Avis, Simmons Foods price; KAR Auction down post-earnings; Northern Oil sell-off accelerates

By Paul A. Harris and Abigail W. Adams

Portland, Ore., Feb. 17 – The high yield drive-through window reopened on Wednesday as two issuers well known to the market saw tight executions with deals that played to big books.

Simmons Foods Inc. and Avis Budget Car Rental, LLC both completed deals over the day.

Meanwhile, the secondary space was largely unchanged on Wednesday although volume was relatively light amid a slowdown in the forward calendar.

Recent issues and earnings-related news were the main drivers of trading activity on Wednesday.

Carnival Corp.’s 5¾% senior notes due 2027 (B2/B+) remained active with the notes trading off their lows and again brushing against par.

KAR Auction Services Inc.’s 5 1/8% senior notes due 2025 were trading down following disappointing earnings.

The sell-off in Northern Oil and Gas, Inc.’s recently priced 8 1/8% senior notes due 2028 (Caa1/B/B) accelerated on Wednesday with the notes now several points below their issue price, despite continued gains in crude oil futures.

Wednesday primary

Simmons Foods priced an upsized $850 million issue (from $750 million) of 4 5/8% eight-year senior secured second-lien notes (B3/B) at par, 12.5 basis points inside of talk, in a deal heard to have played to $4.8 billion of orders, with $800 million of it done in reverse inquiry.

Avis Budget Car Rental, LLC also drove through, pricing a $600 million issue of 5 3/8% eight-year senior notes (B3/B) at par, on the tight end of talk. The deal was heard to play to $3 billion of demand.

Meanwhile, completing an offer that was in the market overnight, Vista Outdoor Inc. priced an upsized $500 million issue (from $350 million) of 4½% eight-year senior notes (B3/B+) at par, in the middle of talk.

Timing was accelerated, as the deal had previously been scheduled to remain in the market until Thursday.

An American issuer also raised cash in the euro junk market.

Danbury, Conn.-based Iqvia Holdings Inc. priced €1.45 billion of senior notes (Ba3/BB) in two tranches, €550 million of 1¾% five-year notes that priced at par, 25 bps inside of talk, and €900 million of 2¼% eight-year notes that priced at par, 12.5 bps inside talk.

Carnival improves

Carnival’s recently priced 5¾% senior notes due 2027 continued to trade in heavy volume in the secondary space with the notes improving.

The 5¾% notes were up about ½ point and stood poised to close the day at 99 7/8, according to a market source.

There was more than $70 million in reported volume.

The notes have been under pressure since the cruise line operator priced a $3.5 billion issue of the 5¾% notes at par on Feb. 10.

The notes quickly fell below par and closed Tuesday at 99 3/8.

KAR trades off

KAR Auction’s 5 1/8% senior notes due 2025 were trading down on Wednesday following a disappointing earnings report.

The notes were down more than 1 point and stood poised to close the day in the 101¾ to 102 context.

There was more than $20 million of the bonds on the tape.

“It’s a reaction to their earnings,” a source said.

KAR’s senior notes were trading off after the company reported a 21% year-over-year decrease in revenue and a loss per share of 1 cent versus analyst expectations for earnings per share of $0.28.

In addition, the company gave disappointing guidance.

Northern Oil sell-off quickens

The sell-off in Northern Oil’s 8 1/8% senior notes due 2028 accelerated on Wednesday with the notes sinking further below par despite gains in crude oil futures.

The 8 1/8% notes dropped another 1½ points.

They were changing hands in the 97¾ to 98¼ context heading into the market close, according to a market source.

There was more than $13 million in reported volume during the session.

The 8 1/8% notes initially performed well and traded as high as 102 after breaking for trade on Feb. 8.

However, they have steadily traded down since.

The sell-off in Northern Oil comes on a strong day for WTI crude oil futures, which settled at $61.14, an increase of $1.09 or 1.82%.

$235 million Tuesday outflows

The dedicated high-yield bond funds had $235 million of net outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $305 million of outflows on the day.

Actively managed funds, meanwhile, were positive on the day, posting $70 million of inflows on Tuesday, the source said.

Indexes mixed

Indexes were again mixed on Wednesday.

The KDP High Yield Daily index gained 4 points to close the day at 69.88 with the yield now 3.73%.

The index was up 1 point on Tuesday.

The ICE BofAML US High Yield index shaved off 4.3 bps with the year-to-date return now 1.367%.

The index rose 2.5 bps on Tuesday.

The CDX High Yield 30 index dropped 5 bps to close Wednesday at 109.33.

The index dropped 8 bps on Tuesday.

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