Junk: Consolidated Energy, Wynn add-on price; Artera strong; funds add $549.3 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 8 – An active Thursday session in the dollar-denominated high-yield new issue market saw Consolidated Energy Finance SA price an upsized $605 million issue (from $580 million) of seven-year senior notes (B2/BB-/BB-) at par to yield 12%, at the wide end of talk. The deal also underwent covenant changes.

The upsize took one trader by surprise.

The word in the market was that the Consolidated Energy order book closed with a comparatively modest $900 million of orders, the trader said.

Elsewhere, Wynn Resorts, Ltd. priced a $400 million add-on to the Wynn Resorts Finance, LLC/Wynn Resorts Capital Corp. 7 1/8% senior bullet notes due Feb. 15, 2031 (B1/BB-/BB-) at 103.00 to yield 6.57% in a Thursday drive-by.

The issue price came at the rich end of the 102.5 to 103 price talk.

Two companies are poised to place new junk issues on Friday, with an overall total of four tranches teed up to price ahead of the weekend.

Three of the four tranches are coming from Ardonagh Group.

The London-based brokerage set price talk in its approximately $2.04 billion equivalent deal on Thursday.

Ardonagh Finco Ltd. is offering two tranches of seven-year senior secured notes (B-/B-). A $500 million tranche is talked to yield 7¾% to 8%, tight to initial guidance in the 8% area. A €500 million tranche is talked to yield in the 7% area, on top of initial guidance.

Ardonagh Group Finance Ltd. is offering a single $1 billion tranche of eight-year senior notes (CCC/CCC) talked to yield in the 9% area, on top of initial guidance.

Books for both dollar-denominated tranches were heard to be around deal-size on Thursday morning, a trader said.

Amer Sports Co. is poised to price a single tranche on Friday.

The Finland-based sports equipment company talked its $600 million offering of seven-year senior secured notes (B1/BB) to yield 6¾% to 7% on Thursday, inside of initial guidance.

A whopping $4.5 billion of demand for the Amer Sports notes is heard to be in play, according to a trader who added that the deal came into the market with $700 million of reverse inquiry.

Either side of unchanged

Meanwhile, it was a flat day in the secondary space with the cash bond market either side of unchanged with markets stabilizing after a heavy start to the week.

While there was some selling pressure on Monday as markets abandoned hope for a March rate cut, the high-yield market has since pared its losses to turn flat on the week, a source said.

Market technicals remain strong with steady inflows and yields from quality credits at historic heights.

New issues remain the area where investors are putting money to work.

However, the trend of strong aftermarket performances from new deals continued to wane with the tight pricing of several recent deals taking its toll, particularly given renewed rate uncertainty.

Artera Services, LLC’s 8½% senior secured first-priority notes due 2031 (B3/B-) were among the week’s outperformers with the notes continuing to edge higher after shooting up to a 101-handle on the break.

However, Hillenbrand, Inc.’s 6¼% senior notes due 2029 (Ba1/BB+) fell flat in the aftermarket, and AssuredPartners, Inc.’s 7½% senior notes due 2032 (Caa2/CCC+) gave back their gains on the break to close Thursday wrapped around their issue price.

High-yield mutual funds and exchange-traded funds notched another consecutive week of inflows with $549.3 million entering the space in the week through Wednesday’s close, according to a market source.

Designated funds have seen inflows each week in 2024.

Artera edges higher

Artera’s 8½% senior secured first-priority notes due 2031 continued to edge higher in heavy volume on Thursday after shooting to a 101-handle after breaking for trade.

The notes added another 1/8 to ¼ point to trade in the 101½ to 101¾ context heading into the market close, a source said.

There was $18 million in reported volume.

Artera priced a downsized $600 million, from $740 million, issue of the 8½% notes at par on Wednesday.

The yield printed at the tight end of yield talk in the 8 5/8% area.

The offering was heavily oversubscribed with demand in excess of $2 billion, a source said.

Proceeds from the downsize were shifted to the concurrent term loan.

Hillenbrand flat

Hillenbrand’s 6¼% senior notes due 2029 fell flat in the aftermarket with the notes’ tight pricing leaving them little room for movement, a source said.

The notes continued to trade in the 99 7/8 to par 1/8 context in heavy volume on Thursday, a level the notes have largely been stuck in since breaking for trade.

There was $39 million of reported volume.

Hillenbrand priced a $500 million issue of the 6¼% notes at par in a Wednesday drive-by.

The yield printed in the middle of yield talk in the 6¼% area.

AssuredPartners comes in

AssuredPartners’ 7½% senior notes due 2032 gave back the gains made on the break to close Thursday’s session wrapped around issue price.

The 7½% notes were off ¼ to 3/8 point in heavy volume.

They were trading in the 99 7/8 to par 1/8 context heading into the close, according to a market source.

There was $34 million in reported volume.

AssuredPartners priced a $500 million issue of the 7½% notes at par in a Wednesday drive-by.

The yield printed at the tight end of the 7½% to 7¾% yield talk.

Indexes

The KDP High Yield Daily index shaved off 2 basis points to close Thursday at 50.63 with the yield now 6.82%.

The index gained 9 bps on Wednesday and 21 bps on Tuesday after falling 24 bps on Monday.

The ICE BofAML US High Yield index inched up 0.5 bp with the year-to-date return now 0.079%.

The index added 20.4 bps on Wednesday and 19.2 bps on Tuesday after falling 33.6 bps on Monday.

The CDX High Yield 30 index inched up 4 bps to close Thursday at 105.78.

The index added 7 bps on Wednesday after falling 5 bps on Tuesday and 22 bps on Monday.

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