Junkland: Rithm Capital, New Fortress, CoreCivic price; Clear Channel, Cleveland-Cliffs flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 5 – An active session in the dollar-denominated new issue market had three issuers – each pricing a single tranche of notes that had each been in the market overnight – raise $2 billion.

Two of the three deals upsized.

Executions appeared solid, with one deal coming at the tight end of talk, while the other two priced in the middle of talk.

Rithm Capital Corp. priced a $775 million issue of five-year senior notes (B3/B-), New Fortress Energy Inc. priced an upsized $750 million issue of five-year senior secured notes (B1/BB/BB-), and CoreCivic Inc. priced an upsized $500 million issue of five-year senior notes (Ba2/BB-).

The new deal activity left Xerox Holdings Corp.’s $400 million offering of five-year senior guaranteed notes (B1/BB) as the sole deal on the forward calendar with pricing expected on Wednesday.

Meanwhile, it was a soft day in the secondary space on Tuesday with a risk-off sentiment sweeping through the market ahead of Federal Reserve chair Jerome Powell’s congressional testimony.

While soft, the market held up well compared to the heavy selling in equities with cash bonds off about 1/8 point as the CDX fell ¼ point, a source said.

The deals to clear the primary market the previous session continued to trade en masse.

However, they were putting in lackluster performances with sources pointing to Tuesday’s market conditions and tight pricing for the reason for the lack of upside movement.

Clear Channel Outdoor Holdings, Inc.’s 7 7/8% senior secured notes due 2030 (B1/B) and Cleveland-Cliffs Inc.’s 7% senior guaranteed notes due 2032 (Ba3/BB-/BB-) were flat on Tuesday with both issues largely wrapped around par since breaking for trade.

USA Compression Partners, LP/USA Compression Finance Corp.’s 7 1/8% senior notes due 2029 (B2/B+/BB) were largely unchanged day over day with the notes holding on to the nominal premium gained on the break.

Active primary

In the new issue market, Rithm Capital priced a $775 million issue of 8% five-year senior notes (B3/B-) at 98.981 to yield 8¼%, in the middle of talk.

An investor, spotting that paper below issue price at 98 bid, 98¾ offered, “down pretty hard on the bid side,” said that the levels might indicate that the market has gotten pretty expensive.

Elsewhere Tuesday, New Fortress Energy priced an upsized $750 million issue (from $500 million) of 8¾% five-year senior secured notes (B1/BB/BB-) at par, in the middle of talk.

And CoreCivic priced an upsized $500 million issue (from $450 million) of 8¼% five-year senior notes (Ba2/BB-) at par, at the tight end of talk.

A spare active new issue calendar remained in the wake of Tuesday’s action.

Xerox Holdings expects to price a $400 million offering of five-year senior guaranteed notes (B1/BB) on Wednesday.

Pending official talk initial guidance is in the mid-to-high 9% area.

Demand for that paper is heard to exceed $1 billion, the investor said.

Flat

Clear Channel’s 7 7/8% senior secured notes due 2030 and Cleveland-Cliffs’ 7% senior guaranteed notes due 2032 fell flat in the aftermarket.

Clear Channel’s 7 7/8% senior secured notes due 2030 traded in a tight range in the 99¾ to par ¼ context in heavy volume with the notes set to close the day wrapped around par, a source said.

There was $93 million in reported volume.

The company priced an $865 million issue of the 7 7/8% notes on Monday.

The deal priced at the tight end of revised price talk for a yield of 7 7/8% to 8%, which tightened from initial talk for a yield of 8% to 8¼%.

Cleveland-Cliffs’ 7% senior guaranteed notes due 2032 were also stuck in the 99¾ to par ¼ context with the notes closing the day wrapped around par, a source said.

There was $42 million in reported volume.

Cleveland-Cliffs priced an upsized $825 million, from $750 million, issue of the 7% notes at par in a Monday drive-by.

The yield printed in the middle of yield talk in the 7% area.

USA Compression holds gains

While largely unchanged day over day, USA Compression’s 7 1/8% senior notes due 2029 held on to the nominal premium gained on the break despite a soft day for the market.

The 7 1/8% senior notes were trading in the par to par 3/8 context throughout the session with the notes wrapped around par ¼ heading into the market close, a source said.

There was $41 million in reported volume.

USA Compression priced a $1 billion issue of the 7 1/8% notes at par in a Monday drive-by.

The yield printed in the middle of the 7% to 7¼% yield talk.

Indexes

The KDP High Yield Daily index was up 6 basis points to close Tuesday at 50.63 with the yield now 6.88%.

The index was unchanged on Monday.

The ICE BofAML US High Yield index was up 7 bps with the year-to-date return now 0.635%.

The index was up 8.3 basis points on Monday.

The CDX High Yield 30 index was down 20 bps to close Tuesday at 106.38.

The index was up 8 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.