Primary prices $3.12 billion; Clarivate unsecured weaken; MicroStrategy rebounds

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 14 – The June 14 week exploded off the starting line, in the primary market, with a handful of issuers raising $3.12 billion at the high-yield drive-through window.

Hannon Armstrong Sustainable Infrastructure Capital priced an upsized $1 billion issue (from $750 million) of 3 3/8% five-year senior bullet notes.

Comstock Resources, Inc. priced a twice-upsized $965 million issue of 5 7/8% 8.5-year senior notes.

Ingles Markets, Inc. priced a $350 million issue of 4 1/8% 10-year senior notes.

Meanwhile, it was another sideways day in the secondary space with the cash bond market largely unchanged as market players eyed the new deals in the pipeline.

New and recent issues continued to dominate the tape.

Clarivate Science Holdings Corp.’s two tranches remained active.

While the secured tranche was largely unchanged, the unsecured tranche was coming in from the heights reached after breaking for trade.

MicroStrategy Inc.’s 6 1/8% senior secured notes due 2028 (B1/B-) rebounded in active trading with the notes again approaching par after trading well below the previous session.

Primary prices $3.12 billion

Executions were solid, with four deals getting done at the tight ends of talk, while the other came in the middle of talk.

Among Monday's deals, Hannon Armstrong Sustainable Infrastructure Capital priced an upsized $1 billion issue (from $750 million) of 3 3/8% five-year senior bullet notes (S&P: BB+) at par, at the tight end of talk.

It was heard to be playing to $1.3 billion of demand on Monday afternoon.

Comstock Resources. priced a twice-upsized $965 million issue (from $500 million, then from $950 million) of 5 7/8% 8.5-year senior notes (B3/B/B+) at par, at the tight end talk.

Books closed Monday afternoon containing around $3 billion of orders, according to a trader who added that trading in the secondary market was a bit scattered, however the notes appeared to be going out Monday evening wrapped around 101.

And Ingles Markets priced a $350 million issue of 4 1/8% 10-year senior notes (Ba2/BB) at par, at the tight end of talk, driven into the market by $200 million of reverse inquiry, according to a trader who added that the new Ingles 4 1/8% notes were trading conspicuously well, going out Monday at 101 bid, 101 ½ offered.

There was also a substantial build-up of business on the active forward calendar, most of it expected to clear the market in the middle part of the present week

Clarivate’s tranches

Clarivate’s two tranches continued to see heavy volume in the secondary space. While the unsecured tranche was largely unchanged in the activity, the unsecured tranche was coming in from the heights reached the previous session.

Clarivate’s 3 7/8% senior secured notes due 2028 (B1/B) continued to trade in the par to par ½ context with most trades between par ¼ to par 3/8.

However, the London-based data and analytics company’s 4 7/8% senior notes due 2029 (Caa1/CCC+) were coming in from their highs.

The 4 7/8% notes dropped down to a 101-handle and were changing hands in the 101 5/8 to 101 7/8 context heading into the market close.

The notes were trading in the 102 to 102¼ context heading into Friday’s close.

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 June 10.

The unsecured tranche has outperformed its lower-coupon counterpart since the notes broke to trade.

MicroStrategy rebounds

MicroStrategy’s 6 1/8% senior secured notes due 2028 rebounded on Monday with the notes again broaching par after trading well below the previous session.

The 6 1/8% notes were up about ¾ point during Monday’s session.

They were changing hands in the 99¾ to 101 1/8 context heading into the market close.

The notes dropped as low as 98 7/8 offered, 99¼ bid on Friday with hedge funds driving the heavily shorted name down, a source said.

The 6 1/8% notes have been volatile since the business intelligence company priced the $500 million issue at par on June 8.

The notes traded as high as 102 on the break.

Proceeds from the offering were used to purchase Bitcoin, which had struggled in the low $30,000 range the previous week.

However, the cryptocurrency broke a key resistance level and popped above $40,000 on Monday.

Bitcoin’s upward momentum was attributed to Tesla Inc. chief executive officer Elon Musk reversing his previous reversed stance on the digital currency and stating that Tesla would accept it as a form of payment if Bitcoin mining became greener.

Indexes mixed

Indexes were mixed on Monday.

The KDP High Yield Daily index rose 5 points to close the day at 70.05 with the yield now 3.77%.

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

The ICE BofAML US High Yield index inched up 3.9 bps with the year-to-date return now 3.149%.

The index posted a cumulative gain of 49.3 bps on the week last week.

The CDX High Yield 30 index shaved off 9 bps to close Monday at 110.16.

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

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