DirecTV prices add-on; Ritchie Bros. on tap; secondary firms; Carnival gains; Coinbase hits new low

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 6 – The domestic high-yield primary market returned to action on Monday with one drive-by deal pricing and one more offering joining the forward calendar.

In a heavily oversubscribed offering, DirecTV priced an upsized $1.4 billion add-on to its 5 7/8% senior secured notes due Aug. 15, 2027 (Ba3/BB/BBB-).

Ritchie Bros. started a roadshow for $935 million equivalent dual-currency offering of senior notes (Ba3/BB).

The deal joins II-VI Inc.’s $990 million offering of eight-year senior notes on the forward calendar.

Meanwhile, it was a firm day in the secondary space with the cash bond market up ¼ to ½ point as the market rebounded from last Friday’s rout.

However, trading activity remained muted with market players reluctant to take on too much risk as the end of year approaches, a source said.

Travel names were well bid on Monday as investors shrugged off concern over the omicron Covid-19 variant.

Carnival Corp.’s 6% senior notes due 2029 (B3/BB-/B+) were on the rise in active trading on Monday.

However, the notes remained well below their previous levels prior to Europe’s Covid-19 lockdowns in late November.

MGIC Investment Corp.’s 5¼% senior notes due 2028 (Ba1/BB+) were active on Monday with the recent sell-off in the secondary market offering an attractive entry point for the notes.

While it was a strong day in the secondary space with the overall market on the rise, Coinbase Global, Inc.'s two tranches of senior notes (Ba1/BB+) did not participate in the rally.

Coinbase’s senior notes hit a new low following Bitcoin’s weekend plunge.

Monday’s primary

The drive-by market reopened on Monday as DirecTV priced an upsized $1.4 billion add-on (from $1 billion) to the DirecTV Holdings LLC and DirecTV Financing Co. Inc. 5 7/8% senior secured notes due Aug. 15, 2027 (Ba3/BB/BBB-) at 101.75 – the rich end of talk – to yield 5.444%.

The deal was at least three-times oversubscribed, with solid demand at 101.75, allowing the issuer to upsize and price the tap 75 cents rich to initial guidance, a trader said.

Elsewhere Ritchie Bros. started a roadshow for $935 million equivalent of senior notes (Ba3/BB)

The acquisition financing deal included Ritchie Bros. Holdings Inc. $500 million of 10-year non-call-five notes with initial guidance in the low-to-mid 5% area.

The buzz in the market has the deal three-times oversubscribed and going well, having ridden into the market on $300 million of reverse inquiry, a trader said.

Meanwhile, Ritchie Bros. Holdings Ltd. is offering C$350 million eight-year non-call-three notes with initial guidance in the low 5% area.

Ritchie Bros. joins II-VI Inc., in the market with a $990 million offering of eight-year non-call three senior notes with initial price talk in the 5½% area.

The deal is playing to $1 billion of demand, according to a trader who added that there was $375 million of reverse inquiry.

Ritchie Bros. and II-VI are expected to price Wednesday.

Beyond that modest active calendar there is some uncertainty with respect to new-issue activity in the run-up to Christmas and year-end.

No change to expectations that issuance during that period would be generally muted, with perhaps $10 billion to $15 billion of additional business clearing the market during the remainder of 2021, sources said on Monday.

Carnival gains

Carnival’s 6% senior notes due 2029 were on the rise in active trading on Monday as investors shrugged off concerns over the omicron Covid-19 variant.

The 6% senior notes rose 1½ points to close Monday at 98½. There was about $13 million in reported volume.

While the 6% notes pared some of their losses during Monday’s session, they remained well below their previous levels.

The 6% notes were trading at 103 in early November.

However, the notes have been on a downward spiral since late November when Europe went into limited lockdowns due to Covid-19 outbreaks.

MGIC active

MGIC Investment’s 5¼% senior notes due 2028 were active on Monday with the recent sell-off in the secondary market offering an attractive entry point, a source said.

The 5¼% notes were relatively unchanged. They remained wrapped around 104 in the high-volume activity.

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

The notes were trading north of 106 heading into November, a source said.

Coinbase’s new low

While the overall secondary space was strong on Monday, Coinbase’s 3 3/8% senior notes due 2028 and 3 5/8% senior notes due 2031 did not participate in the rally with both tranches hitting new lows.

The 3 3/8% senior notes due 2028 fell 1 point to close Monday at 93 5/8.

The 3 5/8% senior notes due 2031 fell 5/8 point to 92 5/8.

The crypto-exchange platform’s long-struggling notes were under added pressure on Monday following plunging Bitcoin prices over the weekend.

Bitcoin plunged nearly 20% to $42,000 on Saturday. However, the cryptocurrency has since pared its losses and reclaimed $50,000 on Monday.

The cryptocurrency was changing hands at $50,915 shortly after 6 p.m. ET.

$315 million Friday outflows

The dedicated high-yield bond funds sustained $315 million of net daily outflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $340 million of outflows on the day.

Actively managed high-yield fund were positive on Friday, posting $25 million of inflows on the day.

Indexes

The KDP High Yield Daily index rose 3 points to close Monday at 67.31 with the yield now 4.19%.

The index posted a cumulative gain of 30 bps on the week last week.

The CDX High Yield 30 index rose 55 bps to close Monday at 108.08.

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