Junk bond market closes high-volume week quietly; Six Flags flat; Perenti holds premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 19 – The dollar-denominated primary market idled on Friday, having turned out $8 billion of issuance during the past week, well over 2024’s average weekly issuance of $6.9 billion.

Visibility on business for the week ahead was scant on Friday.

There is one deal on the active forward calendar scheduled to price during the interval.

Brightline East LLC is running a full roadshow for a $1.25 billion offering of senior secured notes due Jan. 31, 2030. Initial guidance has the notes coming to yield 10% to 11%, sources say.

Late in the week the Brightline book was heard to be just over deal-size and clubby, a trader said.

Passover begins Monday, April 22, and will last through April 30.

Sources canvassed on Friday were uncertain about how the holiday might impact new issue business in the week ahead.

Meanwhile, the secondary space had another sideways session on Friday; however, the tone firmed after selling pressure over the past week had dragged returns back into negative territory.

While spreads had held in well amid the rate move, they pushed out over the past week, with spreads hitting their widest levels in more than two months, a source said.

However, the market remains laser-focused on new issues with the majority of deals to price over the past week holding at or above issue price.

Six Flags Entertainment Corp. and Six Flags Theme Parks Inc.’s 6 5/8% senior secured notes due 2032 (Ba2/BB) recovered from some weakness on the break with the notes wrapped around par in heavy volume on Friday.

While Perenti Finance Pty Ltd.’s 7½% senior notes due 2029 (BB/BB+) came in from the heights reached after breaking for trade, they held on to a large premium on Friday.

Six Flags flat

Six Flags’ 6 5/8% senior secured notes due 2032 shook off early weakness and closed the day wrapped around issue price.

While the notes traded as low as 99¾ after breaking for trade on Thursday, they were changing hands in the 99 7/8 to par 1/8 context in active trade on Friday.

The tight pricing left the notes little upside potential, a source said.

Six Flags priced an $850 million issue of the 6 5/8% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 6¾% area.

Perenti in demand

While Perenti’s 7½% senior notes due 2029 came in from the heights reached after breaking for trade, they continued to trade at a strong premium to their issue price.

The 7½% notes were off about ¼ point to trade in the par 3/8 to par 5/8 context on Friday, a source said.

They traded as high as par 7/8 after breaking for trade on Thursday.

Perenti Finance priced a $350 million issue of the 7½% notes at par on Thursday.

The yield printed on top of yield talk.

The deal played to strong demand during bookbuilding with the book size heard to be in excess of $2 billion.

Fund flows

The dedicated high-yield bond funds sustained $286 million of net daily cash outflows on Thursday, according to a market source.

High-yield ETFs had $200 million of outflows on the day.

Actively managed high-yield funds sustained $86 million of outflows on Thursday, the source said.

News of Thursday’s daily flows follows a Thursday afternoon report that the combined funds had $3.7 billion of net outflows in the week to the Wednesday, April 17 close, according to sources.

That was the largest weekly outflow since March 2023, and the seventh outflow in the past 10 weeks, according to the market source.

Indexes

The KDP High Yield Daily index gained 8 bps to close Friday at 49.33 with the yield now 7.35%.

The index shaved off 7 bps on Thursday, added 9 bps on Wednesday and fell 21 bps on Tuesday and 20 bps on Monday.

The index posted a cumulative loss of 31 bps on the week.

The ICE BofAML US High Yield index added 11.4 bps with year-to-date returns now negative 0.231%.

The index was off 5 bps on Thursday, inched up 4 bps on Wednesday and fell 40.7 bps on Tuesday and 27.2 bps on Monday.

The index posted a cumulative loss of 57.5 bps on the week.

The CDX High Yield 30 index added 11 bps to close Friday at 105.35.

The index added 7 bps on Thursday at 105.24 after falling 2 bps on Wednesday after dropping 17 bps on Tuesday and 59 bps on Monday.

The index posted a cumulative loss of 60 bps on the 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.