Junk bond primary at work overseas; Carvana shifts lower; Playtika falls

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 7 – The junk bond primary market action was in Europe on Wednesday, while books built on domestic deals that are expected later in the week.

Meanwhile, the secondary space firmed on Wednesday after spending the past two sessions in the red.

The cash bond market opened Wednesday down ¼ point but pared its losses to end the day unchanged, sources said.

Trading volume remained light with large, liquid issues and topical news continuing to drive activity in the space.

Carvana Co.’s junk bonds (Caa2/CCC) were again in the spotlight with news of a partnership between its largest bondholders as the company consults with advisers about its debt load pressuring the bonds.

Playtika Holding Corp.’s 4½% senior notes due 2029 (B2/B+) saw heavy selling that dragged the notes down 3 points following news private equity firm Joffre Capital would not take a minority stake in the company.

Primary

All of Wednesday's new issue action took place in Europe.

Two issuers priced deals. Both were upsized.

Stockholm-based credit management and financial services provider Intrum AB (Ba3/BB/BB) priced an upsized €450 million issue (from €300 million) of 9¼% 5.25-year senior notes (// BB) at 97.02 to yield 10%, at the tight end of yield talk, but near the cheap end of price talk.

And Gibraltar-based gaming firm 888 Holdings plc priced an upsized €332 million amount (from €200 million) of 888 Acquisitions Ltd. secured notes in two add-on tranches.

A €182 million tap of the of the 7.558% notes due July 15, 2027 priced at 84.5 to yield 12.061%, at the rich end of price talk, while a €150 million tap of the Euribor plus 550 basis points floating-rate notes due July 15, 2028 priced at 87, in the middle price talk.

Meanwhile in the dollar-denominated market, books are building impressively for the Chart Industries, Inc. $2.06 billion two-part notes offer, a sellside source said on Wednesday.

The $1.31 billion tranche of seven-year senior secured notes (Ba3/B+), in the market with initial guidance of 8¼% to 8½%, is heard to be playing to $3.8 billion of demand, while a $750 million tranche of eight-year senior unsecured notes (B3/B), guided to come 250 bps behind the secured notes, is playing to a $2.8 billion book, the sellsider said.

The deal, backing the acquisition of Howden, came into the market pursued by $2.3 billion of reverse inquiry skewed toward the secured tranche, sources say.

Also on the high-yield road is Jones DesLauriers Insurance Management Inc., a broker partner of Ontario-based Navacord Corp., with a $300 million offering of eight-year senior notes (Caa2/CCC/CCC+).

Initial guidance has those notes – the first to come with triple-C equivalent ratings (“triple hooks”) on both sides of the split since mid-June – coming to yield in the high-10% to low-11% area.

Both deals kicked off earlier in the week on timelines that have them pricing before Friday's close.

Carvana under pressure

Carvana’s already distressed junk bonds were under further pressure on Wednesday following news its two largest bondholders signed an agreement to negotiate as a bloc with the company as it consults with advisers regarding its debt load.

The struggling used car e-commerce company’s 5 5/8% senior notes due 2025 fell 3 points on the news to close the day at 42½, according to a market source.

The yield climbed to 42½%.

The 10¼% senior notes due 2030 were off about ½ point with the notes changing hands in the 41½ to 42 context.

The yield was about 30½%.

The notes, which priced at par in late April, were among the most actively traded issues in the secondary space with $28 million in reported volume.

The 4 7/8% senior notes due 2029 were also off about ½ point to close the day at 32½ with the yield 27 3/8%.

News broke on Wednesday that Apollo Global Management and Pimco, which collectively own about 70% of Carvana’s unsecured debt, had joined forces to negotiate with the company, a source said.

The agreement between the bondholders comes as Carvana consults with advisers to explore its options regarding its debt burden.

Playtika under pressure

Playtika’s 4½% senior notes due 2029 were under heavy selling pressure on Wednesday following news private equity firm Joffre Capital would not take a minority stake in the company.

The 4½% notes sank 3 points to close the day at 76¾ with the yield now 9¼%, according to a market source.

There was $11 million in reported volume.

The notes were under pressure after the company announced that Joffre Palace Holdings Ltd. was unable to move forward with the pre-closing of its stock purchase agreement by the December deadline resulting in the resignation of a member of the board of directors, a source said

Joffre announced in June it was purchasing $2.2 billion in stock to take a 25.73% stake in the company.

Fund flows

High-yield ETFs saw chunky outflows of $466 million on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were positive on the day, posting $10 million of inflows on Tuesday, the source said.

With only Wednesday's fund flow totals remaining to go into the tally the combined funds are tracking $246 million of net inflows for the week to Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index gained 5 points to close Tuesday at 52.42 with the yield 7.22%.

The index was down 15 points on Tuesday and 8 points on Monday.

The ICE BofAML US High Yield index inched up 3.1 bps with the year-to-date return now negative 10.29%.

The index was down 25.1 bps on Tuesday and 15.8 bps on Monday.

The CDX High Yield 30 index inched up 3 bps to close Wednesday at 100.8.

The index slid 8 bps on Tuesday and 61 bps on Monday.

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