% in early April.

However, the notes have largely flat-lined over the past two weeks on an 84-handle.

Sunnova rises

Sunnova’s 5 7/8% senior notes due 2026 improved in heavy volume on Thursday following a mixed earnings report and upbeat guidance.

The 5 7/8% notes, an off-the-run issue that rarely trades in volume, jumped ½ point to close the day wrapped around 91 with a yield of 9%.

There was $16 million in reported volume.

The notes last traded on Monday at 90½.

They were marked at 86 at the end of March.

“They’re moving in the right direction,” a source said.

The notes were on the rise after upbeat guidance with the company’s new customer outlook and EBITDA projections for 2023 coming in above expectations.

Indexes

The KDP High Yield Daily index gained 4 points to close Thursday at 51.87 with the yield 7.12%.

The index fell 8 points on Wednesday after rising 6 points on Tuesday and 9 points on Monday.

The CDX High Yield 30 index fell 53 bps to close Thursday at 101.18.

The index was down 9 bps on Wednesday, 54 bps on Tuesday and 1 bp on Monday.

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