Junk market posts fresh $3.11 billion; secondary under pressure; Coinbase hits new low

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 28 – Five issuers priced single tranches of dollar-denominated junk on Tuesday, raising a combined $3.11 billion.

Meanwhile, the secondary space continued to leak amid rising 10-year Treasury yields, deadlock surrounding raising the debt limit ceiling, and a fresh challenge to the bipartisan infrastructure bill.

The 10-year Treasury yield climbed as high as 1.562% during Tuesday’s session before closing the day at 1.541%.

The cash bond market was down ¼ to ½ point, sources said. However, volume outside of new and recent issues remained light.

Altice France SA’s 5½% senior secured notes due 2029 (B2/B) continued to trend lower with the notes now firmly below par.

The sell-off in Coinbase Global, Inc.'s two tranches (Ba1/BB+) continued on Tuesday with the longer-duration notes trading down to a 94-handle.

New deals on Tuesday

The primary session generated a steady news flow against a backdrop of significant weakness in the stock market, with the Nasdaq sustaining a drop of more than 2.8%.

There was also selling in the high-yield bond market, according to a trader who had bonds down around 3/8 of a point on the day, with Treasury-sensitive names off more.

However, the sell-off failed to create significant interference in the primary market, where solid executions were the rule.

One deal priced inside of talk, three at the tight ends, and one in the middle of talk.

Among the session's issuers, Spain's Grifols, SA priced $705 million of 4¾% seven-year senior notes (B3/B/B+) at par, at the tight end of talk

Grifols also priced €1.4 of notes at par to yield 3 7/8%.

Meanwhile Rockcliff Energy II LLC upsized its deal and priced it inside of talk.

The $700 million issue (from $600 million) of 5½% eight-year senior notes (B3/B+/B+) came at par.

Talk was 5 5/8% to 5¾%.

And in one of Tuesday's three drive-by deals HealthEquity, Inc. priced a $500 million issue of 4½% eight-year senior notes (B3/B) at par, at the tight end of talk.

It was heard to be playing to $2.7 billion of orders.

Tuesday's action left a massive $12.8 billion calendar in its wake.

As much as $10.5 billion of that amount could price Wednesday, sources say.

However, the market awaits official price talk on all of that business (see related stories in this issue).

Altice down again

Altice’s recently priced 5½% senior secured notes due 2029 continued their downward trajectory in active trading on Tuesday with the notes now firmly below par.

The notes dropped ½ point to change hands in the 99 to 99¼ context heading into the market close.

They closed the previous session at 99½ bid, par offered.

Altice priced the $2 billion tranche at par last Friday.

Coinbase’s new low

The sell-off in Coinbase Global’s two tranches continued on Tuesday with the longer-duration notes particularly hard hit.

Coinbase’s 3 5/8% senior notes due 2031 fell about 5/8 point. They were changing hands in the 94 3/8 to 94 7/8 context during Tuesday’s session.

While volume was light, Coinbase’s 3 3/8% senior notes due 2028 were down about ¼ point to trade in the 95½ to 96 context heading into the market close.

The notes have struggled since the cryptocurrency exchange priced a $1 billion tranche of the 3 5/8% notes and a $1 billion tranche of the 3 3/8% notes at par on Sept. 14.

The notes were heavily shorted. Rising Treasury yields and China’s ban on cryptocurrency have added to the pressure already on the notes.

$135 million Monday outflows

The dedicated high-yield bond funds sustained $135 million of net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $173 million outflows on the day.

However actively managed high-yield funds were positive on Monday, posting $38 million of inflows on the day, the source said.

The combined funds are tracking $406 million of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index sank 26 basis points to close Tuesday at 69.94 with the yield now 3.68%.

The index was down 8 bps on Monday.

The CDX High Yield 30 index fell 32 bps to close Tuesday at 109.38.

The index rose 3 bps on Monday.

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