HUB megadeal prices; Fortrea joins calendar; Ryman Hospitality adds; funds add $2.5 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 8 – HUB International Ltd. priced Thursday’s sole dollar-denominated high-yield deal, a downsized $2.18 billion issue of seven-year senior secured notes (B2/B) that came at par to yield 7¼%.

The issue size decreased from $2.68 billion, with $500 million shifted to the concurrent term loan.

The yield came at the tight end of yield talk in the 7 3/8% area. Initial talk was in the mid-7% area.

The new HUB 7¼% notes were wrapped around the issue price at Thursday’s close: 99 7/8 bid, par 1/8 offered, according to a bond trader.

Although it was widely known in the market that the company was keen to secure a rate of 7¼%, there was pushback, especially from one of the big, real-money accounts in the deal, the trader said.

Had there been a little bit more left on the table, that account might have added on to its already sizable order, the source added.

Meanwhile Fortrea Holdings Inc. began a roadshow for a $570 million offering of senior secured notes due 2030 (BB/BB+). The company is in the market with initial guidance in the high-7% to 8% area.

Two more big deals are believed to be close at hand.

Univar Solutions Inc. is expected soon with a $1.8 billion offering of secured notes backing the buyout of the company by Apollo.

Univar’s existing bonds traded up ¼ of a point to ½ of a point on Wednesday, a trader said, adding that it was a big move that suggests the new deal is about to hit the market.

And Viasat Inc.’s $1.6 billion offering of senior notes, whispered with an all-in yield of 12%, is also near at hand, sources said.

In the euro-denominated new issue market, InfoPro Digital priced €975 million of IPD 3 BV five-year senior secured notes (B2/B/B+) in two tranches.

A €500 million tranche of fixed-rate notes priced at par to yield 8%, 12.5 basis points inside of yield talk in the 8¼% area and well inside of the 8½% to 8¾% initial guidance.

A €475 million tranche of three-month Euribor plus 475 bps floating-rate notes priced at 99.00. The spread came on top of spread talk (initial guidance was 500 bps). The issue price came 50 cents rich to the rich end of the 98 to 98.5 price talk (initial guidance was 97.5 to 98).

InfoPro’s tight pricing hinged in part on a helping hand from the good credit fairy, who showed up when S&P Global Ratings raised its rating for InfoPro Digital to B from B- on Thursday, a London-based buyside source said.

Secondary quiet but firm

Meanwhile, it was a quiet but firm day in the secondary space as market players awaited the deals in the pipeline.

The cash bond market added a 1/8 point with offers-wanted-in-competition lists outnumbering bids-wanted-in-competition lists, a source said.

However, trading activity was muted.

Ryman Hospitality Properties, Inc.’s newly priced 7¼% senior notes due 2028 (B1/B+) were in focus with the notes continuing to add after a decent break.

O-I Glass, Inc. subsidiary Owens-Brockway Glass Container Inc.’s 7¼% senior notes due 2031 (B2/B+) saw heavy volume although with little movement in price.

Carvana Co.’s senior notes (Ca/CCC-) continued their ascent from the distressed debt abyss with the notes adding another 7 to 8 points after the embattled used car e-commerce company upped its forward guidance.

The dedicated high-yield bond funds saw $140 million of net daily cash inflows on Wednesday, according to a market source.

High-yield exchange-traded funds saw $130 million of inflows on the day.

Actively managed high-yield funds saw $10 million of inflows on Wednesday, the source said.

Meanwhile, high-yield mutual funds and ETFs eliminated the previous week’s multi-billion-dollar outflow with $2.5 billion entering the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

That’s the biggest weekly inflow since mid-April, according to the market source.

Funds saw a $2.17 billion outflow the previous week.

Ryman Hospitality adds

Ryman Hospitality’s new 7¼% senior notes due 2028 continued to add after a decent break.

The notes were up 3/8 to ½ point.

They were marked at par ½ bid, 101 offered and were changing hands in the par 5/8 to par 7/8 context heading into the market close.

There was $38 million in reported volume.

The REIT priced $400 million, upsized from $300 million, of the 7¼% notes at par on Wednesday.

The yield printed at the tight end of the 7¼% to 7½% yield talk.

The deal was heavily oversubscribed with the offering playing to $2 billion of orders.

O-I Glass active

O-I Glass’ 7¼% senior notes due 2031 saw heavy volume on Thursday although with little movement in price.

The 7¼% notes were changing hands in a tight range between 102 and 102 1/8 throughout the session, a source said.

There was $26 million in reported volume.

The notes have been hovering above 102 for the past week with the notes lifted to their highest level since pricing in the market’s rally last Friday.

Carvana returns

Carvana’s senior notes were among the best performers of Thursday’s session with the notes adding 7 to 8 points as they continued to shoot back from the distressed debt abyss.

Carvana’s 5 5/8% senior notes due 2025 added 7 points to close the day at 86 with the yield now 12 7/8%, a source said.

The 10¼% notes due 2030 jumped 8 points to close the day at 78¾ with the yield now 15 3/8%.

Carvana’s senior notes have made a phenomenal recovery in 2023.

The 5 5/8% notes and 10¼% notes both closed 2022 in the low 40s.

Typically, bonds that trade in the 40s see no return, a source said.

However, Carvana’s bonds have been on a strong uptrend, particularly in May as its exchange offer floundered.

Carvana launched an exchange in late March for five series of notes. However, the distressed debt exchange was canceled last week prompting an S&P upgrade.

Carvana poured lighter fluid on its uptrend on Thursday after upping its second-quarter guidance.

The company now expected adjusted EBITDA of $50 million versus analyst expectations for adjusted EBITDA of negative $3.6 million.

Indexes

The KDP High Yield Daily added 4 points to close Thursday at 50.58 with the yield now 7.32%.

The index shaved off 4 points on Wednesday and 4 points on Tuesday after gaining 3 points on Monday.

The ICE BofAML US High Yield index add 9 basis points with the year-to-date return now 4.77%.

The index was up 0.9 bp on Wednesday, was down 0.5 bp on Tuesday and added 6.7 bps on Monday.

The CDX High Yield 30 index gained 28 bps to close Thursday at 102.28.

The index was down 6 bps on Wednesday, added 23 bps on Tuesday and fell 15 bps on Monday.

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