Junk: EnQuest prices; Odeon on deck, outstanding notes fall; RXO at a premium; DISH active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 12 – The primary market saw some action on Wednesday with one deal pricing and another joining the forward calendar.

Meanwhile, it was an indecisive day in the secondary space with the latest Producer Price Index report and release of the Federal Reserve’s September meeting minute notes doing little to move the market.

The cash bond market was largely flat as players look to Thursday’s highly anticipated Consumer Price Index report to gauge the Federal Reserve’s next moves.

Market chatter has the report coming in hot, which could spark more selling in the market, a source said.

However, the market has been a mixed bag as investors shun weaker credits and seek out higher-quality paper.

Short-duration BB paper has remained well-bid while CCC credits have taken a hit, a source said.

“People are selling sectors they think will perform badly in a recession,” a source said.

While the new issue market has slowed, the recent deals to clear the primary have performed well in secondary activity.

RXO, Inc.’s 7½% split-rated senior notes due 2027 (Baa3/BB+) were holding a premium in active trading.

However, primary market activity also sparked selling in outstanding issues with AMC Entertainment Holdings, Inc.’s 10% senior secured second-lien notes due 2026 among the worst performers of Wednesday’s session after a new offering of secured notes was announced.

DISH DBS Corp.’s soon-to-mature 5% senior notes due March 15, 2023 (B3/B) were among the most actively traded issue in the secondary space on Wednesday although with little movement in price.

However, the company’s 5¼% senior notes due 2026 (Ba3/B+) were weaker in active trade.

EnQuest, Odeon

London-based petroleum exploration and production company EnQuest plc priced Wednesday's sole deal, a dollar-denominated issue of bonds that priced on the London syndicate desk.

The $305 million issue of 11 5/8% five-year senior notes (B3/B+) came at 98.611 to yield 12%, with the yield coming tight to yield talk, and the issue price coming toward the cheap end of discount talk.

European accounts were heard to have represented the greater portion of the book, a New York-based trader said.

One dollar-denominated deal was announced on Wednesday.

Odeon Finco plc, an indirect subsidiary of AMC Entertainment Holdings, began marketing a $400 million offering of five-year senior secured notes, with initial guidance that has the notes coming with a 12¾% coupon at OID 95 to 96, and set to price before the end of the week.

News of the new deal sent the price of the AMC 10% second-lien notes due 2026 tumbling four points, trading at 58 on Wednesday morning, according to the trader who postulated that holders of the 10% notes became restive at the thought of being layered into a more expensive debt structure.

The notes were changing hands in the 58½ to 59½ context heading into the market close with the yield cracking 28%, a source said.

There was $57 million in reported volume.

RXO at a premium

RXO’s 7½% split-rated senior notes due 2027 were holding a nominal premium to their discounted issue price in active trading on Wednesday.

The notes traded as high as 99½ and were marked at 99¼ bid, 99½ offered heading into the market close, a source said.

The notes were active for a small issue.

However, the notes will be going into the high-yield index “so a lot of guys will have to own it,” a source said.

The company is also a solid one with XPO Logistics, the company RXO is being spun off from, a well-known name in the high-yield market.

RXO priced an upsized $355 million issue of the 7½% notes (Baa3/BB+) at 98.962 to yield 7¾% on Tuesday.

Pricing came at the tight end of the 7½% to 7¾% coupon talk, at the cheap end of the 98.962 to 98.968 discount talk, and at the tight end of the 7¾% to 8% yield talk.

The deal was backing XPO Logistics’ spinoff of its transportation brokerage platform.

DISH active

DISH’s senior notes saw heavy volume on Wednesday with its soon-to-mature 5% senior notes due March 15, 2023 among the most actively traded issues of Wednesday’s session.

The 5% notes were little changed and remained wrapped around 98 with a yield of about 10%, a source said.

There was $27 million in reported volume.

DISH’s 5¼% senior notes due 2026 were weaker in active trade.

The 5¼% notes were off ½ point with the notes changing hands in the 81¾ to 82 context heading into the market close, a source said.

The yield on the notes was about 10¾%.

There was $14 million in reported volume.

There have been large sellers of DISH paper in the market in recent sessions, a source said.

Indexes

The KDP High Yield Daily index was off 7 points to close Wednesday at 51.2 with the yield 8.04%.

The index was down 44 points on Tuesday.

The ICE BofAML US High Yield index was off 8 basis points with the year-to-date return now negative 14.236%.

The index fell 77 bps on Tuesday.

The CDX High Yield 30 index inched up 6 bps to close Wednesday at 96.42.

The index was down 45 bps on Tuesday.

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