Rakuten prices in junkland, up on break; Sabre gains continue; Citrix regains 87-handle

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 22 – The domestic high-yield primary market saw one deal clear the forward calendar on Tuesday – Tokyo-based Rakuten Group, Inc.’s $500 million offering of two-year senior notes (BB+).

The deal priced at a discount and made strong gains on the break.

The offering is the last that is expected from the primary market during the holiday-shortened week.

Meanwhile, it was a firm day in the secondary space with the cash bond market up ¼ point as the market weighed comments from Federal Reserve speakers on the eve of the release of the Federal Open Market Committee’s minute notes.

ETF buying was again lifting the market as inflows continued to the asset class.

End-of-year illiquidity had not yet set in on Tuesday with recent issues keeping the secondary space moving, sources said.

Sabre GLBL Inc.’s (Sabre Corp.) 11¼% senior secured notes due 2027 (Ba3/B) were in focus with the notes continuing to post gains on Tuesday after surging on the break.

Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) returned to an 87-handle in heavy volume after trading below for the past week.

Medline Industries’ 5¼% senior notes due 2029 (Caa1/B-/B-) continued their strong uptrend on Tuesday with the notes hitting their highest level since September.

Rakuten prices

Tokyo-based Rakuten Group priced a $500 million issue of two-year senior notes at 96.968 to yield 12% on Tuesday.

The yield and discount came in line with talk.

The notes appeared to be doing pretty well on the break, according to a sellside source who reported seeing dealer sell prints at 98, translating into an 11.396% yield to worst.

There were U.S. high-yield accounts active in the deal, sources said.

Rakuten almost certainly concludes high-yield new issue business ahead of the extended Thanksgiving weekend in the United States, which is set to get underway in the bond market following a 2 p.m. ET early close on Wednesday, market sources say.

Sabre gains continue

Sabre’s 11¼% senior secured notes due 2027 were in focus on Tuesday with the notes continuing to post gains after surging at the break the previous session.

The 11¼% notes rose another 1 point to a 101-handle, sources said.

They were changing hands in the 101 to 101¼ context heading into the market close.

There was $67 million in reported volume.

The travel technology company priced an upsized $555 million, from $535 million, issue of 11¼% notes at 98.134 to yield 11¾% in a Monday drive-by.

The offering was heavily oversubscribed with the deal book exceeding $1 billion, a source said.

The strong demand for the notes followed it into the secondary space with the notes shooting up to par on the break.

Citrix reclaims 87-handle

Citrix’s 6½% senior secured notes due 2029 returned to an 87-handle on Tuesday.

The notes gained ½ point in heavy volume and were changing hands in the 87 1/8 to 87 3/8 context heading into the market close, according to a market source.

There was $17 million in reported volume.

The $4 billion issue, which priced at 83.561 on Sept. 20, have channeled between 84- and 87-handles for the majority of their time in the secondary space.

The notes shot up from an 84-handle to an 87-handle amid the dovish pivot rally sparked by the release of the Consumer Price Index report on Nov. 10.

However, they have spent much of the last week on an 86-handle as the rally waned and the market reassessed its expectations for the Federal Reserve’s path forward.

Medline gains

Medline’s 5¼% senior notes due 2029 continued their strong uptrend on Tuesday with the notes trading up to their highest level since September, a source said.

The 5¼% notes gained 2 points in active trade.

They were changing hands in the 82¼ to 82¾ context for the majority of the session, a source said.

The yield was 8½%.

The notes were previously on an 80-handle.

Medline’s 5¼% notes due 2029 have been on a strong uptrend since trading down to a historic low of 73 in early November.

$678 million Monday inflows

The dedicated high-yield bond funds saw $678 million of net daily cash inflows on Monday, according to a market source.

High-yield ETFs saw $653 million of inflows on the day.

Actively managed high-yield funds saw $25 million of inflows on Monday, the market source said.

The combined funds are tracking $2.4 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index rose 17 points to close Tuesday at 51.94 with the yield 7.44%.

The index was down 5 points on Monday at 51.77 with the yield 7.52%.

The CDX High Yield 30 index rose 43 basis points to close Tuesday at 101.22.

The index inched up 4 bps on Monday.

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