High-yield secondary firms; Brightline East for sale; ION improves

By Abigail W. Adams

Portland, Me., April 26 – The domestic high-yield primary market was dormant on Friday with the calendar empty as the stampede of issuance in early to mid-April continued to dwindle.

While the primary market operated at a steady pace over the past week with $3.24 billion pricing in five dollar-denominated tranches, the past week was one of the lighter volume weeks of the year with the market averaging between $6 billion to $8 billion in weekly issuance, according to Prospect News data.

The active pace of issuance is expected to continue in the week ahead although the Federal Open Market Committee meeting may put a drag on dealmaking in the early part of the week, sources said.

The meeting will be closely monitored as the market attempts to assess how the Fed will respond to the latest round of macro data.

The market narrative around rate cuts has shifted dramatically over the past two weeks with the question turning from how many rate cuts and when to if there will be rate cuts in 2024.

While the GDP print on Thursday sparked some kneejerk selling in the market early in the session, it rebounded into the close.

The secondary space continued to firm on Friday after the release of the Consumer Price Expenditure report.

While the report came in above expectations on an annual basis, the monthly increase of 0.3% was largely inline with expectations.

Markets were breathing a sigh of relief with the cash bond market adding 1/8 to ¼ point to nearly eliminate losses from the previous session, a source said.

Helios Software Holdings, Inc. and ION Corporate Solutions Finance Sarl’s new 8¾% senior secured notes due 2029 (B2/B) improved alongside the broader market after a flat break the previous session.

However, even as the broader market firmed, Brightline East LLC’s 11% senior secured notes due Jan. 31, 2030 (B/B) continued to struggle with the notes breaking below a 99-handle.

ION improves

ION’s new 8¾% senior secured notes due 2029 improved alongside the broader market after a flat break the previous session.

The 8¾% notes added ¼ point with the notes trading in the par 1/8 to par 3/8 context heading into the market close, a source said.

ION priced an upsized $500 million, from $400 million tranche of the 8¾% notes at par on Thursday.

Pricing came at the tight end of talk for a yield of 8¾% to 9%.

The deal also included a €300 million tranche of five-year senior secured notes that priced at par to yield 7 7/8%.

Brightline struggles

While the broader market firmed on Friday, Brightline’s new notes did not participate with the notes continuing to fall after a weak break.

The notes were dragged down another ½ to 5/8 point.

They were trading in the 99 to 99½ context in early trade but continued to lose steam as the session progressed, a source said.

They were trading in the 98¾ to 99¼ context heading into the market close.

The notes closed the previous session at 99½ bid.

Brightline priced a $1.325 billion issue of the 11% senior secured notes at par on Thursday.

Pricing came at the wide end of price talk for a yield of 10¾% to 11%.

While the notes offered a chunky coupon, the deal must have had some hair on it, a source said.

Indexes

The KDP High Yield Daily index gained 24 basis points to close Friday at 49.62 with the yield 7.2%.

The index was down 18 bps on Thursday.

The ICE BofAML US High Yield index was up 29.2 bps with year-to-date returns now 0.411%.

The index was down 33.5 bps on Thursday and 3.4 bps on Wednesday after adding 38.7 bps on Tuesday and 30.1 bps on Monday.

The index posted a weekly gain of 60.9 bps on the week.

The CDX High Yield 30 index gained 36 bps to close Friday at 106.28.

The index fell 11 bps on Thursday and 21 bps on Wednesday after adding 39 bps on Tuesday and 50 bps on Monday.

The index posted a weekly gain of 93 bps.

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