Junk: Univision, Acuris price; Renewable Energy, Cabinetworks, Herbalife at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 7 – The domestic high-yield primary market continued to churn out deals on Friday.

Univision Communications Inc. priced a $1.05 billion issue of eight-year senior secured notes (B1/B+) and Acuris Finance Sarl priced a $350 million issue of seven-year senior secured notes (B2/B).

The week ahead will begin with a modest forward calendar.

Meanwhile, the secondary space closed Friday on firm footing with the market largely unchanged at the opening but gaining strength as the session progressed.

Several recent deals were putting in strong performances in the secondary space.

After a lackluster break, Herbalife International, Inc.’s 4 7/8% senior notes due 2029 (B1/BB-) gained momentum as Friday’s session progressed with the notes closing the day wrapped around 101.

Victors Merger Corp.’s (Cabinetworks) 6 3/8% senior notes due 2029 (Caa1/CCC+) were also trading at a large premium to their issue price despite their low credit ratings.

Renewable Energy Group Inc.’s 5 7/8% senior secured notes due 2028 (B2/BB) outperformed with the notes rocketing up to a 103-handle.

Friday’s primary

The Friday session saw Univision Communications price its $1.05 billion eight-year senior secured notes (B1/B+) to yield 4½%, 12.5 basis points inside of price talk in the 4¾% area.

The deal was heard to be handsomely oversubscribed on Thursday, at the talk, sources said.

The notes were going out Friday wrapped around 101, according to a bond trader.

Also, Acuris Finance priced a $350 million issue of seven-year senior secured notes (B2/B) at par to yield 5%, at the tight end of talk.

It appeared to be a “clubby” deal, engendering a niche following, and heard to be playing to around $500 million of orders, the trader said.

And late Friday Penn Virginia announced it was deferring its $350 million offering of seven-year senior notes (B/B), which were talked Thursday to yield in the 8¾% area, and scheduled to price Friday.

On Friday morning orders for Penn Virginia's note were heard to amount to two-thirds the size of the deal, a market source said.

The week ahead is set to get underway with a modest active deal calendar in place.

The market appears to be in good shape, the trader said, marking it 1/8 of a point higher on low Friday volume, in spite a major miss in the nonfarm payrolls report.

Of course, weak employment news likely means further stimulus, the trader noted, adding that the U.S. Department of Labor's Friday report may bring about some investor recalibration in the week ahead.

Herbalife gains

After a lackluster break, Herbalife’s 4 7/8% senior notes due 2029 gained momentum during Friday’s session.

The notes were wrapped around par after breaking for trade on Thursday and opened Friday on a par-handle.

However, the notes steadily climbed as the session progressed and closed the day wrapped around 101, according to a market source.

The notes improved alongside the broader market.

Herbalife priced an upsized $600 million, from $500 million, issue of the 4 7/8% notes at par on Thursday.

The yield printed in the middle of price talk in the 4 7/8% area.

Cabinetworks at a premium

Cabinetworks’ 6 3/8% senior notes due 2029 continued to put in a strong performance in the secondary space.

The notes climbed to a 101-handle shortly after breaking for trade and were changing hands in the 101 to 101½ context during Friday’s session, sources said.

Cabinetworks priced a $550 million issue of the 6 3/8% notes at par on Thursday

Pricing came in the middle of yield talk in the 6 3/8% area.

Renewable Energy outperforms

Renewable Energy’s 5 7/8% senior secured notes due 2028 outperformed in the aftermarket with the strong demand seen during bookbuilding following the notes into the secondary space.

The notes were changing hands in the 103½ to 104 context throughout Friday’s session.

In a heavily oversubscribed offering, Renewable Energy priced an upsized $550 million, from $500 million, issue of the 5 7/8% notes at par.

Pricing came tighter than the 6% to 6¼% yield talk.

The deal was heard to be playing to $4.5 billion in orders.

Daily fund flows

High-yield ETFs sustained $157 million of daily cash outflows on Thursday, the most recent session for which data was available at press time, according to market source.

However actively managed high-yield funds were positive on the day, seeing $100 million of inflows on Thursday.

News of Thursday's daily flows followed a Thursday report that the dedicated high-yield bond funds sustained $1.39 billion of net outflows in the week to the Wednesday, May 5 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

The year 2021 continues to run red ink, with the latest weekly flows extending year-to-date outflows from the dedicated high-yield bond funds to $8.7 billion.

Indexes gain

Indexes closed the week on strong footing.

The KDP High Yield Daily index rose 5 points to close Friday at 69.77 with the yield now 3.82%.

The index was up 2 points on Thursday, 4 points on Wednesday, 1 point on Tuesday and 3 points on Monday.

The index posted a cumulative gain of 15 points on the week.

The ICE BofAML US High Yield index was up 10 bps with the year-to-date return now 2.293%.

The index was up 3.4 bps on Thursday and 11 bps on Wednesday, was down 5.8 bps on Tuesday and up 9.6 bps on Monday.

The index posted a cumulative gain of 18.2 bps on the week.

The CDX High Yield 30 index closed Friday at 109.85.

The index dropped 2 bps on Wednesday and 15 bps on Tuesday after gaining 5 bps on Monday.

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