Junk market: Vistra, Melco, Taseko Mines price; Herbalife gains continue; VistaJet jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 9 – In the dollar-denominated primary market three issuers priced single tranches of junk on Tuesday, Vistra Corp., Melco Resorts Finance Ltd. and Taseko Mines Ltd.

Meanwhile, it was a quiet and flat day in the secondary space with all eyes on the Consumer Price Index report set for release on Wednesday.

Markets have widely anticipated June as the start of the Fed’s rate cut campaign; however, still strong inflationary reports have called those expectations into question.

The high-yield market had some selling pressure the previous week as markets reassessed rate cut expectations.

However, the tone has firmed over the past few sessions with hope still alive for three rate cuts starting in June, a source said.

The latest CPI report will be a test of current rate cut projections.

While many were on the sidelines on Tuesday ahead of the potentially market moving report, new and recent issues continued to drive volume in the space.

Herbalife International Inc. and HLF Financing Sarl LLC’s new 12¼% senior secured notes due 2029 (Ba2/B+) continued to move in heavy volume with buyers lifting the discounted notes to fresh heights.

AMC Networks Inc.’s recently priced 10¼% senior secured notes due 2029 (Ba3/BB) also improved with the notes hitting their highest level since breaking for trade.

While new and recent issues remained in focus, earnings new sparked the largest price movements in the space.

VistaJet’s senior notes were among the major gainers of Tuesday’s session with the company reporting strong numbers.

Primary market

Two of Tuesday’s three primary deals upsized.

One came as an a.m.-to-p.m. drive-by.

All three priced tight to talk, or tight to downwardly revised talk.

Vistra priced the session’s sole drive-by, an upsized $1 billion issue of Vistra Operations Co. LLC eight-year senior notes (Ba2/BB/BB) that came at par to yield 6 7/8%.

The issue size increased from $750 million.

Melco Resorts Finance priced an upsized $750 million issue of eight-year senior notes (Ba3/BB-) at par to yield 7 5/8%.

The issue size increased from $500 million.

The yield printed at the tight end of the 7 5/8% to 7¾% revised yield talk, which tightened earlier Tuesday from 7¾% to 7 7/8%. Initial guidance was in the high-7% area.

Melco was heard to be playing to $2.7 billion of demand shortly before launching at 7 5/8% on Tuesday morning, a trader said.

And Taseko Mines priced a $500 million issue of six-year senior secured notes (B3/B-/B-) at par to yield 8¼%.

In the wake of Tuesday’s action Endo Finance Holdings, Inc. remains in the market with a $1.25 billion offering of seven-year senior secured notes (B2/B+).

The deal is in the market in front of $2.8 billion of reverse inquiry in the mid-9% area, a trader said.

Herbalife gains

Moving to the secondary market, Herbalife’s 12¼% senior secured notes due 2029 continued their upward momentum in the secondary space with buyers lifting the notes to fresh heights on Tuesday.

The 12¼% notes added another 1 to 1¼ points to break above a 99-handle.

They were trading in the 99 7/8 to par 1/8 context heading into the market close.

There was $23 million in reported volume.

While the deal had some pushback during bookbuilding with the credit hairy, the chunky yield helped lift the notes to well above the discounted issue price.

The $800 million issue priced at 97.298 to yield 13% on Friday.

AMC improves

AMC Networks’ 10¼% senior secured notes due 2029 improved in active trade on Tuesday with the notes showing their highest level since pricing.

The notes added about 3/8 to ½ point.

They were trading in the par 7/8 to 101 1/8 context heading into the market close, a source said.

There was $28 million in reported volume.

The notes have performed well since the $875 million issue priced at par on March 26.

However, they have remained on a par-handle since breaking for trade.

VistaJet’s earnings

VistaJet’s senior notes were the major winners on a flat day for the market with the notes jumping 2 to 3 points on the heels of a strong earnings report.

VistaJet’s 6 3/8% senior notes due 2030 (B3/B-) jumped 2½ to 3 points in heavy volume.

The notes were wrapped around 79 heading into the market close with the yield about 11 3/8%, a source said.

There was $21 million in reported volume.

The notes have been on a strong uptrend heading into Tuesday’s earnings release with the notes on a 74-handle last week, a source said.

Fund flows

The dedicated high-yield bond funds sustained $448 million of net daily cash outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $354 million of outflows on the day.

Actively managed high-yield funds sustained $94 million of outflows on Monday.

The combined funds are tracking $551 million of net outflows on the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index added 9 basis points to close Tuesday at 50.17 with the yield 6.94%.

The index slid 2 bps on Monday.

The ICE BofAML US High Yield index was up 17.4 bps with the year-to-date return now 1.188%.

The index added 4 bps on Monday.

The CDX High Yield 30 index was flat on Tuesday to close the day at 106.94.

The index gained 23 bps on Monday.

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