Junk starts week strong; Antero, Clear Channel at a premium; Garda lags; Macy’s pops

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 18 – Subdued activity was rumored as a possibility in the May 17 week, however that expectation already looks to be at odds with reality.

Another $5.4 billion face amount of new paper cleared the high-yield market on Tuesday.

Meanwhile, the secondary space was slightly firmer on the day after a soft start to the week.

However, trading volume remained muted with little activity from ETFs, a source said.

The market also weakened slightly as accounts began to sell to make room for the deluge of new paper on deck.

New paper continued to dominate the tape although the bonds followed different trajectories.

Antero Resources Corp.’s 5 3/8% senior notes due 2030 (B1/B+) continued to gain momentum in active trading.

Clear Channel Outdoor Holdings, Inc.’s 7½% senior notes due 2029 (Caa2/CCC) were also trading with a slight premium to their issue price.

However, Garda World Security Corp.’s 6% senior notes due 2029 (Caa2/CCC+) struggled with the notes dropping below par.

Outside of recent issues, Macy’s, Inc.’s capital structure popped after the department store chain crushed expectations with its first-quarter earnings report.

Primary

As with the week before, the May 17 week is off to a big start.

A $5.4 billion face amount of junk cleared the new issue market on Tuesday, in a mix of drive-bys and deals that had been in the market overnight.

It follows Monday's $2.15 billion, with the two sessions coming slightly less than $2 billion below the $9.45 billion seen on Monday and Tuesday, May 10 and 11.

The active new issue calendar also saw a modest buildup (see related stories in this issue).

Antero gains

Antero’s 5 3/8% senior notes due 2030 continued to gain momentum in the secondary space. The notes rose about ½ point.

They were marked at par ¾ bid, par 7/8 offered heading into the market close. There was $66 million in reported volume.

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

The yield printed at the tight end of the 5 3/8% to 5½% yield talk, which tightened from earlier talk for a yield of 5½% to 5¾%.

Clear Channel at a premium

Clear Channel’s 7½% notes due 2029 were performing “surprisingly okay,” in high-volume activity, a source said.

The notes were marked at par ½ bid, par ¾ offered.

There was more than $119 million in reported volume.

Clear Channel priced a $1.05 billion issue of the 7½% notes at par on Monday.

The yield printed at the tight end of the 7½% to 7¾% yield talk.

Garda lags

Garda’s 6% senior notes due 2029 were lagging their issue price on Tuesday. While the notes broke at par, they did not hold and quickly sank below.

The notes were marked at 99 3/8 bid, 99½ offered heading into the market close with lots of offers in the market, a source said.

There was about $40 million in reported volume.

Garda priced a $500 million issue of the 6% notes at par on Monday.

The yield printed at the tight end of yield talk in the 6% area.

Macy’s pops

Macy’s capital structure popped on Tuesday with its junk bonds gaining 2 to 4 points after first-quarter earnings smashed expectations.

The department store retailer’s 5 1/8% senor notes due 2042 rose 4½ points to close the day at 91½.

The 6 3/8% senior notes due 2037 also gained about 4½ points to close the day at 103¼.

The 4.3% notes were up 2¾ points to 82¼. The 4½% senior notes due 2034 were up 1¾ points to 93½.

Macy’s earnings beat “across the board,” a source said.

The company reported a surprise profit of $103 million compared to a loss of $3.6 billion in the first quarter of 2020.

Revenue grew to $4.71 billion versus expectations for revenue of $4.37 billion.

The company also raised its guidance for 2021 to between $21.73 billion and $22.23 billion versus previous guidance of $19.75 billion to $20.75 billion.

Active: $565 million outflows

The actively managed high-yield funds sustained $565 million of outflows on Monday, the most recent session for which data was available at press time, according to a market source.

It was the third consecutive substantial outflow in a row for the asset managers, following last Friday's $550 million outflow and last Thursday's $425 million outflow.

High-yield ETFs saw positive flows on Monday, with $737 million of inflows on the day, the source said.

The combined funds are tracking $1.4 billion of net outflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes mixed

Indexes remained mixed on Tuesday.

The KDP High Yield Daily index shaved off 1 point to close Tuesday at 69.58 with the yield now 3.9%. The index was down 2 points on Monday.

The CDX High Yield 30 index dropped 16 bps to close Tuesday at 109.28.

The index was down 28 bps on Monday.

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