Risk-on in secondary; Odeon at a premium; Carnival, Citrix on the rise; DISH gains continue

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 17 – The high-yield primary market remained quiet on Monday, as no new issues were priced.

The session ended with one dollar-denominated deal, a Nordic transaction, on the active forward calendar.

Netherlands-based offshore oil and gas services company Bluewater Holding BV was scheduled to hold an investor call for its $240 million offering of four-year senior notes on Monday.

The deal is expected to price later in the week.

Meanwhile, it was risk-on in the secondary space on Monday with the cash bond market gaining ¼ to ½ point and the CDX index up over 1 point to break above a 96-handle, sources said.

Sentiment improved after the U.K. rolled back the tax stimulus program that sent its markets into a tailspin in early October.

And while the market still has to wade through third-quarter earnings, many are expecting an end-of-year rally with the Fed rate hike schedule believed to be peaking soon, a source said.

AMC Entertainment Holdings, Inc. subsidiary Odeon Finco plc’s newly priced 12¾% senior secured notes due 2027 (B3/B) were trading at a large premium to their discounted issue price.

However, volume in the name was light with the notes largely tucked away.

The cruisers improved in the risk-on sentiment on Monday with Carnival Corp.'s 7 5/8% senior notes due 2026 (B3/B) lifted almost 2 points after hitting a historic low in the sell-off of the previous week.

Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) also resumed their upward momentum after getting knocked down in the volatility of the previous week.

DISH DBS Corp.’s senior notes continued to improve as it mulls the divestiture of its wireless division.

Odeon at a premium

AMC subsidiary Odeon’s 12¾% senior secured notes due 2027 were trading at a large premium to their discounted issue price in aftermarket activity although activity in the name was light for a new issue, a source said.

The 12¾% notes traded up to a 93-handle on Monday with the notes changing hands in the 93¼ to 93½ context heading into the market close, a source said.

However, the issue has been thinly traded in the aftermarket since breaking for trade.

The deal carried a hefty yield and was most likely tightly allocated, a source said.

Odeon priced a $400 million issue of the 12¾% notes at 92 to yield 15.066% on Friday.

The notes priced inline with talk for a coupon of 12¾%, a discount of 92 for a yield of 15.06%.

However, final pricing widened from initial guidance for a discount of 95 to 96.

Carnival lifted

Carnival’s 7 5/8% senior notes due 2026 pared their losses in active trade on Monday with the notes up 2 points after hitting a historic low the previous week.

The 7 5/8% notes returned to a 75-handle on Monday and were wrapped around 75¼ with a yield of 17 5/8% heading into the market close, a source said.

There was $23 million in reported volume with the notes among the most actively traded in the secondary space.

Carnival’s capital structure has been whipsawed by the volatility in the space with the performance of the cruise line operator’s senior notes a barometer for the market’s expectations for a recession.

The notes traded down to a historic low of 71 amid selling pressure the previous week.

However, Carnival’s notes are high-beta and tend to rise and fall as the market deflates and rallies, a source said.

Citrix gains

Citrix’s 6½% senior secured notes due 2029 resumed their upward momentum as market conditions improved on Monday.

The 6½% notes gained 1½ points and were changing hands in the 85¾ to 86 context heading into the market close, according to a market source.

There was $12.5 million in reported volume.

The notes closed last Friday on an 84-handle.

Tibco priced a $4 billion issue of the 6½% notes at 83.561 to yield 10% on Sept. 20.

The notes hit a high of an 87-handle in early October before selling pressure dragged them back down to an 84-handle.

DISH gains momentum

DISH’s capital structure continued to rise on Monday as the market digests news the satellite broadcaster is divesting its wireless arm.

DISH’s senior notes rose another 3/8 to 1½ points in active trade.

The 7¾% notes due 2026 (B3/B) saw the largest price appreciation during Monday’s session.

The notes were up 1½ points to close the day on a 79-handle.

They were trading in the 79 3/8 to 79 5/8 context heading into the market close with the yield 15 1/8%.

There was $11 million in reported volume.

DISH’s 7 3/8% senior notes due 2028 rose about 1 point to change hands in the 70¾ to 71 context heading into the market close.

The yield was about 15¼%.

DISH’s capital structure has been active following reports the satellite broadcaster is considering selling its wireless arm to DISH chair Charlie Ergen’s special acquisition vehicle Conex Corp.

Conex is holding a special shareholders meeting on Oct. 31 to ask for an extension to its business combination deadline from Nov. 3 to June 3, 2023.

Fund flows

The dedicated high-yield bond funds sustained $484 million of net outflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $394 million of outflows on the day.

Actively managed high-yield funds sustained $90 million of outflows on Friday, the source said.

The combined funds are tracking $881 million of net outflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index rose 28 points to close Monday at 51.45 with the yield 7.93%.

The index posted a cumulative loss of 54 basis points on the week last week.

The CDX High Yield 30 index jumped 121 bps to close Monday at 97.56.

The index was down 46 bps on the week last week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.