Antero, Clear Channel, Garda price; secondary quiet; JBS holds premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 17 – Three issuers completed drive-by deals totaling $2.15 billion during a news-heavy Monday session.

Among them were Clear Channel Outdoor Holdings, Inc., which priced a $1.05 billion issue of eight-year senior notes (Caa2/CCC), and Antero Resources Corp., which sold an upsized $600 million issue of nine-year senior notes.

Meanwhile, it was a quiet day in the secondary space albeit with a slightly weaker tone following last Friday’s “inexplicable,” rally, a source said.

The high-yield secondary space bounced hard off of a recent low last Friday, despite the release of data last week that fueled long-held fears about inflation.

With the market moving in a largely sideways direction over the past few months and credit spreads at all-time tights, the market will break one way or another, a source said.

And the direction may very well be to the downside.

With the market slightly soft at the outset of the week, there were more sellers in the market with paper easier to buy than previously.

Despite the slightly soft tone, demand remained high for new paper with several new deals continuing to rip.

Antero’s new notes were trading with a slight premium on the break.

While the pricing was tight, the new notes were relatively cheap compared to the trading level of the natural gas company’s 7 5/8% senior notes due 2029, which priced in January.

While the notes came in slightly, JBS USA’s 3¾% senior notes due 2031 (Ba1/BB+) continued to trade on a 101-handle during Monday’s session.

Monday’s primary

Three issuers completed drive-by deals totaling $2.15 billion during a news heavy Monday session.

Executions were uniformly tight.

There was also a significant buildup of the active forward calendar.

Of note, Monday's deals came with coupons that seemed comparatively worthy of the name, “high yield.”

The average coupon on Monday was 6.3%.

The session's biggest issuer, Clear Channel Outdoor Holdings walked away with the highest coupon, pricing $1.05 billion of 7½% eight-year senior notes (Caa2/CCC) at par.

The lowest of Monday's coupons was printed on new bonds from Antero Resources, which sold an upsized $600 million issue (from $500 million) of 5 3/8% senior notes due March 2030 (B1/B+), also at par.

Compare that to one week ago, Monday, May 10, when nine tranches cleared the market, and the average coupon was just 3.82%!

DISH DBS Corp. issued that session's highest priced paper, $1.5 billion of 5 1/8% senior notes due June 2029.

That day's most microscopic coupon came on an issue of 2¼% add-on notes due 2026 issued at a premium by T-Mobile USA Inc., to yield an anemic 2.18%.

Antero in focus

Antero’s new 5 3/8% senior notes due 2030 were trading with a slight premium after breaking for trade. The notes were marked at par ¼ bid, par ½ offered, a source said.

The pricing of the notes was tight with the natural gas company’s most recent issue pricing with a 7 5/8% coupon in January.

“This was pretty good financing for them,” a source said. “How do you get a coupon that’s 200 [basis points] better in four months. That’s insane.”

However, the 5 3/8% notes looked cheap compared to the trading level of the 7 5/8% notes, the source said.

The 7 5/8% notes trade on a 109-handle with the yield about 4.95%.

The two issues were “basically the same bond,” with the 2030 notes carrying only a slightly longer duration, the source said.

JBS holds

While the notes were coming in from the heights reached after breaking for trade, JBS USA’s 3¾% senior notes due 2031 continued to trade with a large premium.

The notes were marked at 101 bid, 101¼ offered heading into the market close. They closed out the previous session at 101½.

While JBS’ new notes carried a low coupon and were a longer duration, the company was a solid credit and the business model has protection from investors fear about inflation.

The company is a massive, multi-national food processing company.

“If there’s inflation out there, the cost of food will go up as fast as anything,” a source said.

Friday fund flows

Actively managed high-yield funds sustained a hefty $550 million of outflows on Friday, the most recent session for which data was available at press time, according to a market source.

It was the second consecutive session during which the actively managed funds saw substantial outflows, as it followed the $425 million of outflows those funds saw last Thursday.

High-yield ETFs, however, saw positive cash flows on Friday, with $367 million of inflows on the day, according to the market source.

Indexes mixed

Indexes were mixed at the start of the week.

The KDP High Yield Daily index shaved off 2 points to close Monday at 69.59 with the yield now 3.88%.

The index had a cumulative loss of 16 points on the week last week.

The CDX High Yield 30 index dropped 28 bps to close Monday at 109.44.

The index posted a cumulative loss of 13 bps on the week.

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