Pilgrim’s Pride leads busy Thursday; Royal Caribbean in focus, improves; Solaris on a 102-handle

By Paul A. Harris and Abigail W. Adams

Portland, Ore., March 25 – The primary market churned out five deals for $3.15 billion face amount of new paper on Thursday, including a $1 billion issue from Pilgrim's Pride Corp.

Meanwhile, it was another sideways day in the secondary space with the high-yield market largely unaffected by the volatility in equities.

Demand for new paper remained strong with several recent deals well bid, largely due to exchange-traded funds, which were major buyers, a source said.

While several recent deals were putting in strong performances in the aftermarket, Royal Caribbean Cruises Ltd.’s 5½% senior notes due 2028 (B2/B) were not among them.

The notes were under water at the start of Thursday’s session; however, they gained momentum and popped above par as the session progressed.

While the issue was small, Alta Equipment Group Inc.’s 5 5/8% senior secured second-lien notes due 2026 were active with the notes trading with a strong premium to their issue price.

And Solaris Water Midstream LLC’s 7 5/8% senior notes due 2026 (B3/B) outperformed with the notes trading up to a 102-handle.

Meanwhile, high-yield mutual and exchange-traded funds continued to have outflows with $1.378 billion leaving the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Thursday primary

A busy Thursday in the new issue market saw five issuers clear the market with a $3.15 billion face amount of junk in five dollar-denominated tranches.

The primary market continues to perform like a well-oiled machine.

Three of Thursday's five issuers upsized their deals.

Executions were solid, with three tranches pricing at the tight end of talk, while the other two priced in the middle.

Notable among the day's transactions was Pilgrim's Pride Corp. $1 billion issue of 4¼% 10-year sustainability-linked senior notes (B1/BB+/BB+) which priced at 98.994 to yield 4 3/8% in a drive-by.

The yield printed in the middle of yield talk.

The 10-year notes feature a coupon that would step-up by 25 basis points per year if the issuer fails to meet the sustainability performance target as verified by a source external to the company.

Meanwhile, three issuers are on deck for Friday.

Royal Caribbean improves

Royal Caribbean Cruises’ 5½% senior notes due 2028 were gaining momentum in high-volume activity on Thursday after a lackluster break.

The 5½% notes opened Thursday at 99¼ bid, 99¾ offered, a source said.

However, they improved as the session progressed and were marked at par bid, par ¼ offered heading into the market close.

The notes dominated activity in the secondary space with almost $200 million in reported volume during Thursday’s session.

Royal Caribbean priced an upsized $1.5 billion, from $1.25 billion, issue of the 5½% notes at par on Wednesday.

Pricing came at the tight end of the 5½% to 5¾% yield talk.

Royal Caribbean’s most recent deal is the third time the cruise line operator has tapped the high-yield market since the pandemic caused it to cease operations about one year ago.

Alta at a premium

Alta Equipment Group’s ’s 5 5/8% senior secured second-lien notes due 2026 were trading with a healthy premium to their issue price in active trading on Thursday.

The 5 5/8% notes were wrapped around 101 for the majority of the session.

While the issue was small, the notes were active with $36 million in reported volume.

Alta priced an upsized $315 million, from $300 million, issue of the 5 5/8% notes on Wednesday.

Pricing came inside of the 5¾% to 6% yield talk.

Solaris on a 102-handle

Solaris Water Midstream’s 7 5/8% senior notes outperformed in the secondary space with the notes trading up to a 102-handle.

The 7 5/8% notes were marked at 102 bid, 102¼ offered heading into the market close, a source said.

There was more than $35 million in reported volume.

The deal was heavily oversubscribed and offered a nice coupon, a source said.

Solaris priced a $400 million issue of the 7 5/8% at par on Wednesday.

Pricing came deep inside of the 8% to 8¼% early guidance.

The deal was heard to be playing to $1.9 billion of demand.

Indexes mixed

Indexes were again mixed on Thursday.

The KDP High Yield Daily index slid 2 points to close the day at $69.10 with the yield now 4.21%.

The index rose 9 points on Wednesday, 12 points on Tuesday and 5 points on Monday.

The ICE BofAML US High Yield index slid 2 bps with the year-to-date return now 0.556%.

The index added 18.3 bps on Wednesday, 13.2 bps on Tuesday and 30.2 bps on Monday.

The CDX High Yield 30 index gained 13 bps to close Thursday at 108.5.

The index was down 4 bps on Wednesday and 31 bps on Tuesday after gaining 17 bps on Monday.

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