Junk calendar full, but market waits; Horizon Pharma takes a hit; Newell lower; PGT gains

By Abigail W. Adams

Portland, Me., May 16 – The domestic high-yield bond primary market was quiet on Tuesday after a substantial buildup in the forward calendar the previous session.

Four dollar-denominated tranches with a face value of $2.93 billion are set to price before the week closes, with more issuers expected to tap the market.

While the remainder of the week is expected to be busy, Tuesday was a quiet session with no new deals announced and no offerings pricing.

The secondary space was equally quiet with few making moves as debt ceiling negotiations dragged on.

“Wait and see” seemed to be the general theme with the market in wait-and-see mode through the Federal Open Market Committee announcement in early May and now in wait-and-see mode for debt negotiations.

“Everyone’s just sitting still,” a source said.

The cash bond market had a soft open with selling pressure accelerating as the session progressed.

The cash bond market closed the day down 3/8 point with the CDX index falling 5/8 point to a 99-handle.

With activity surrounding new issues tempering, topical news was the driver of activity in the space.

Newell Brands Inc.’s senior notes were weaker in active trade after the company slashed the dividend of its common stock.

Horizon Pharma USA, Inc.’s 5½% senior notes due 2027 (Ba2/B+) took a hit following news the Federal Trade Commission was preparing to block Amgen’s $28.3 billion acquisition of the company.

PGT Innovations, Inc.’s 4 3/8% senior notes due 2029 (B1/B+) made large gains in active trade on Tuesday.

Newell weaker

Newell’s senior notes were weaker in heavy volume on Tuesday as stock nosedived after the company slashed its dividend.

Newell’s 4.7% senior notes due 2026 (Ba1/BB+) were off about ¼ point to close the day at 93 1/8, according to a market source.

The yield was 7.4%.

There was $19 million in reported volume.

Newell’s 6 5/8% senior notes due 2029 were down ¼ to 3/8 point.

The notes closed the day at 94 7/8 with the yield 7.67%.

There was $15 million in reported volume.

Newell’s notes were weaker as stock sank to its lowest level since 2009 after the company announced it was slashing its dividend to 7 cents a share from 23 cents.

Horizon takes a hit

Horizon’s 5½% senior notes due 2027 were taking a hit following news the FTC was preparing to block Amgen’s acquisition of the company.

The notes dropped 3½ points in early trade to fall below par for the first time since December 2022.

They were marked at 99¼ bid, 99¾ offered early in the session, a source said.

However, the notes pared their losses heading into the close with the final prints in the par ½ to par ¾ context, a source said.

There was $9 million in reported volume.

The 5½% notes were trading on a 95-handle in November 2022 but were lifted to a 99-handle as market chatter about a possible acquisition circulated.

The notes rose to 102 after Amgen’s acquisition was formally announced.

The deal was expected to close in the first half of 2023. However, the FTC is now preparing a lawsuit to block its completion.

PGT gains

PGT Innovations’ 4 3/8% senior notes due 2029 made large gains in active trade on Tuesday.

The notes added 2 points to trade up to a 93-handle.

They were changing hands in the 93 to 93½ context heading into the market close with the yield about 5 5/8%, a source said.

There was $15 million in reported volume.

The notes have been on an uptrend since the window and door manufacturer reported earnings on May 11.

Fund flows

High-yield fund flows remained negative on Monday, the most recent session the data was available for.

Exchange-traded funds had outflows of $421 million while actively managed funds had outflows of $19 million.

Indexes

The KDP High Yield Daily index fell 16 points to close Tuesday at 50.45 with the yield 7.38%.

The index was flat on Monday.

The ICE BofAML US High Yield index fell 29.7 basis points with the year-to-date return now 3.912%.

The index shed 4.8 bps on Monday.

The CDX High Yield 30 index fell 63 bps to close Tuesday at 99.52.

The index inched up 2 bps on Monday.

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