Last day of junk quarter: big primary and secondary on firm footing; United Wholesale flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 31 – March exited the high yield new issue market like a lion on Wednesday.

Six issuers priced a combined seven tranches of dollar-denominated junk with a total face value of $3.69 billion.

Meanwhile, the secondary space was active on Wednesday with several bids-wanted-in-competition and offers-wanted-in-competition lists circulating the market, a source said.

While there was a healthy mix of buying and selling as accounts rebalanced their portfolios and prepared for the new quarter, the overall market was strong with several names bid up.

While several off-the-run names were active and making gains on Wednesday, United Wholesale Mortgage, LLC’s newly priced 5½% notes due 2029 (Ba3) fell flat in the aftermarket with the notes wrapped around their issue price.

Spirit AeroSystems, Inc.’s 4.6% senior notes due 2028 returned to focus on Wednesday with the notes making large gains with no clear catalyst other than end-of-quarter activity.

Hudbay Minerals Inc.’s 4½% senior notes due 2026 were also making positive strides in active trading following a slew of analyst upgrades for the company’s equity.

Murphy Oil Corp.’s 6 3/8% senior notes due 2028 (Ba3/BB/BB+) topped par in active trading on Wednesday after languishing below since mid-March.

Last day of quarter

March did not go softly into the record books with an eleventh hour $3.69 billion pricing on Wednesday.

Three of the six issuers came with drive-by deals.

Two of the six upsized their offerings.

Executions remained solid, with one tranche pricing inside of talk, one pricing at the rich end, and five pricing in the middle of – or on top of – talk.

Wednesday's action left three offers totaling $2.9 billion for the Thursday, April 1 session.

One of those was announced on Tuesday.

WW International, Inc. (Weight Watchers) plans to price a $500 million offering of eight-year senior secured notes (Ba3/BB-) on Thursday.

Pending official talk the deal is in the market with initial guidance in the mid-to-high 4% area (see related stories in this issue).

At Wednesday's close the order book had already built to $750 million, a bond trader said, and added that there was some reverse inquiry in the deal.

The Weight Watchers $1 billion term loan is playing to even stronger demand with books heard to be around $2.5 billion at Wednesday's close, the trader said.

The new issue bourse is expected to be shuttered on Good Friday, as much of the bond market will enjoy an extended Easter holiday weekend, sources say.

Flat

While many names were improving in active trading in the final day of the first-quarter, United Wholesale Mortgage’s recently priced 5½% notes due 2029 fell flat.

The 5½% notes were marked at 99 7/8 bid, par 1/8 offered on Wednesday – a level they maintained throughout the session.

The notes were active with more than $30 million in reported volume.

United Wholesale Mortgage priced a $700 million issue of the 5½% notes at par in a Tuesday drive-by.

The yield printed on top of yield talk.

Spirit AeroSystems on the rise

Several off-the-run names were active and posting large gains on Wednesday with no clear catalyst other than end-of-quarter activity, sources said.

Spirit AeroSystems’ 4.6% senior notes due 2028 were among them with the notes rising more than 3 points to a 98-handle, according to a market source.

The 4.6% notes traded as high as 98 5/8 with most prints between 98 1/8 and 98½.

There were some large block trades of the notes which pushed the volume of the bonds to nearly 4x their average, the source said.

The notes were previously on a 95-handle.

Hudbay gains

Hudbay Minerals’ 4½% senior notes due 2026 were also posting large gains in active trading.

The 4½% notes opened the day at 101½ but jettisoned to 104 by the market close, a source said.

There was more than $14 million in reported volume heading into the close.

The Canadian mining company recently reported a significant copper find at its mining site in Arizona and raised its three-year production guidance for copper and gold.

Murphy Oil tops par

Murphy Oil’s 6 3/8% senior notes due 2028 topped par in active trading on Wednesday after trading below for the previous two weeks.

The 6 3/8% notes were up almost 2 points to close the day at par 3/8, according to a market source.

There was more than $9 million in reported volume.

The notes were on a 98-handle at the start of the week.

$152 million Tuesday inflows

The dedicated high-yield bond funds had $152 million of net inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $137 million of inflows on the day.

In line with that, one trader reported working through a couple of sizable offers-wanted-in-competition (OWICs) from the junk ETFs on Wednesday.

Actively managed high yield funds saw $15 million of inflows on Tuesday, the market source said.

Indexes gain

Indexes were on the rise on Wednesday with the market closing the first-quarter on strong footing.

The KDP High Yield Daily index rose 9 points to close Wednesday at 69.19 with the yield now 4.16%.

The index slid 1 point on Tuesday after gaining 3 points on Monday.

The CDX High Yield 30 index rose 43 bps to close Wednesday at 108.92.

The index was down 12 bps on Tuesday and 30 bps on Monday.

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