Primary sells $5.8 billion; Party City outperforms; Ryman improves; Cleveland-Cliffs lags

By Paul A. Harris and Abigail W. Adams

Portland, Ore., Feb. 10 – Counting only the straight junk deals, issuers priced a hefty $5.8 billion on a big Wednesday in the new issue market.

Meanwhile, new paper continued to dominate the tape on Wednesday.

As market players awaited the flood of paper expected before the day drew to a close, the deals to price during Tuesday’s session remained active.

Party City Holdco Inc.’s 8¾% senior notes due 2026 (Caa1/CCC) were in focus on Wednesday with the notes climbing to a 102-handle.

Ryman Hospitality Properties, Inc.’s 4½% senior notes due 2029 (B1/B) improved in active trading.

However, Constellium SE’s 3¾% senior notes due 2029 (B2/B) remained wrapped around their issue price and Cleveland-Cliffs Inc.’s two tranches of senior notes were lagging in the aftermarket.

Carnival leads action

Executions continued on the tights.

Some of Wednesday's deals played to massive books, market sources said.

Carnival Corp., coming with its fifth dollar-denominated deal since the end of last March, priced an upsized $3.5 billion issue (from $2.5 billion) of 5¾% six-year senior bullet notes (B2/B+) at par, in the middle of talk.

The deal was heard to be playing to around $7.7 billion of orders at one point on Wednesday.

Trading levels call that amount of demand into question. The bonds initially traded down to 99¾ bid, but got a late lift and went out wrapped around par, traders said.

Prestige Brands Inc. priced an upsized $600 million issue (from $500 million) of 10-year senior notes (B2/B+) at par, at the tight end talk, in a deal heard to have played to at least $4 billion of orders.

Catalent Inc. priced an upsized $550 million issue (from $475 million) of 3 1/8% eight-year senior notes (B1/BB-) at par, at the tight end of talk, in a deal heard to be eight-times oversubscribed (see related stories in this issue).

Party City outperforms

Party City’s 8¾% senior notes due 2026 outperformed in active trading on Wednesday.

The notes climbed to a 102-handle shortly after breaking for trade on Tuesday, which is where they remained in Wednesday’s high-volume activity.

The notes were changing hands in the 102¼ to 102½ context heading into Wednesday’s close, according to a market source.

There was more than $109 million in reported volume.

The deal was driven to the market by reverse inquiry and was expected to perform well, a source said.

Party City priced a $750 million issue of the 8¾% notes at par on Tuesday.

Initial talk had the notes coming with a yield of 9½% to 10%.

Ryman improves

Ryman Hospitality’s 4½% senior notes due 2029 improved in active trading on Wednesday after falling flat after breaking for trade the previous session.

The 4½% notes gained about 3/8 point and stood poised to close the day at par 7/8, according to a market source.

There was more than $49 million in reported volume during Wednesday’s session.

The 4½% notes were marked at par ½ bid after breaking for trade on Tuesday.

Ryman priced an upsized $600 million, from $400 million, issue of the 4½% notes in a Tuesday drive-by.

The yield printed at the tight end of the 4½% to 4¾% yield talk.

Constellium flat

Constellium’s 3¾% notes fell flat in the aftermarket, a product of the notes’ tight pricing, sources said.

The 3¾% notes were wrapped around par heading into the market close, which is largely where they have remained since breaking for trade.

There was more than $35 million in reported volume during Wednesday’s session.

Constellium priced a $500 million issue of the 3¾% notes at par on Tuesday.

The yield printed at the tight end of the 3¾% to 4% yield talk.

Cleveland-Cliffs lags

Cleveland-Cliffs’ two tranches of senior notes were lagging their issue prices in the aftermarket.

The 4 5/8% notes due 2029 and 4 7/8% senior notes due 2031 were marked at 99 bid, 99½ offered after breaking for trade on Tuesday, according to a market source.

While volume was light, they remained underwater on Wednesday.

“It wasn’t a good deal. They priced too tight,” a source said.

Cleveland-Cliffs priced a $500 million issue of the 4 5/8% notes and a $500 million issue of the 4 7/8% notes at par on Tuesday.

The 4 5/8% notes priced at the tight end of yield talk in the 4¾% area; the 4 7/8% notes priced at the tight end of yield talk in the 5% area.

Sizable Tuesday outflows

The dedicated high-yield bond funds sustained a sizable $700 million of net outflows on Tuesday, the latest session for which data was available at press time, according to a market source.

High-yield ETFs saw $575 million of outflows on the day.

Actively managed high-yield funds sustained $125 million of outflows on Tuesday, the source said.

Indexes gain

Indexes were on the rise on Wednesday.

The KDP High Yield Daily index rose 6 points to close Wednesday at 69.86 with the yield now 3.74%.

The index gained 5 points on Tuesday and 7 points on Monday.

The ICE BofAML US High Yield index rose 6.3 bps on Wednesday with the year-to-date return now 1.354%.

The index was up 6.9 bps on Tuesday and 13.3 bps on Monday.

The CDX High Yield 30 index gained 10 points to close Wednesday at 109.51.

The index fell 19 points on Tuesday and was up 11 points on Monday.

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