Six new deals in high-yield primary; Home Point soars; CrowdStrike gains continue

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 14 – The week’s activity the primary market was awaiting came on Thursday as six issuers priced single-tranche deals.

Meanwhile, the secondary space was unchanged on Thursday as the market awaits President-elect Joseph Biden’s speech regarding additional stimulus.

New paper continued to dominate the tape with several recent deals performing well.

Home Point Capital Inc.’s 5% senior notes due 2026 (B2/B) were putting in a strong performance in the aftermarket with the notes trading well above their issue price.

CrowdStrike Holdings, Inc.’s 3% senior notes due 2029 (Ba3/BB) continued to gain momentum in high-volume activity.

Urban One, Inc.’s recently priced 7 3/8% senior notes due 2028 (B3/B-) were active with the notes lifted to a 104-handle.

Outside of recent issues, trading activity was light, a source said. “Nobody’s looking to buy and nobody wants to sell,” the source said.

Meanwhile, outflows continued the second week of the new year with high-yield mutual and exchange traded funds seeing $1.26 billion leave the space.

Six single tranches

A big Thursday in the new issue market saw half a dozen dollar-denominated issuers complete single tranche deals.

Two came as drive-bys, while timing on a couple of the roadshow deals was accelerated.

Executions continued to be razor sharp, with three of the six tranches coming inside of talk, and two coming at the tight end.

The session saw two deals top the $1 billion mark.

The biggest deal, from SBA Communications Corp., was the only Thursday transaction not to come tight to talk.

The company priced a $1.5 billion issue of eight-year senior notes (existing ratings B1/BB-), in a drive-by, at par to yield 3 1/8%, in the middle of the 3% to 3¼% yield talk.

Elsewhere TransDigm Inc. priced a $1.2 billion issue of eight-year senior subordinated notes (B3/B-) at par to yield 4 5/8% in a drive-by, at the tight end of talk.

Around midday it was playing to about $2.75 billion of orders, a trader said.

Also coming at the drive-through window was Mercer International Inc. which priced an upsized $875 million issue (from $500 million) of eight-year senior notes (Ba3/B+) at par to yield 5 1/8%, inside of talk.

The Vancouver, Canada-based forest products company plans to use the proceeds, along with cash on hand, to refinance all of its outstanding 6½% senior notes due 2024 and its 7 3/8% senior notes due 2025.

Prior to the upsize the company was planning only a partial redemption of the 2025 notes.

“There was a lot of reverse inquiry in the deal, so it made sense to go after the full issue [of 2025 notes],” said a market source who was following the deal.

California Resources Corp. priced a $600 million issue of five-year senior notes (B2/B+) at par to yield 7 1/8%, inside of talk.

Not long before it priced the deal was heard to be playing to $1 billion of orders, a market source said.

Legends Hospitality Holding Co., LLC priced an upsized $400 million issue (from $350 million) of five-year senior secured notes (B3/B) at par to yield 5%, at the tight end of talk.

It was a blowout, a trader said.

Legends and California Resources accelerated timing. Earlier in the week they were announced as Friday business.

With those accelerations only one deal remained on the active calendar ahead of the coming weekend that will be extended by the Monday national holiday celebrating the memory of Dr. Martin Luther King, Jr.

Mohegan Gaming & Entertainment is in the market with a $1.175 billion offering of five-year second-priority senior secured notes (Caa1).

Early guidance is in the low 8% area.

Mohegan is going “shockingly well, for a casino deal coming in a pandemic,” a trader said, Thursday, adding that prior to Covid the authority's bonds always tended to trade well.

Home Point gains

Home Point’s 5% senior notes due 2026 were putting in a solid performance in the secondary space with the notes continuing to gain after a strong break.

The 5% notes were changing hands in the 101 7/8 to 102 1/8 context heading into Thursday’s close, according to a market source.

There was more than $52 million of the bonds on the tape.

The notes saw a good break and traded up to par ¾ bid, 101¼ offered on Wednesday.

The demand seen during bookbuilding followed the notes into the secondary space, a source said.

Home Point priced an upsized $550 million, from $500 million, issue of the 5% notes at par on Wednesday.

Pricing came at the tight end of the 5% to 5¼% yield talk.

The deal was heavily oversubscribed and played to $1.7 billion of orders across 95 accounts.

CrowdStrike gains continue

CrowdStrike’s 3% senior notes due 2029 continued to gain momentum in high-volume activity on Thursday.

The 3% notes were up another ½ point. They were changing hands in the 101¾ to 102 1/8 context heading into the market close, a source said.

There was about $45 million in reported volume during the session.

The notes have posted steady gains since pricing on Tuesday with the yield on the notes now about 2.5%, a source said.

While the notes priced tight and the yield was low, the deal from the large-cap cybersecurity firm attracted a lot of interest from accounts with the issuer not a typical one for the high-yield market.

Urban One on a 104-handle

Urban One’s 7 3/8% senior notes due 2028 continued their meteoric rise on Thursday with the notes trading up to a 104-handle.

The 7 3/8% notes were changing hands in the 104 5/8 to 104 7/8 context heading into the market close.

There was about $18 million of the bonds on the tape during the session.

The notes skyrocketed since pricing last Friday and were changing hands in the 103¾ to 104 context earlier in the week.

The notes priced relatively cheap compared to the market with the hunt for yield driving the notes up, a source said.

Indexes mixed

Indexes were mixed on Thursday with some posting nominal gains and others flat.

The KDP High Yield Daily index gained 6 points to close Thursday at 69.16 with the yield now 4.26%.

The index gained 4 points on Wednesday after falling 9 points on Tuesday and 5 points on Monday.

The ICE BofAML US High Yield index gained 16.9 bps with the year-to-date return now 0.309%.

The index gained 13.7 bps on Wednesday after falling 9.7 bps on Tuesday and 13 bps on Monday.

The CDX High Yield 30 index was flat on Thursday, closing the day at 109.11.

The index rose 25 bps on Wednesday after falling 7 bps on Tuesday and 40 bps on Monday.

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