Garda, FXI, Virgin clear the calendar; Clarivate expected for Friday; Tesla gains

By Paul A. Harris and James McCandless

Portland, Ore., Oct. 24 – In the high-yield primary on Thursday the calendar thinned as issuers concluded varying roadshows.

Garda World Security Corp., FXI Holdings, Inc. and Virgin Australia Holdings Ltd. combined to bring nearly $2 billion of new paper to the junk bond market.

Friday is expected to be active with Clarivate Analytics plc (Camelot Finance SA) in the market with $500 million and an eye out for Blackboard Inc.’s $243 million of five-year notes.

The high yield secondary market was awash with new issuance on Wednesday.

New notes priced by American Builders & Contractors Supply Co., Inc., Liberty Cablevision of Puerto Rico and Netflix, Inc. garnered most of the day’s attention.

Meanwhile, Tesla, Inc.’s issues gained after posting mixed third-quarter results.

Separately, over $1 billion of inflows came into the dedicated high-yield bond funds for the week that concluded at Wednesday's close.

Thursday deals

Dealers made headway in clearing a sizable late October calendar on Thursday.

All of the session's business priced at the conclusions of roadshows of varying lengths.

Garda World Security Corp. priced a $779 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 9½%.

The yield printed at the tight end of the 9½% to 9¾% yield talk, although wide of initial guidance in the low 9% area, sources said.

The additional yield generated additional interest among the accounts, according to an investor who said that there were heard to be around $1 billion of orders in the book on Thursday morning.

FXI Holdings, Inc. priced a $775 million issue of 12¼% seven-year non-call-three senior secured notes (B3/B-) at 98.279 to yield 12 5/8%.

The yield printed at the wide end of yield talk in the 12½% area. The discount came in line with OID talk of approximately two points.

The deal underwent covenant changes.

The new FXI 12¼% notes were wrapped around the issue price – 98¼ on the bid side – late Thursday afternoon, according to an investor who said that the word in the market held that it had been a “clubby” deal, meaning that it was driven by investors with a pre-existing interest in the name.

Virgin Australia Holdings Ltd. priced an upsized $425 million issue of five-year senior bullet notes (expected ratings B3/B) at par to yield 8 1/8%.

The issue size increased from $400 million.

The yield printed on top of final yield talk which had tightened from earlier official talk of 8¼% to 8½%. Initial price talk was in the 8% area.

Looking to Friday

Friday promises to be an active session in the dollar-denominated new issue market.

Clarivate Analytics plc (Camelot Finance SA) expects to price a $500 million issue of seven-year senior secured notes (B2/B).

As the market awaits official talk, the early guidance has the deal coming in the low 5% area.

Meanwhile some market watcher had been expecting Blackboard Inc. to price its $243 million five-year second-lien notes (Caa2/CCC) on Thursday.

The early guidance set forth a coupon in the 10% area, with the notes pricing at a discount.

Look for the bond portion of Blackboard's debt refinancing effort to grow, said a trader on Thursday, adding that the concurrent $500 million term loan has met with resistance among leverage loan investors, and is expected to be downsized.

New notes lifted

Beloit, Wis.-based roofing name ABC Supply’s new 4% senior secured notes due 2028 landed at 100¼ bid.

About $52 million of the notes changed hands.

The $700 million pricing came as a quick-to-market Wednesday trade.

San Juan, Puerto Rico-based cable and wireless name Liberty Cablevision’s new 6¾% senior secured notes due 2027 rose to 103.1 bid.

By the close, about $36 million traded.

The upsized $1.2 billion issue hit the market on Tuesday.

Los Gatos, Calif.-based streaming media giant Netflix’s new 4 7/8% senior notes due 2030 inched up ¼ point to close at 101 bid.

The notes priced in dollar and euro-denominated tranches on Tuesday.

Tesla gains

Meanwhile, Tesla’s notes were seen gaining, market sources said.

The 5.3% senior notes due 2025 improved by ¼ point to close at 94¼ bid.

After the close on Wednesday, the Palo Alto, Calif.-based electric vehicle maker showed mixed results in its third-quarter earnings report.

The company showed a profit of $1.86 per share, far outpacing the 15 cents per share loss that analysts had expected.

Revenues were underwhelming at $6.3 billion.

Junk funds see $1.22 billion inflows

The dedicated high-yield bond funds saw $1.244 billion of inflows during the week that concluded at Wednesday's close, according to information posted on the internet late Thursday by Lipper US Fund Flows.

It's the second consecutive chunky inflow, following the $1.792 billion of new inflows in the week to the Oct. 16 close.

Unsurprisingly, the daily fund flow numbers for Wednesday, the final session in the present week’s tally, were positive to the tune of $442 million of net daily inflows, according to a market source.

High-yield ETFs saw $402 million of inflows on the day.

Actively managed high-yield funds saw $40 million of inflows on Wednesday, the source added.

Indexes better

Three high yield indexes saw a net positive result on Thursday.

The KDP High Yield Daily index remained unchanged on Thursday, ending at 71.25 with the yield inching down to 5.52%.

The index inched up 2 basis points on Wednesday, picked up 5 bps on Tuesday and trailed by 5 bps on Monday.

The ICE BofAML US High Yield index rose 6.5 bps with the year-to-date return now at 11.976%.

The index gained 4.8 bps on Wednesday, picked up 1.5 bps on Tuesday and improved by 5.9 bps on Monday.

The CDX High Yield 30 index dipped 33.39 bps to 107.38.

The index rose 33.32 bps on Wednesday, lost 33.52 bps on Tuesday and reached up 33.29 bps on Monday.

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