Xerox prices ‘blowout’ junk deal; CoreCivic surges; New Fortress adds; Rithm fades

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 6 – The dollar junk bond market had Xerox Holdings Corp. as its sole issuer on Wednesday.

Meanwhile, it was a largely sideways day in the secondary space with Federal Reserve chair Jerome Powell’s congressional testimony doing little to move the needle in markets.

Powell’s mantra was unchanged in front of Congress with Powell affirming that rate cuts would begin in 2024 but Federal Reserve officials would continue to exercise caution until they were certain inflation would return to their 2% target.

The market’s response was underwhelming although the cash bond market did squeak out nominal gains, a source said.

New issues remained in focus with the deals to price during Tuesday’s session following different trajectories.

CoreCivic, Inc.’s 8¼% senior notes due 2029 (Ba2/BB-) surged on Wednesday after a strong break as buyers chased the notes into the secondary with allocations tough.

New Fortress Energy Inc.’s 8¾% senior secured notes due 2029 (B1/BB/BB-) continued to add on Wednesday with the notes trading with a hearty premium although they remained on a par handle.

However, Rithm Capital Corp.’s 8% senior notes due 2029 (B3/B-) sank further below their discounted issue price.

Primary

Xerox Holdings Corp. had the spotlight to itself in the dollar-denominated high-yield primary market on Wednesday, as it priced an upsized $500 million issue of senior guaranteed notes due Nov. 30, 2029 (Ba3/BB) at par to yield 8 7/8%.

The issue size increased from $400 million.

The yield printed 12.5 basis points inside of the 9% to 9¼% yield talk. Initial guidance was in the mid-to-high 9% area.

The deal, which was heard to be playing to $2 billion of demand at price talk, was par 5/8 bid, 101 3/8 offered, late Wednesday afternoon, according to a trader.

In the euro new issue market Compagnie Plastic Omnium SE priced a €500 million issue of 4 7/8% five-year senior notes (S&P: BB+) at 99.459 to yield 5%, at the tight end of talk in the 5 1/8% area.

Early guidance was 5 3/8% to 5½%. At that guidance the deal was playing to €1.45 billion of demand, according to an informed source.

A high-yield sellside source in London, who was tracking the credit for the first time on Wednesday, noted that Plastic Omnium was previously known for showing up in the market with unrated deals.

CoreCivic surges

CoreCivic’s 8¼% senior notes due 2029 surged higher on Wednesday after a strong break with buyers chasing the notes into the secondary with allocations in the sought-after deal tight.

The 8¼% notes added another 1 to 1½ points.

They were marked at 102½ bid, 103 offered early in the session with the notes wrapped around 102 7/8 heading into the market close.

There was $21 million in reported volume.

CoreCivic priced an upsized $500 million, from $450 million, issue of the 8¼% notes on Tuesday.

Pricing came at the tight end of the 8¼% to 8 3/8% yield talk.

The deal was heard to have come into the market with $400 million of reverse inquiry and was heavily oversubscribed.

New Fortress adds

New Fortress’ new 8¾% senior secured notes due 2029 continued to add after a strong break although the notes remained on a par handle.

The were seen up another ¼ point with the notes trading in the par 3/8 to par 5/8 context heading into the market close.

There was $57 million in reported volume.

New Fortress priced an upsized $750 million, from $500 million issue, of the 8¾% notes at par on Tuesday.

The yield printed in the middle of yield talk in the 8¾% area.

Rithm falters

Rithm Capital’s new 8% senior notes due 2029 sank further below their discounted issue price in heavy volume on Wednesday.

The notes were trading on a 97-handle at the open to gain some traction as the session progressed to close the day in the 98 to 98¼ context.

There was $147 million in reported volume.

Rithm Capital priced a $775 million issue of the 8% notes at 98.981 to yield 8¼% on Tuesday.

The yield printed in the middle of yield talk in the 8¼% area.

Fund flows

High-yield ETFs sustained $76 million of daily cash outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds had $8 million of inflows on the day, the source said.

Indexes

The KDP High Yield Daily index was up 10 bps to close Wednesday at 50.73 with the yield 6.83%.

The index was up 6 bps on Tuesday and was unchanged on Monday.

The ICE BofAML US High Yield index gained 14.9 bps with the year-to-date return now 0.785%.

The index was up 7 bps on Tuesday and 8.3 basis points on Monday.

The CDX High Yield 30 index was up 18 bps to close Wednesday at 106.56.

The index was down 20 bps on Tuesday and up 8 bps on Monday.

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