Six Flags plays to U.S. junk market; Tekni-Plex soars; Blackstone Mortgage gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 26 – Six Flags Entertainment Corp. was the issuer of the day in the U.S. junk bond market, bringing a drive-by deal for a liability management exercise.

Meanwhile, it was another soft day in the secondary space with the cash bond market off about 1/8 point as investors digested strong tech earnings versus reawakened fear about the stability of the banking system.

While the market was soft, activity remained light with activity concentrated in new and recent issues.

Trident TPI Holdings, Inc.’s, the parent of Tekni-Plex Inc., new 12¾% senior notes due 2028 (Caa2/CCC+) soared in the aftermarket with the notes climbing several points above a discounted issue price.

DISH Network Corp.’s senior notes were active although with little movement in price during Wednesday’s session.

While DISH was flat, Altice USA, Inc. subsidiary CSC Holdings, LLC’s recently priced 11¼% senior guaranteed notes due 2028 (B1/B) and Rand Parent, LLC’s 8½% first-lien senior secured notes due 2030 (Ba1/BB/BB+), backing the buyout of Atlas Air, continued their downtrends.

However, positive earnings lifted Blackstone Mortgage Trust, Inc.’s 3¾% senior secured notes due 2027 (Ba2/BB-), which were among the largest gainers of Wednesday’s session.

Primary

Six Flags Entertainment came as Wednesday’s sole issuer in the dollar-denominated high yield new issue market, pricing an $800 million issue of 7¼% eight-year senior notes (B3/B) at 99.248 to yield 7 3/8%, on top of talk, and tight to initial guidance.

Meantime the market awaited word on a dollar tranche from Benteler International AG, $500 million of five-year senior secured notes (Ba3/BB-), announced Monday, and expected to price before the end of the week.

The Salzburg, Austria-based supplier of automotive components and technology came to the market hoping for a rate in the mid-10% area, only to watch guidance move up into the high-10% area, as the deal wound its way along the investor trail.

Investors are finding Benteler’s deal challenging because the company, which underwent a bank debt restructuring in 2020, is a first-time high-yield issuer, a sellside source said.

The higher rate appeared to help scare up a crowd, a trader remarked, adding that late Tuesday orders for the notes were heard to be in the neighborhood of $1.1 billion.

The €975 million equivalent two-part debt refinancing deal also features a €525 million tranche which also became more expensive for Benteler as the week wore on, with discussions moving to the mid-to-high 9% area from the earlier low-to-mid 9% area.

Elsewhere Heartland Dental, LLC and co-issuer Heartland Dental Finance Corp. started a roadshow on Wednesday for a $500 million offering of five-year senior secured notes (B2/B).

Initial talk has the deal coming in the 10% area, with pricing expected mid-to-late in the week ahead.

Tekni-Plex soars

Tekni-Plex’s 12¾% senior notes due 2028 dominated activity in the secondary space on Wednesday with the notes continuing to climb further above their discounted issue price after a strong break.

The 12¾% notes broke above a 101-handle to close the day in the 101¾ to 102 context, a source said.

The yield narrowed to 12¼%.

There was $80 million in reported volume.

Tekni-Plex’s parent company Trident TPI Holdings priced a $620 million issue of the 12¾% senior notes at 98.939 to yield 13% on Tuesday.

Pricing came at the rich end of the 97.97 to 98.939 price talk and the tight end of the 13% to 13¼% yield talk.

The deal was heavily oversubscribed with allocations tight, which helped drive their aftermarket performance, sources said.

DISH active

DISH’s senior notes were active, although with little movement in price, during Wednesday’s session.

The satellite broadcaster’s 11¾% senior secured notes due 2027 (Ba3/B+) continued to trade in the 93¾ to 94¼ context in heavy volume.

The yield was about 13½%.

There was $26 million on the tape with the notes among the most active of Wednesday’s session.

The 11¾% notes have largely flatlined at their current level over the past two weeks.

DISH’s soon-to-mature 5 7/8% senior notes due Nov. 15, 2024 (B3/B) were also flat in active trade with the notes wrapped around 82½ for a yield of 19½%, a source said.

There was $13 million in reported volume.

Downtrend

CSC Holdings’ 11¼% senior guaranteed notes due 2028 and Atlas Air’s 8½% first-lien senior secured notes due 2030 continued to experience selling pressure on Wednesday.

CSC’s 11¼% senior guaranteed notes due 2028 again hit a new all-time low.

The notes fell another ½ point to close the day in the 98½ to 99 context, a source said.

There was $17 million in reported volume.

The notes were also under pressure on Tuesday with the notes breaking below a 99-handle for the first time since pricing at par on April 18.

Atlas Air’s 8½% first-lien senior secured notes due 2030 were reapproaching their all-time low with the notes shedding another ¾ point to fall to a 90-handle.

The 8½% notes opened the day wrapped around 91 and continued to move lower as the session progressed.

They were changing hands in the 90 3/8 to 90 5/8 context heading into the market close with the yield about 10½%, a source said.

There was $22 million in reported volume.

The leveraged buyout financing deal has struggled since pricing at par on Feb. 9 with the notes trading to an all-time low of 90 in late March.

Blackstone Mortgage’s earnings

While the broader market was soft on Wednesday, earnings propelled Blackstone Mortgage’s 3¾% senior secured notes due 2027 higher.

The 3¾% notes added 2 points in active trade.

They were changing hands in the 83 to 83¼ context with the yield about 9¼%.

There was $7 million in reported volume.

The notes were on the rise after the real estate investment trust reported better-than-expected results.

Fund flows

High-yield ETFs had $262 million of daily cash inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were flat-to-slightly-negative on the day, sustaining $4 million of outflows on Tuesday, the source said.

The combined funds are tracking $963 million of net inflows for the week that was set to conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index fell 8 points to close Wednesday at 51.83 with the yield 7.14%.

The index rose 6 points on Tuesday and 9 points on Monday.

The ICE BofAML US High Yield index fell 13 basis points with the year-to-date return now 4.276%.

The index inched up 1.2 bps on Tuesday and 21.2 bps on Monday.

The CDX High Yield 30 index was down 9 points to close Wednesday at 100.65.

The index fell 54 bps on Tuesday and shed 1 bp on Monday.

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