Transocean, Endo, EquipmentShare.com price; cruise names dip; funds lose $476.4 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 11 – A busy session in the high-yield new issue market saw three issuers price a combined four tranches of notes to raise an overall total of $3.4 billion.

Two of the three issuers upsized their placements while one downsized.

All four tranches saw sharp executions that brought them at the tight ends of talk.

In drive-by action, Transocean Inc., known by its stock ticker, RIG, priced an upsized $1.8 billion amount (from $1.5 billion) of priority guaranteed notes (Caa1/B-) in two tranches.

The deal included a $900 million tranche of 8¼% five-year notes and a $900 million tranche of 8½% seven-year notes.

Both priced at par.

Demand was heard to be $5.6 billion across both tranches.

At the conclusion of a roadshow, Endo Finance Holdings, Inc. priced a downsized $1 billion issue (from $1.25 billion) of 8½% seven-year senior secured notes (B2/B+) at par.

The heavily oversubscribed issue was trading at 101 3/8 bid, 101¾ bid offered late Thursday afternoon after trading as high as 101 7/8 earlier in the afternoon, a trader said.

The $250 million downsize amount, which was shifted to the concurrent term loan B, increased the loan size to $1.5 billion from $1.25 billion.

And EquipmentShare.com, Inc. priced an upsized $600 million issue (from $500 million) of 8 5/8% eight-year senior secured second-lien notes (B3/B) at par.

The issue priced on an accelerated timeline. When announced Thursday morning, it was scheduled to remain in the market until Friday.

Meanwhile, it was another soft day in the secondary space. The market was off another 1/8 to ¼ point with the latest round of macro data continuing to call into question the Fed’s rate cut path.

The Producer Price Index report released on Thursday came in softer than expected on a monthly basis, which came as a relief to the market after Wednesday’s hot Consumer Price Index report, a source said.

However, the PPI print still logged a large annual gain, and the weekly jobless claims came in below expectations, reflecting the resilience of the labor market.

Treasuries were flat on Thursday after the large jump in yields the previous session as markets priced out a June rate cut.

However, the macro data continued to feed into doubts about the number of rate cuts to expect in 2024, a source said.

The secondary space was quiet as markets awaited the deals in the pipeline to break for trade.

Taseko Mines Ltd.’s 8¼% senior secured notes due 2030 (B3/B-/B-) and Vistra Operations Co. LLC’s 6 7/8% senior notes due 2032 (Ba2/BB/BB) remained active, although with little movement in price.

The cruisers were also active with Carnival Corp.’s 6% senior notes due 2029 (B3/BB-) and Royal Caribbean Cruises Ltd.’s 6¼% senior notes due 2032 (Ba2/BB+) dipping alongside the broader market.

High-yield mutual funds and exchange-traded funds saw their second consecutive week of outflows with $476.4 million leaving the space in the week through Wednesday’s close.

Active

New and recent issues continued to drive volume on Thursday with Taseko’s 8¼% senior secured notes due 2030 and Vistra’s 6 7/8% senior notes due 2032 active in the space.

However, the notes saw little movement pricewise with Taseko’s notes trading with a premium while Vistra’s remained below issue price.

Taseko’s 8¼% notes remained in the par ½ to 101 context, a source said.

There was $21 million in reported volume.

While the notes were off about ¼ point from the heights reached after breaking for trade, they maintained their premium despite a soft day for the market.

The $500 million issue priced at par on Tuesday.

Vistra’s 6 7/8% notes continued to trade below issue price, a level dropped to in the heavy selling of Wednesday’s session.

The notes remained in the 99½ to par context, a source said.

There was $17 million in reported volume.

Vistra priced the $1 billion issue at par on Tuesday.

Cruisers dip

Cruise line operators were active on the tape on Thursday with the notes dipping on another soft day for the market.

Carnival’s 6% senior notes due 2029 were off about ¼ point.

The notes were wrapped around 97 with the yield about 6¾%, a source said.

There was $24 million in reported volume.

Royal Caribbean’s 6¼% senior notes due 2032 were off about ½ point.

The notes were trading at 99¼ with the yield about 6 3/8%, a source said.

There was $16 million in reported volume.

Indexes

The KDP High Yield Daily index was off 6 basis points to close Thursday at 49.71 with the yield now 7.18%.

The index fell 40 bps on Wednesday, added 9 bps on Tuesday and slid 2 bps on Monday.

The ICE BofAML US High Yield index was down 18.8 bps with the year-to-date return now 0.47%.

The index fell 52.3 bps on Wednesday, was up 17.4 bps on Tuesday and was up 4 bps on Monday.

The CDX High Yield 30 index was down 13 bps to close Thursday at 106.23.

The index sank 58 bps on Wednesday, was flat on Tuesday and gained 23 bps on Monday.

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