TKC Holdings, ION Trading price; MSCI gains; Cogent at a premium; Mavis under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 3 – In a deal held over the weekend, having undergone revisions, covenant changes and widening talk last week, TKC Holdings, Inc. priced an upsized $1.1 billion of junk in two tranches on Monday.

And ION Trading Technologies Sarl priced a $450 million issue of seven-year senior secured notes

Meanwhile, the secondary space was slightly improved on Monday although volume remained light with focus on the forward calendar and earnings, sources said.

Recent issues continued to dominate the tape, although they followed different trajectories.

While pressure remains on low-coupon, high-duration bonds, MSCI Inc.’s split-rated 3 5/8% senior notes due 2031 (Ba1/BB+/BBB-) bucked the trend with the notes continuing to improve in active trading.

Cogent Communications Group, Inc.’s 3½% senior notes due 2026 (Ba3/BB) were also trading with a healthy premium in the aftermarket.

However, despite their large coupon, Mavis Tire Express Services’ 6½% senior notes due 2029 (Caa2/CCC) saw a lackluster reception in the secondary space with the notes, at times, lagging their issue price.

Meanwhile, outside of recent issues, PBF Holding Co. LLC/PBF Finance Corp.’s 9¼% senior secured notes due 2025 (Ba3/BB/BB) continued to rip with the notes rising to a 105-handle.

Monday pricings

In a deal held over the weekend, having undergone revisions, covenant changes and widening talk last week, TKC Holdings priced an upsized $1.1 billion of junk in two tranches on Monday.

The yield printed in the middle of yield talk in the 5¾% area.

The deal, which was upsized from $700 million, saw a $25 million shift of proceeds to the secured notes from the unsecured notes.

An upsized $425 million amount (from $400 million) of 6 7/8% seven-year senior secured first-lien notes (B1/B) priced at par, in the middle talk.

A downsized $675 million amount (from $700 million) of 10½% eight-year senior unsecured notes (Caa2/CCC) priced at par, at the wide end talk.

Meanwhile, ION Trading Technologies priced a $450 million issue of seven-year senior secured notes (B3/B) at par to yield 5¾% on Monday, according to an informed source.

There were several roadshow announcements on Monday. The session finished with a $7.3 billion active new issue calendar, all of it expected to clear before the middle of the month.

Friday cash flows

The cash flows of the dedicated high-yield funds were slightly negative on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $87 million of outflows on the day.

Actively managed high-yield funds sustained $5 million of outflows on Friday, the source said.

MSCI gains

MSCI’s split-rated 3 5/8% senior notes due 2031 bucked the recent trend of low-coupon, long-duration notes falling flat in the aftermarket.

After a strong break, the notes continued their upward momentum in active trading on Monday.

The notes were up about ½ point to 101 bid, 101½ offered heading into the close, a source said.

While the notes fit the category of bonds that have fallen out of favor with investors, the financial data analytics company is from the tech sector.

“Investors feel very comfortable with the tech sector, they give those bonds more leeway,” a source said.

MSCI priced an upsized $600 million, from $500 million, issue of the 3 5/8% notes at par on Friday.

The yield printed tighter than the 3¾% to 4% yield talk.

Cogent at a premium

Cogent’s 3½% senior notes due 2026 were also trading with a healthy premium in the aftermarket despite their low coupon.

The 3½% notes were marked at par ¾ bid, 101 offered heading into Monday’s close.

While the coupon was low, the notes were “in a sweet spot,” with a short five-year duration, a source said.

Cogent priced a $500 million issue of the 3½% notes at par on Friday.

Pricing came in the middle of yield talk in the 3½% area.

Mavis under pressure

While several recent deals were putting in solid performances in the aftermarket, Mavis Tire’s 6½% senior notes due 2031 were struggling.

The notes were marked at par ¾ bid, par offered heading into the market close, according to a market source.

Allocations of the notes were weak with several flippers involved in the deal, a source said.

Hedge players were also shorting the notes with the sentiment that the leveraged buyout deal had weak covenants.

Mavis Tire priced a $720 million issue of the 6½% notes at par on Friday.

Pricing came in the middle of yield talk in the 6½% area.

Proceeds will be used to fund the leveraged buyout of Mavis Tire by an investor group led by BayPine LP and TSG Consumer Partners LP.

PBF gains continue

PBF Energy’s 9¼% senior secured notes due 2025 continued their upward momentum on Monday with the notes hitting a 105-handle.

The 9¼% notes gained another 1 point on Monday and were marked at 105 bid, 105 ¾ bid heading into the market close.

The once-struggling notes from the petroleum refiner have been on a tear since the company reported better-than-expected first quarter earnings the previous week.

The notes have staged several remarkable rebounds over the past six months.

They were trading in the mid-80s in November 2020 with the company’s future prospects in doubt heading into its third-quarter earnings report.

They popped following earnings and traded as high as 103 only to again sink below par in mid-February.

The notes were stuck in the mid-90s and would succumb to selling pressure every time they approached par, a source said.

However, once the 9¼% notes broke through the par resistance they have steadily climbed higher with positive earnings fueling the upward momentum.

Indexes gain

Indexes launched the week with nominal gains.

The KDP High Yield Daily index rose 3 points to close Monday at 69.65 with the yield now 3.86%.

The index posted a cumulative gain of 8 points on the week last week.

The CDX High Yield 30 index gained 5 bps to close Monday at 109.92.

The index posted a cumulative gain of 22 bps on the week last week.

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