Junk market hot, $4.6 billion prices in seven deals; MGM flat; ESAB holds premium

By Abigail W. Adams

Portland, Me., March 26 – The domestic high-yield primary market was on fire on Tuesday with seven deals totaling $4.6 billion clearing the market.

The deals played to heavy demand with four of the seven deals upsizing and six out of the seven offerings coming at the tight ends or pricing through talk.

In drive-by action, Matador Resources Co., Surgery Center Holdings Inc., Griffin Global Asset Management subsidiary GGAM Finance Ltd. and VMED 02 UK Financing I plc tapped the market.

After brief stints in the market, AMC Networks Inc., Algoma Steel Inc. and Phinia Inc. cleared their deals from the forward calendar.

While the European primary market still has a hefty load of deals to work through, Tuesday’s action leaves just one deal on the active forward calendar.

However, the shadow calendar continues to build as Genesee & Wyoming Inc. telegraphed its intention to offer $1 billion of secured notes while it announced plans to launch a $2.43 billion term loan.

Meanwhile, it was a sideways day in the secondary space on Tuesday with the market laser focused on new issuance.

ESAB Corp.’s 6¼% senior notes due 2029 (Ba1/BB+) and MGM Resorts International’s 6½% senior notes due 2032 (B1/BB-/BB-) dominated the tape as market players awaited the deals in the pipeline to break for trade.

While ESAB’s new notes were holding a nominal premium in heavy volume, MGM Resort’s new notes were flat.

Drive-by

The drive-by window was wide open on Tuesday with four issuers tapping the market.

Matador Resources priced an upsized $900 million, from $800 million, offering of eight-year senior notes (B1/BB-/BB-) at par to yield 6½%.

Pricing came at the wide end of tightened talk for a yield of 6 3/8% to 6½%; initial price talk was for a yield of 6½% to 6¾%.

Early guidance was for a yield in the high 6% area.

The deal came into the market with $100 million of reverse inquiry and played to heavy demand during bookbuilding, sources said.

The demand followed the notes into the secondary space where they were seen changing hands at par ¾ shortly after breaking for trade.

Surgery Center Holdings priced an upsized $800 million, from $600 million, offering of eight-year senior notes (Caa1/CCC+) at par to yield 7¼%.

Pricing came at the tight end of talk for a yield of 7¼% to 7½%. Early guidance was for a yield in the 7½% to 7¾% area.

GGAM Finance Ltd. priced $400 million of five-year senior notes (BB-/BB) at par to yield 6 7/8%.

Pricing came tighter than talk for a yield in the 7 1/8% area. Early guidance was for a yield in the 7¼% area.

VMED priced $750 million of eight-year senior secured notes (Ba3/B+/BB+) at par to yield 7¾%.

Pricing came at the wide end of talk for a yield of 7 5/8% to 7¾%.

Early guidance was for a yield in the high 7% area.

In demand

The deals to clear the calendar on Tuesday played to heavy demand.

In a deal that came on an accelerated timeline, Phinia priced an upsized $525 million, from $425 million, of five-year senior secured notes (Ba1/BB+) at par to yield 6¾%.

Pricing came tighter than talk for a yield in the 7% area. Early guidance was in the low 7% area.

The deal was heavily oversubscribed and came into the market with $800 million in reverse inquiry, a source said.

There was heard to be $2.35 billion in the books early Tuesday.

The strong demand for the notes followed them into the secondary space where they jumped on the break.

The notes traded as high as 101¼ but settled into the par 7/8 to 101 1/8 context heading into the close, a source said.

AMC Networks priced an upsized $875 million, from $700 million, issue of senior secured notes due January 2029 (Ba3/BB) on Tuesday with a yield of 10¼%.

Pricing came tighter than talk for a yield in the 10½% area. Early guidance was for a yield in the high 10% area.

The deal was also heavily oversubscribed and came into the market with $1 billion in reverse inquiry, a source said.

Books were heard to be $2.2 billion early Tuesday.

Algoma Steel priced $350 million of five-year senior secured second-lien notes (B3/B/BB-) at par to yield 9 1/8%.

Pricing came tighter than talk for a yield of 9¼% to 9½%.

Early guidance was for a yield in the 9½% area.

The notes broke strong and were trading in the par ½ to par ¾ context heading into the close.

At a premium

ESAB’s 6¼% senior notes due 2029 held a premium in heavy volume on Tuesday.

The 6¼% notes were trading in the par 3/8 to par 5/8 context heading into the market close, a source said.

There was $115 million in reported volume.

ESAB priced an upsized $700 million, from $600 million, issue of the 6¼% notes at par in a Monday drive-by.

Pricing came at the tight end of talk for a yield of 6¼% to 6½%.

Flat

MGM Resort’s 6½% senior notes due 2032 were putting in a lackluster performance in the aftermarket.

The notes traded as low as 99¾ in intraday activity, a source said.

However, they closed the day wrapped around issue price with the notes trading in the 99 7/8 to par 1/8 context.

There was $100 million in reported volume

MGM priced a $750 million issue of the 6½% notes at par in a Monday drive-by.

Pricing came at the midpoint of talk for a yield in the 6½% area.

Indexes

The KDP High Yield Daily index closed Tuesday flat at 50.76 with the yield 6.83%.

The index was off 6 basis points on Monday.

The ICE BofAML US High Yield index slid 3.8 bps with the year-to-date return now 1.321%.

The index was off 6 bps on Monday.

The CDX High Yield 30 index was off 5 bps to close Tuesday at 106.98.

The index was down 4 bps on Monday.

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