Charter prices; thyssenkrupp active; Occidental gains continue; Uber catches a bid

By Abigail W. Adams

Portland, Me., July 6 – The domestic high-yield primary market slowed its pace on Monday, but it did not stop as one megadeal cleared the market.

Charter Communications Inc. subsidiaries CCO Holdings, LLC and CCO Capital Corp. priced $1.5 billion of long 10-year senior notes (B1/BB) in a Monday drive-by.

While opportunistic issuers may step forward if market conditions continue to hold, primary market activity is expected to remain muted as earnings season begins, sources said.

Meanwhile, the secondary space was quiet yet firm as market players “limped” back from the holiday weekend, a source said.

While volume was light, high beta names were up ¾ to 1 point as a risk-on sentiment pervaded the market.

Germany-based thyssenkrupp Elevator’s dollar-denominated tranches remained active on Monday with the notes posting nominal gains.

Occidental Petroleum Corp.’s recently priced three tranches of senior notes continued to gain in active trading.

Uber Technologies Inc.’s junk bonds “caught a bid” on Monday on the heels of its acquisition of Postmates.

Charter’s drive-by

Charter was the lone issuer to clear the primary market on Monday.

Charter priced $1.5 billion of long 10-year senior notes at par to yield 4¼%.

Pricing came at the mid-point of talk for a yield in the 4¼% area. Initial guidance was for a yield in the 4 3/8% area.

Primary market activity is expected to remain muted as earnings season approaches, a market source said.

While opportunistic issuers may continue to step forward if conditions remain favorable, the primary market is not expected to release the tidal wave of deals that it did in June.

Most companies who needed to raise capital have already tapped the market, a source said.

thyssenkrupp active

The dollar-denominated tranches backing the leveraged buyout of Germany-based elevator technology company thyssenkrupp Elevator remained active on Monday.

The 5¼% senior notes due 2027 saw nominal improvement in high-volume activity.

They were up about ¼ point to change hands in the par ¾ to par 7/8 context, according to a market source.

The 7 5/8% senior notes due 2028 were up about ½ point with the notes climbing to a 103-handle.

They were changing hands in the 103 to 103½ context heading into the market close, a source said.

The elevator technology company priced a $1.56 billion tranche of the 5¼% notes and a $445 million tranche of the 7 5/8% notes at par on June 30 as part of a €4.05 billion equivalent five-tranche megadeal.

The dollar-denominated tranches have traded with strong premiums since freeing for trade.

Occidental gains

Occidental’s recently priced senior notes continued to post gains in the secondary space.

The 8 7/8% senior notes due 2030 remained the most actively traded of the three tranches.

The notes climbed almost 2 points to a 104-handle during Monday’s session.

They were changing hands in the 104 to 104½ context in the late afternoon and stood poised to close the day at 104¼, sources said.

The 8½% notes due 2027 climbed more than 1½ points to 103 7/8.

The 8% senior notes due 2025 were also up about 1½ points to 103 3/8.

After a weak start in the aftermarket, the notes steadily gained throughout last week with better credit energy names on the rise alongside crude oil futures.

WTI crude oil futures were largely flat on Monday settling at $40.58, a decrease of 5 cents or 0.12%.

The energy sector in general was on the rise after Berkshire Hathaway Inc.’s acquisition of Dominion Energy’s natural gas transmission and storage assets.

The deal was valued at $10 billion.

Uber catches a bid

Uber’s junk bonds “caught a bid” after the ride sharing company announced it was acquiring food delivery service Postmates, a market source said.

The 8% senior notes due 2026 were up 2 points to 104½ on Monday.

Uber announced on Monday that it would acquire Postmates in a $2.65 billion all-stock transaction, which will increase its market share in the food delivery service industry, CNBC reported.

The ride sharing company and owner of Uber Eats previously attempted to acquire GrubHub, but negotiations broke down and GrubHub was instead acquired by Amsterdam-based Just Eat Takeaway.com.

Indexes gain

Indexes launched the week on firm footing.

The KDP High Yield Daily index gained 26 basis points to close Monday at 65.32 with the yield now 6.52%.

The index posted a cumulative loss of 6 bps on the week last week.

The ICE BofAML US High Yield index gained 50.1 bps with the year-to-date return now negative 3.508%.

The index posted a cumulative gain of 53.1 bps on the week last week.

The CDX High Yield 30 index gained 57 bps to close Monday at 100.49.

The index posted a cumulative gain of 103 bps on the week last week.

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