Junk: Delek Logistics flat; Chemours falls on accounting probe; funds down $448.8 million

By Abigail W. Adams and Paul A. Harris

Portland, Me., Feb. 29 – The dollar-denominated high-yield new issue market remained sidelined on Thursday.

The active forward calendar contains just one deal.

Clear Channel Outdoor Holdings, Inc. is marketing $865 million of six-year senior secured notes (B1/B) with initial guidance of 8¼% to 8½%.

It is heard to be playing to $1.6 billion of demand, with the roadshow expected to wrap up Monday, a trader said.

Demand for the $425 million term loan has yet to build to deal size, although loan commitments aren’t due until Monday, the trader said.

Yet, it’s possible the bonds will upsize and the loan downsize, the source added.

In the secondary space, it was a flat day on Thursday with the highly anticipated Personal Consumption Expenditure report a non-event.

The report came in largely as anticipated with markets breathing a sigh of relief there was no surprise uptick in inflation.

While the cash bond market was largely unchanged, the tone firmed with the market better bid, a source said.

New paper and topical news were the driving forces of activity during Thursday’s session.

Delek Logistics Partners, LP/Delek Logistics Finance Corp.’s 8 5/8% senior notes due 2029 (B3/BB-/BB-) became the latest new deal to fall largely flat in the aftermarket.

Chemours Co.’s senior notes (B1/BB) saw heavy selling pressure after news broke that the company placed its CEO and CFO on leave and was conducting an accounting probe.

Everi Holdings, Inc.’s 5% senior notes due 2029 (B3/B+) jumped following news the company would acquire International Game Technology plc’s Global Gaming and PlayDigital businesses.

Meanwhile, high-yield mutual funds and exchange-traded funds saw their second outflow of 2024 with $448.8 million leaving the space in the week through Wednesday’s close.

Funds have only seen two outflows in 2024 with the first outflow of $88.8 million occurring the week ending Feb. 14.

Delek Logistics flat

Delek Logistics’ issue of 8 5/8% senior notes due 2029 was the latest deal to put in a lackluster performance in the aftermarket.

The notes were flat day-over-day and continued to trade in the par to par 3/8 context, a level they’ve been stuck in since breaking for trade, a source said.

Delek priced an upsized $650 million, from $550 million, issue of the 8 5/8% notes at par on Wednesday.

Pricing came at the tight end of the 8 5/8% to 8¾% yield talk.

Chemours under pressure

Chemours’ senior notes saw heavy selling pressure on Thursday with the notes falling 4 to 5 points as news of a brewing accounting scandal swept through the market.

The chemical company’s 5¾% senior notes due 2028 sank 5 points to close the day wrapped around 88, a source said.

The yield jumped to just shy of 9%.

There was $50 million in reported volume.

The 5 3/8% senior notes due 2027 were also down 5 points to close the day wrapped around 92.

The yield was about 8¼%.

There was $39 million in reported volume.

The 4 5/8% senior notes due 2029 fell 4 points to close the day at 82½ with the yield about 8½%.

There was $31 million in reported volume.

The senior notes sank after the company revealed that it had placed its CEO, CFO and accounting officer on leave as it investigated its accounting protocols.

The accounting problems were first revealed when the company delayed its earnings report, which was slated for release on Feb. 14.

The 5 3/8% notes were trading on a 98-handle, the 5¾% notes were trading in the 93 to 94 context, and the 4 5/8% notes were trading on an 88-handle prior to the Feb. 14 earnings release delay.

“I thought they were a good company,” a source said.

Everi jumps

Everi’s 5% senior notes due 2029 surged on Thursday following news the company would merge with International Game Technology’s Global Gaming and PlayDigital businesses.

The 5% notes jumped 8 points to a 99-handle.

They were trading in the 99 to 99¼ context in heavy volume, a source said.

There was $35 million on the tape.

The notes were trading on a 91-handle heading into Thursday’s session.

News broke Thursday that International Game Technology would spin off its gaming businesses, which would then merge with Everi.

The new entity is valued at $6.2 billion including debt.

Indexes

The KDP High Yield Daily index gained 5 basis points to close Thursday at 50.44 with the yield 6.98%.

The index inched up 1 bp on Wednesday, was down 4 bps on Tuesday and fell 12 bps on Monday.

The ICE BofAML US High Yield index was up 10.2 bps with the year-to-date return now 0.315%.

The index was down 1.6 bps on Wednesday and 6.9 bps on Tuesday after rising 2.8 bps on Monday.

The CDX High Yield 30 index gained 14 bps to close Thursday at 106.33.

The index was down 19 bps on Wednesday, up 16 bps on Tuesday and down 14 bps on Monday.

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