W.R. Grace prices; junkland indecisive; Albertsons goes nowhere; Alliant, Nielsen struggle

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 7 – The domestic high-yield bond primary market remained open for business on Tuesday with one deal pricing and the forward calendar continuing to grow.

W.R. Grace Holdings LLC priced an upsized $350 million issue of eight-year senior secured notes (B1/B/BB+) in a Tuesday drive-by.

Meanwhile, the secondary space remained indecisive about the Federal Reserve’s path forward on Tuesday with chair Jerome Powell’s midsession comments doing little to give the market clarity.

“The market’s been all over the place,” a source said. “It doesn’t know what it wants to do.”

While the secondary space was weak early in the session, there was a momentary rally surrounding Powell’s comments.

However, the rally was quick to fizzle with no new information surfacing and Powell’s messaging remaining higher interest rates for longer.

The cash bond market closed the session better bid than at the open but largely unchanged on the day.

With the Federal Reserve rate-hike schedule still up in the air and the market dialing back its bets for an easing in the second half, there was little conviction to move the market higher, a source said.

The pullback in the market was taking its toll on new and recent deals with the issues to price during Monday’s session struggling in secondary market activity.

Albertsons Cos., Inc.’s 6½% senior notes due 2028 (Ba3/BB) “didn’t go anywhere,” a source said, with the notes flatlining since breaking for trade.

Alliant Holdings Intermediate, LLC and Alliant Holdings Co-Issuer, Inc.’s 6¾% senior secured notes due 2028 (B2/B) quickly fell below par although the notes pared their losses amid the intraday rally in the market.

Nielsen Holdings plc’s 9.29% senior secured notes due 2029 (B2/B/BB) also sank well below their add-on price before trimming some losses into the close.

The primary

W.R. Grace Holdings priced an upsized $350 million issue (from $325 million) of eight-year senior secured notes (B1/B/BB+) at par to yield 7 3/8% in a Tuesday drive-by.

The issue size increased from $325 million.

The yield printed inside of talk.

The notes were wrapped around 101 in late Tuesday afternoon trading, according to a bond trader who added that the deal was heard to have played to around $2 billion of demand including a lot of higher quality accounts.

Meantime the active calendar grew.

Ineos Finance plc started a roadshow for 5.25-year senior secured notes (expected ratings Ba2/BB/BBB-) in benchmark dollar-denominated and euro-denominated tranches. both guided in the low 7% area.

The roadshow is set to run through Thursday.

And American Airlines, Inc. is expected to kick off a $750 million offering of senior secured notes on Wednesday.

The deal is whispered in the 7¾% area.

The air carrier is also marketing a $1 billion term loan.

Demand across both tranches was $1.5 billion on Tuesday afternoon, a trader said, adding that the split was approximately even.

Alberstons flat

Albertsons’ 6½% senior notes due 2028 flatlined in aftermarket activity with the notes stuck at 99¾ bid, par ¼ offered since breaking for trade.

“Those didn’t go anywhere,” a source said.

The notes priced in line with the BB index with the tight pricing leaving it little room for movement.

Albertsons priced a $750 million issue of the 6½% notes at par in a Monday drive-by.

The yield printed in the middle of yield talk in the 6½% area.

Alliant struggles

Alliant’s 6¾% senior secured notes due 2028 struggled in secondary market activity with the notes trading off and shooting higher as the market sank and rallied throughout the session.

The 6¾% notes fell to a 99-handle in early trading with the notes trading in the 99 3/8 to 99 5/8 context. However, they shot back up to par as the market rallied during Powell’s midsession speech.

They then gave back some gains as the market sold off following the rally with the notes closing the day in the 99¾ to par context, a source said.

Alliant priced a $1.25 billion issue of the 6¾% notes at par on Monday.

The yield printed in the middle of yield talk in the 6¾% area.

Nielsen falls

Nielsen’s 9.29% senior secured notes due 2029 fell well below their add-on price in heavy volume on Tuesday.

The notes launched the day flat but were down to 97-bid within the first few hours of trading.

It was not until the underwriter started stabilizing the notes that they pared their losses, a source said.

The 9.29% notes closed Tuesday in the 97 3/8 to 97 7/8 context.

Nielsen priced an upsized $650 million, from $500 million, add-on to the 9.29% notes at 98 on Monday.

The issue price came at the rich end of the 97.5 to 98 price talk.

Fund flows

High-yield ETFs sustained $1.1 billion of outflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were positive on Monday, posting $35 million of inflows on the day.

The combined funds are tracking $37 million of net outflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index was down 9 points to close Tuesday at 53.45 with the yield 6.85%.

The index fell 39 points on Monday.

The ICE BofAML US High Yield index inched up 0.9 basis point with the year-to-date return now 4.372%.

The index fell 68.8 bps on Monday.

The CDX High Yield 30 index gained 35 bps to close Tuesday at 103.27.

The index fell 27 bps on Monday.

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