Jones DesLauriers prices; Teva, Ritchie, Alteryx at premiums; junk funds out $2.31 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 2 – On Thursday Jones DesLauriers Insurance Management Inc., a broker partner of Navacord Inc., priced a $500 million issue of 8½% seven-year senior secured notes (B2/B-/B+) at par, in the middle of yield talk in the 8½% area.

The deal was playing to $625 million of demand, much of it comprised of chunky orders, according to a sellside source.

And it emptied the active forward calendar.

Meanwhile, it was a volatile day in the secondary space with the market heavy in the morning as the 10-year Treasury yield moved firmly above 4%.

However, the market closed the day strong after dovish comments from a Federal Reserve official helped lift market sentiment.

“It was a pretty nice rip into the close,” a source said. “Any small amount of news really propels the market.”

The cash bond market eliminated its ¼ to 3/8 point loss at the open and closed the day with ¼ point gain after a Federal Reserve official hinted that future rate hikes may not be as aggressive as expected.

The onslaught of paper that priced during Wednesday’s session was largely trading with the broader market with the new paper hitting its lows early in the session but strong at the close.

Teva Pharmaceutical Finance Netherlands III BV’s dollar-denominated tranches (Ba2/BB-/BB-) opened the day with nominal premiums and gained strength alongside the broader market into the close.

Ritchie Bros. Holdings Inc.’s senior notes were among the outperformers of recent deals with its unsecured, longer duration tranche rising to a 101-handle by the market close.

Alteryx, Inc.’s 8¾% senior notes due 2028 (B3/B-) also bounced off their lows to close the day with a decent premium.

Frontier Communications Holdings, LLC 8 5/8% first-lien senior secured notes due 2031 (B3/B/BB+) were among the weakest of recent deals with the notes trading well below their issue price in intraday activity, although they fought off losses to close the day flat.

Meanwhile, money continued to leave the space with high-yield mutual and exchange-traded funds having another outsized outflow after one of the largest on record the previous week.

Funds lost $2.31 billion in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flows Report Newsline.

The outflow follows the $6.125 billion that left the space the previous week, the third largest outflow on record, sources said.

Teva gains steam

Teva’s dollar-denominated tranches opened the day with a nominal premium but gained steam as buyers lifted the space into the close.

Teva’s 7 7/8% notes due September 2029 and 8 1/8% notes due 2031 were marked at par bid, par ¼ offered early in the session.

However, they were lifted ¼ to ½ point into the close and ended the day in the par ½, 101 context, a source said.

Teva priced a $600 million tranche of the 7 7/8% notes and a $500 million tranche of the 8 1/8% notes at par on Wednesday as part of a $2.06 billion equivalent four-tranche offering.

The 7 7/8% notes priced on top of final talk and at the rich end of earlier talk for a yield of 7 7/8% to 8 1/8%.

The 8 1/8% notes also priced on top of final talk and at the tight end of earlier talk for a yield of 8 1/8% to 8 3/8%.

Ritchie outperforms

Ritchie Bros’. recent offerings were the outperformers of recent deals with its longer-duration, unsecured tranche chased up in the aftermarket.

Ritchie’s 6¾% senior secured notes due March 2028 (Ba2/BB+) put in a solid performance.

The notes launched the day at par ¼ bid, par ½ offered and were lifted to par ¾ bid, 101 offered at the close.

However, the 7¾% senior notes due 2031 (B1/BB-) was the tranche most sought after. The notes launched the day at par ¾ bid, 101¼ offered and continued to climb as the session progressed.

They were marked at 101 3/8 bid, 101 5/8 offered heading into the close.

“It was a tale of two bonds,” a source said.

While both tranches performed well, investors were more interested in duration with the higher yield also helping to drive demand, the source said.

Ritchie priced a $550 million tranche of the 6¾% notes and an $800 million tranche of the 7¾% notes at par on Wednesday.

The 6¾% notes priced tighter than the 6 7/8% to 7 1/8% yield talk; the 7¾% notes priced tighter than the 7 7/8% to 8 1/8% yield talk.

Alteryx improves

Alteryx’s 8¾% senior notes due 2028 (B3/B) followed the trajectory of the broader market on Thursday with the notes opening the day with a nominal premium and gaining strength as the session progressed.

The 8¾% notes were marked at par bid, par ¼ offered early in the session.

They were lifted to par 3/8 bid, par 5/8 offered by the close.

The notes were largely trading with market sentiment, a source said.

Alteryx priced an upsized $450 million, from $350 million, issue of the 8¾% notes at par on Wednesday.

The yield printed at the tight end of the 8¾% to 9% yield talk.

Frontier falters

Frontier’s 8 5/8% first-lien senior secured notes due 2031 were among the weakest of recent deals with the notes dropping below their issue price in intraday activity but fighting off losses into the close.

The 8 5/8% notes traded as low as 99½ but fought their way back to par by the close.

The notes ended the day in the par to par 1/8 context, a source said.

Frontier priced a $750 million issue of the 8 5/8% notes at par on Wednesday.

The yield printed in the middle of the 8½% to 8¾% yield talk.

Fund flows

The dedicated high-yield bond funds sustained $1.09 billion of net daily cash outflows on Wednesday, according to a market source.

High-yield ETFs saw $1.04 billion of outflows on the day.

Actively managed high-yield funds sustained $50 million of outflows on Wednesday, the source said.

News of Wednesday's daily outflows was followed by a Thursday afternoon report that the combined funds sustained $2.31 billion of net outflows in the week to Wednesday's close, according to fund-tracker Refinitiv-Lipper.

Of note, $983 million of Wednesday's daily outflows from the high-yield ETFs will be tallied in next week's fund flows numbers, according to the market source.

Indexes

The KDP High Yield Daily index was down 13 points to close Thursday at 50.91 with the yield 7.56%.

The index fell 12 points on Wednesday, inched up 2 points on Tuesday after falling 67 points on Monday.

The ICE BofAML US High Yield index was off 17.9 basis points with the year-to-date return now 2.169%. The index was down 21.7 bps on Wednesday after rising 8.5 bps on Tuesday and 43.6 bps on Monday.

The CDX High Yield 30 index gained 10 bps to close Thursday at 101.7.

The index was up 22 bps on Wednesday, fell 19 bps on Tuesday and rose 27 bps on Monday.

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