Madison IAQ on deck for high yield; Paysafe struggles; RLJ gains; Clarivate tranches mixed

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 11 – While no deals cleared the primary market on Friday, the high-yield week ahead is expected to be an active one with sources expecting about $10 billion in new supply.

Madison IAQ, LLC joined the forward calendar with plans to start a roadshow for a $1.49 billion two-tranche offering on Monday.

There are whispers of serial issuers Icahn Enterprises and OneMain Finance Corp. tapping the market in the coming week as well.

Meanwhile, the secondary space continued to see a slow grind tighter on Friday.

High-yield spreads are now approaching year-to-date tights of 322 bps and all-time lows in yields according to a BofA Global Research Report.

However, the secondary market remained quiet with volume outside of new paper mixed.

While the overall cash bond market remained strong on Friday, the performance of several recent deals was mixed.

Paysafe Holdings US Corp.’s 4% senior secured notes due 2029 (B1/B+) continued to trade off in high-volume activity after a weak break that saw the notes immediately dip below par.

Clarivate Science Holdings Corp.’s two tranches were mixed with the lower-yielding secured notes flat but their higher-coupon, unsecured counterparts trading up to a 102-handle.

RLJ Lodging Trust, LP’s 3¾% senior secured notes due 2026 (Ba3/BB-) continued to gain momentum in active trading.

While volume in the name was light, MicroStrategy Inc.’s 6 1/8% senior secured notes due 2028 (B1/B-) remained under pressure with the notes dropping firmly below par.

Friday’s primary

Madison IAQ generated the Friday dollar-denominated primary market's only buzz when the company announced a $1.49 billion two-part deal set to hit the road on Monday: $600 million of seven-year senior secured notes (B1/B) and $885 million of eight-year senior unsecured notes (Caa1/CCC+).

As with the past week, market watchers look for around $10 billion of dollar-denominated new issue business to clear the market in the week ahead.

BofA Securities, Inc. was heard to be coming with between five and eight deals.

Citigroup, which is left books on the above-mentioned Madison IAQ deal, is expected to announce at least one other offer for the week ahead.

The issuer in question is expected to be Icahn Enterprises. Few other details were known Friday, except that the company is looking for a rate in the high 3% area to 4%.

Also, OneMain Finance Corp. is expected to show up in the week ahead.

The Evansville, Ind.-based financial services holding company met with investors over the past week to discuss its social bond framework.

Those meetings were arranged by BNP Paribas, Citigroup and Mizuho.

Paysafe struggles

Paysafe’s 4% senior secured notes due 2029 continued to struggle in the aftermarket following a weak break.

The 4% notes dropped another ½ point and were marked at 99 bid, 99 5/8 offered in the late afternoon.

There was more than $32 million in reported volume.

The 4% notes immediately traded down on the break on Thursday.

“Guys went right after it,” a source said.

While low-coupon, longer-duration bonds have been under pressure in recent weeks amid concerns about inflation, rate-sensitive names have improved over the past two weeks with the 10-year Treasury yield coming in.

Paysafe’s poor performance was not a product of general market conditions but rather was specific to the name, a source said.

Paysafe priced a $400 million tranche of the 4% notes at par on Thursday as part of a dual-currency offering.

Pricing came on top of yield talk.

The London-based provider of payment solutions also priced a €435 million tranche of 3% notes at par.

The euro-denominated tranche was faring better in the secondary space with the notes marked at par bid, par ½ offered in the late afternoon.

Clarivate’s tranches

Clarivate’s two tranches were active on Friday with the unsecured tranche outperforming its lower-yielding secured counterpart – an indication of investors’ continued hunt for yield in the new issue market.

The 3 7/8% senior secured notes due 2028 (B1/B) fell flat in the aftermarket. The notes were changing hands in the par to par ½ context throughout Friday’s session, sources said.

There was $81 million in reported volume.

However, the 4 7/8% senior notes due 2029 skyrocketed to a 102-handle (Caa1/CCC+), despite their low credit rating.

The 4 7/8% notes were changing hands in the 102 to 102½ context in the late afternoon.

There was about $70 million in reported volume.

Clarivate priced a $1 billion tranche of the 3 7/8% notes and a $1 billion tranche of the 4 7/8% notes at par on Thursday.

The 3 7/8% notes priced in the middle of yield talk in the 3 7/8% area.

The 4 7/8% notes priced in the in the middle of yield talk in the 4 7/8% area.

RLJ gains

RLJ Lodging’s 3¾% senior secured notes due 2026 continued to gain strength in active trading on Friday.

The notes broke out of a par-handle and stood poised to close Friday up ½ point at par ¾ bid, 101¼ offered.

There was about $34 million in reported volume.

RLJ priced an upsized $500 million, from $400 million, issue of the 3¾% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 3 7/8% area.

MicroStrategy sinks further

While volume in the name was light on Friday, MicroStrategy’s recently priced 6 1/8% senior secured notes due 2028 dropped firmly below par.

The notes, which priced at par, fell about 1 point and stood poised to close the day at 98 7/8 offered, 99¼ bid, a source said.

The deal was a “hedge fund special,” a source previously said, with proceeds from the $500 million issue used to purchase Bitcoin.

While the notes initially jumped to 102 after breaking for trade, they have steadily come in since and closed out the previous session wrapped around par.

The notes are heavily shorted, sources said.

Indexes

Indexes continued to post gains on Friday with all closing the week with cumulative gains.

The KDP High Yield Daily index rose another 5 points to close the day at 70 with the yield 3.69%.

The index was up 6 points on Thursday, 9 points on Wednesday, 7 points on Tuesday and 6 points on Monday.

The index had a cumulative gain of 33 points on the week.

The CDX High Yield 30 index rose 15 bps to close the day at 110.25.

The index rose 21 bps on Thursday, 4 bps on Wednesday, 2 bps on Tuesday and 1 bp on Monday.

The index posted a cumulative gain of 43 bps on the week.

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