Junk calendar dwindles; ADT weakens; Centerfield, Strathcona, Healthcare Royalty at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 16 – The domestic high-yield primary market saw one deal price during Friday’s session.

CURO Group Holdings Corp. was the sole issuer to tap the market with its $750 million issue of seven-year senior secured notes (B3/B-).

While McGraw-Hill Education, Inc./MAV Acquisition Corp.’s $2.03 billion two-tranche offering is the sole deal on the forward calendar, the week ahead could be busy with sources speculating about several potential issuers.

Meanwhile, the secondary space was again soft on Friday although volume outside of new issues was light.

While the overall market was weak, new issues continued to trade well.

ADT Inc.’s 4 1/8% first-priority senior secured notes due 2029 (Ba3/BB-) were among the most actively traded in the secondary space.

While the notes continued to trade with a slight premium to their issue price, they were losing steam as the session progressed.

Strathcona Resources Ltd.’s 6 7/8% senior notes due 2026 (B3/BB-/B+) were trading at a decent premium to their discounted issue price.

However, Healthcare Royalty, Inc.’s 4½% senior notes due 2029 (B2//BB) and Centerfield’s 6 5/8% senior notes due 2026 (B2/B) outperformed with both trading up to 2 points above their issue prices.

Friday’s primary

CURO Group Holdings priced Friday's sole dollar-denominated deal, an upsized $750 million issue (from $700 million) of senior secured notes due 2028 (B3/B-) at par, on the tight end talk.

When price talk came out the deal was heard to be playing to $2 billion of demand, having ridden into the market on $1.1 billion of reverse inquiry.

The week ahead

The week ahead could be busy, sources say.

Heading into the weekend just one deal remained on the active forward calendar.

McGraw-Hill Education is marketing a $2.03 billion two-part high-yield notes offer backing the acquisition of McGraw-Hill Education by Platinum Equity Partners.

It includes $1.15 billion of seven-year senior secured notes (B2/B-) with initial guidance in the low 5% area, and $875 million of eight-year senior unsecured notes (Caa2/CCC) with initial guidance in the low 7% area.

The roadshow was scheduled to run through Monday.

Elsewhere, when Carnival Corp. announced a tender offer for up to $2,004,000,000 of its $4 billion outstanding 11½% first priority senior secured notes due 2023, on July 6, it disclosed that the tender hinges on putting new financing in place.

The early deadline for the tender is Monday, a source said, adding that Carnival is expected to show up in the week ahead with a bond deal backing the tender.

DirecTV is also expected to show up with a deal in the week ahead, a trader said.

ADT weakens

ADT’s 4 1/8% first-priority senior secured notes due 2029 were among the most actively traded issues in the secondary space.

While the notes continued to trade with a slight premium to their issue price, they were losing steam as the session progressed.

ADT’s 4 1/8% notes traded as high as par ½ during Friday’s session. However, they were wrapped around par 1/8 by the late afternoon, sources said.

There was more than $89 million in reported volume.

ADT priced a $1 billion issue of the 4 1/8% notes at par on Thursday.

The yield printed in the middle of the 4% to 4¼% yield talk.

Strathcona at a premium

Strathcona’s 6 7/8% senior notes due 2026 were trading at a premium to their discounted issue price.

The 6 7/8% notes traded in a range of 99 5/8 to par ½ during Friday’s session, a source said.

They were wrapped around par heading into the market close.

There was more than $53 million in reported volume.

The Canadian-based oil and gas company priced a $500 million issue of the 6 7/8% notes at 99.47 to yield 7% on Thursday.

The yield printed at the wide end of the 6¾% to 7% yield talk.

Outperformers

Healthcare Royalty’s 4½% senior notes due 2029 and Centerfield’s 6 5/8% senior notes due 2026 outperformed in the aftermarket with the notes almost 2 points above their issue prices.

Healthcare Royalty’s 4½% notes traded in a range of 101¾ to 102¼ during Friday’s session, a source said.

They stood poised to close the day at 102¼.

There was $35 million in reported volume.

Healthcare Royalty priced a downsized $650 million, from $750 million, issue of 4½% notes at par on Thursday with $100 million in proceeds shifted to the concurrent bank loan.

Pricing comes tight to talk in the 4 5/8% area.

Centerfield’s 6 5/8% senior notes due 2026 were also putting in a strong performance in the aftermarket with the notes gaining steam as the session progressed.

The 6 5/8% notes traded in a range of 101 to 102 3/8 during Friday’s session.

They were changing hands in the 101¾ to 102¼ context heading into the market close.

The Los Angeles-based technology company priced a $785 million issue of the 6 5/8% notes at par on Thursday.

The yield printed tighter than the 6¾% to 7% yield talk.

Thursday fund flows

The dedicated high-yield bond funds sustained light net daily outflows of $60 million on Thursday, according to a market source.

High-yield ETFs disgorged $150 million of cash on the day.

However actively managed high-yield funds were positive on Thursday, posting $90 million of inflows, the source said.

News of Thursday's daily flows trails a Thursday report that the combined funds sustained $1.4 billion of net outflows in the week to Wednesday's close, according to the Refinitiv Lipper Fund Flow Report Newsline.

That outflow trailed three consecutive weekly inflows totaling a cumulative $1.8 billion, according to the market source.

Year-to-date flows for the combined high-yield funds stood at negative-$14.5 billion, at Thursday's close, the source added.

Indexes

The KDP High Yield Daily index shaved off 2 points to close Friday at 70.22 with the yield 3.67%.

The index dropped 7 points on Thursday, 3 points on Wednesday, was unchanged on Tuesday and was down 1 point on Monday.

The index posted a cumulative loss of 13 points on the week.

The CDX High Yield 30 index dropped 17 basis points to close Friday at 109.51.

The index dropped 18 bps on Thursday, rose 5 bps on Wednesday, and dropped 19 bps on Tuesday and 5 bps on Monday.

The index was down 54 bps on the week.

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