Junk primary quiet; Genesis Energy, Summit Materials at a premium; Equitrans soars

By Abigail W. Adams

Portland, Me., Dec. 1 – The domestic high-yield bond primary market was quiet on Friday after capping one of the busiest months of 2023 for new deal activity.

As the secondary space logged its best monthly performance of the year, the primary market had 32 tranches totaling $22.041 billion, marking the second heaviest volume month of the year, according to the Prospect News database.

While there were no deals in the market as December commenced, the primary market is expected to continue to unleash deals at a rapid clip.

Sources anticipate $10 billion in new supply before the year draws to a close with most of the activity expected in the next two weeks.

Meanwhile, a flat open gave way to a strong session on Friday as Treasury yields sank double digits with the market upping its expectations for rate cuts in 2024.

The secondary space extended its rate-cut rally into December after logging its best month of the year with the market surging 4½ points in November.

The majority of those gains were realized after the release of the Consumer Price Index report on Nov. 14, a source said.

The market continued to add as it entered the final weeks of the year with the cash bond market up 1/8 to ¼ point, a source said.

ETF buying continued to lift the broader space with ETF market makers circulating sizeable offers-wanted-in-competition lists, a source said.

New paper remained in focus with the deals to price over the past week putting in strong aftermarket performances.

While off the heights reached on the break, Genesis Energy, LP and Genesis Energy Finance Corp.’s new 8½% senior notes due 2029 (B3/B) continued to trade at a strong premium to their discounted issue price.

Summit Materials, LLC and Summit Materials Finance Corp.’s new 7¼% senior notes due 2031 (Ba3/BB) continued to add to gains after a strong break the previous session.

While new and recent issues drove volume, Equitrans Midstream Corp.’s senior notes (Ba3/BB-) had the largest price movement with the notes jumping 3 to 6 points on news the company was exploring a sale.

Genesis Energy at a premium

Genesis Energy’s 8½% senior notes due 2029 continued to trade at a strong premium to their discounted issue price, although they failed to reclaim the heights reached on the break.

The 8½% notes were changing hands in the 99 1/8 to 99 3/8 context in active trade early Friday and continued to climb as the market gained strength, a source said.

They were trading in the 99 3/8 to 99 5/8 context heading into the market close.

There was $98 million in reported volume.

Gensis Energy priced an upsized $600 million, from $550 million issue, of the 8¼% notes at 98.961 to yield 8½% in a Thursday drive-by.

The coupon printed at the tight end of the 8¼% to 8½% coupon talk and the yield came at the tight end of the 8½% to 8¾% yield talk.

Summit Materials adds

Summit Material’s new 7¼% senior notes due 2031 (Ba3/BB) continued to climb on Friday after a strong break the previous session.

The 7¼% notes opened the day largely unchanged in the par ½ to par ¾ context, a source said.

However, they rose alongside the broader market and were trading in the par 7/8 to 101 3/8 context heading into the market close.

Summit priced an $800 million issue of the 7¼% notes at par on Thursday.

The yield was talked in the 7½% area.

Equitrans soars

Equitrans’ senior notes were the major gainers of the session after news reports circulated about the company exploring a potential sale.

Equitrans’ 6½% senior notes due 2048 jumped 6 points to close the day in the 97¾ to 98 context, a source said.

The yield fell to about 6 5/8%.

The notes were wrapped around 92 heading into Friday’s session.

Equitrans’ 7½% senior notes due 2030 added 3 points to close the day on a 106-handle.

They were trading in the 106¼ to 106½ context heading into the market close, a source said.

The yield was about 6 1/8%.

The notes surged in light volume after news circulated that the company was exploring a potential sale, a source said.

Indexes

The KDP High Yield Daily index gained 21 basis points to close Friday at 49.55 with the yield 7.28%.

The index was down 14 bps on Thursday, was up 37 bps on Wednesday and 9 bps on Tuesday and was flat on Monday.

The index posted a cumulative gain of 50 bps on the week.

The CDX High Yield 30 index added 27 bps to close Friday at 104.17.

The index gained 9 bps on Thursday, 5 bps on Wednesday and 11 bps on Tuesday.

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