GFL, NCR price; Xerox, Lamar add-on; Carnival’s new notes lag; LogMeIn, PRA Group gain

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 17 – The domestic high-yield primary market launched what promises to be another heavy volume week for new deals with four issuers pricing $2.4 billion in six tranches on Monday.

NCR Corp. priced $1.1 billion of senior notes (B3/BB-) in two tranches, GFL Environmental Inc. priced an upsized $750 million issue, Xerox Holdings Corp. priced an upsized $400 million in two add-on tranches, and Lamar Advertising Co. priced a $150 million add-on.

Several deals also joined the forward calendar with offerings from ON Semiconductor Corp., Pike Corp., and New Fortress Energy Inc. on tap.

Meanwhile, the secondary space launched the day flat but gained strength as the session progressed and closed Monday with nominal gains, sources said.

However, while it was an overall strong day for the market, volume was light and some recent deals continued to struggle.

Carnival Corp.’s new 9 7/8% senior secured second-priority notes due 2027 (Ba1/BB+) were lagging their issue price in active trading, which was unsurprising to some sources.

While Carnival joined the roster of recent deals that sank underwater, LogMeIn, Inc.’s 5½% senior secured notes due 2027 (B1/B-/BB-) continued to gain in high volume.

PRA Group, Inc.’s recently priced 7 3/8% senior notes due 2025 (Ba2/BB+) also maintained their upward momentum in active trading with the notes on a 103-handle.

Monday’s session

A news heavy Monday saw the Aug. 17 week off to a strong start as four issuers brought a $2.4 billion face amount of junk bonds in a total of five tranches.

Two of the four issuers upsized their deals.

Executions continued to reflect strong demand for paper, as deals priced and rich to talk, or through talk.

And all of Monday's business took place at the high-yield drive-through window.

NCR priced $1.1 billion of senior notes (B3/BB-) in two tranches: $650 million of 5% eight-year notes and $450 million of 5¼% 10-year notes, at the tight ends of talk.

GFL Environmental priced an upsized $750 million (from $600 million) of 3¾% five-year senior secured notes (Ba1/BB) at the tight end of talk.

Xerox Holdings priced an upsized $400 million (from $200 million) of senior bullet notes (Ba1/BB) in two add-on tranches: A $200 million add-on to its 5% notes due 2025 rich to talk and a $200 million add-on to its 5½% notes due 2028 at the rich end of talk.

And Lamar Advertising priced a $150 million add-on to its 4% senior notes due Feb. 15, 2030 (Ba3/BB-) at the rich end talk.

The Monday session also saw a build-up of the active new issue calendar with new three deals, all of them slated to clear by midweek.

ON Semiconductor plans to price a $500 million offering of eight-year senior notes on Tuesday. Initial guidance is in the low 4% area.

Pike Corp. also expects to price a $500 million offering of eight-year senior notes (existing ratings B3/CCC+) on Wednesday. Initial talk has the notes coming to yield in the high 5% area (see related stories in this issue).

And New Fortress Energy expects to price an $800 million offering of five-year senior secured notes (existing ratings B1/B+) on Wednesday.

Carnival lags

Carnival’s newly priced 9 7/8% senior secured second-priority notes due 2027 saw a lackluster reception in the secondary space with the notes trading well below their issue price.

The 9 7/8% notes traded as low as 98 7/8. However, the majority of prints were on a 99-handle, a source said.

The bonds were active with more than $35 million in reported volume by the late afternoon.

The lackluster performance of the notes was not a surprise given their tight pricing and the company’s uncertain future with cruise line operations suspended until November, sources said.

The negative headlines surrounding the company continued to mount with Carnival disclosing on Monday that it had been the subject of a ransomware attack on Aug. 15, the day after the senior notes priced.

The ransomware attack could lead to claims from those affected by the data breach, the company said in an 8-K filing with the Securities and Exchange Commission.

In a heavily oversubscribed offering, Carnival priced a $900 million issue of the 9 7/8% notes at par on Aug. 14.

Pricing came at the tight end of yield talk in the 10% area. Initial price talk had the notes coming to yield 10% to 10¼%.

The deal was heard to be playing to $2 billion of orders.

The offering was the third time Carnival has tapped the high-yield market since April.

The cruise ship operator priced a $4 billion issue of 11½% first-priority senior secured notes due 2023 at 99 to yield 11.901% on April 1.

It returned on July 15 to price a dual-currency offering that included a $775 million tranche of second-priority senior secured notes due Feb. 1, 2026 that priced at par to yield 10½%.

LogMeIn gains

While several recent deals were struggling in the aftermarket, LogMeIn’s 5½% senior secured notes due 2027 were not among them.

The 5½% notes continued to rise in active trading on Monday.

The notes traded in a range of 102 3/8 to 103 1/8 throughout Monday’s session with the notes gaining strength alongside the broader market as the afternoon progressed.

The 5½% notes were changing hands in the 102¾ to 103 1/8 context heading into Monday’s close.

More than $40 million of the bonds were on the tape by the late afternoon.

The notes saw a strong break and were marked at 102½ bid, 102¾ offered late Friday.

LogMeIn priced an upsized $950 million issue of the 5 ½% notes at par last Friday.

The yield printed at the tight end of the 5½% to 5¾% yield talk.

Proceeds will be used to fund Francisco Partners’ leveraged buy-out of the software and cloud-based remote connectivity service provider.

PRA Group gains

PRA Group’s recently priced 7 3/8% senior notes due 2025 also continued their upward momentum in the secondary space.

The 7 3/8% notes were up another ½ point to close the day at 103¾.

The bonds remained active with more than $15 million in reported volume.

PRA Group priced a $300 million issue of the 7 3/8% notes at par on Aug. 13.

$523 million Friday outflows

The dedicated high-yield bond funds sustained $523 million of net outflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs took it on the nose, sustaining $778 million of outflows on the day.

Actively managed high-yield funds, however, saw solid inflows of $255 million on Friday, the source said.

Indexes mixed

Indexes were mixed at the start of the week after all posted cumulative losses the previous week.

The KDP High Yield Daily index dropped 9 basis points to close Monday at 66.75 with the yield now 5.58%.

The index posted a cumulative loss of 22 bps on the week last week.

The ICE BofAML US High Yield index shaved off 2.9 bps with the year-to-date return now negative 0.199%.

The index posted a cumulative loss of 39.8 bps on the week last week and sank bank into negative territory on Friday.

The CDX High Yield 30 index gained 48 bps to close Monday at 104.48.

The index posted a cumulative loss of 83 bps on the week last week.

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