High yield: CQP prices; secondary quiet, unchanged; Park River on a par-handle

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 27 – In the high-yield primary market on Thursday all eyes were on CQP as the holding company of Houston-based LNG supplier Cheniere Energy Partners priced a prominent issue.

Meanwhile, the secondary space was quiet heading into the holiday weekend with volume light and little movement in the names that did trade.

“It’s extremely quiet. It’s like it’s Friday,” a source said. With Friday’s early close, tomorrow’s session is expected to be even quieter.

Recent issues continued to dominate the tape.

Park River Holdings Inc.’s 6¾% senior notes due 2029 (Caa1/CCC/CCC+) continued to trade on a par-handle.

Bausch Health Cos., Inc.’s 4 7/8% senior secured notes due 2028 (Ba2/BB) were in focus with the notes bouncing off their lows from the previous session.

DT Midstream’s two tranches of senior notes remained active although with little movement in price.

With the flood of new deals slowing down, there was an uptick of activity in outstanding issues.

Carnival Corp.’s 5¾% senior notes due 2027 (B2/B+) were nominally improved in active trading.

AMC Entertainment Holdings, Inc.’s 12% second-lien senior secured notes due 2026 (Ca/C) continued their rally with the notes up more than 6 points on the week.

Thursday primary

On Thursday CQP Holdco LP and BIP-V Chinook Holdco LLC priced $1.4 billion of 5½% 10-year senior secured notes (expected ratings B2/B) at par, at the wide end of talk, and in line with initial guidance.

The issue size decreased from $1.5 billion, with $100 million of proceeds shifted to the term loan. Earlier the notes offer increased to $1.5 billion from $1 billion, reflecting the earlier $500 million shift of proceeds to the notes from the loan.

Earlier Thursday demand for the loan was heard to be right around that deal's final size, a trader said.

As to the bonds, color on demand was proving more difficult to come by, the source added.

The bonds, which were privately placed, are expected to become immediately available to investors by means of a deposit/withdrawal at custodian (DWAC) transaction in which investors will be required to wire funds into the Depository Trust Company, whereupon the bonds will be delivered, and will immediately be tradable as Rule 144A securities.

There should be no constraints on how the notes trade, the source added. For example, should an investor be motivated to flip the bonds, nothing aside from market conditions should impede such a transaction.

However, some investors expressed apprehensions about the bond deal on Thursday, the trader noted.

Coming as a true private late in a pre-holiday week, the notes will break into an illiquid high-yield market, at best, because some market participants will be taking Friday off, ahead of the extended Memorial Day weekend.

Others, who do come to work, will only be in for a few hours, the trader added.

Also on Thursday Conduent postponed its $750 million offering of eight-year senior secured notes (B1/BB-).

Price talk of 5½% to 5¾%, wide to initial guidance in the low-to-mid 5% area, surfaced on Wednesday.

The Florham Park, N.J.-based business process services company stated that its decision not to go forward with its bank debt refinancing deal (the company also withdrew a $750 million term loan) was based on the combination of deal structure and market conditions, and added that it was postponing in order to pursue a more optimal outcome at a later point in time (see related stories in this issue).

Conduent's offer was the first postponed high-yield deal since Vericast Corp. pulled its $1.775 billion two-part secured notes offer from the market in early March.

An abbreviated, pre-holiday Friday will get underway with no business on the active new issue calendar.

Chances of any new issue business being announced ahead of Friday's early close are slim, market sources say.

Park River on a par-handle

Park River’s 6¾% senior notes due 2029 failed to move too far beyond their issue price with the notes remaining on a par-handle on Thursday.

The notes continued to change hands in the par to par ½ context heading into the market close, according to a market source.

There was about $20 million in reported volume.

Park River priced a $340 million issue of eight-year senior notes (Caa1/CCC/CCC+) at par to yield 6¾% on Wednesday.

The yield printed in the middle of yield talk in the 6¾% area.

Active

Several recent issues remained active in the secondary space.

Bausch Health’s 4 7/8% senior secured notes due 2028 were among the most actively traded issues during Thursday’s session with the notes bouncing off of Wednesday’s lows.

The 4 7/8% notes again traded up to the par 5/8 to par 7/8 context after trading as low as par ¼ on Wednesday, a source said.

There was more than $48 million in reported volume.

Bausch Health priced a $1.6 billion issue of the 4 7/8% senior secured notes at par in a Monday drive-by.

While the notes traded as high as 101 7/8 on the break, they have steadily come in, largely due to the amount of new paper that flooded the space over the past few sessions.

However, with the new-deal faucet turning off, the notes were firming.

DT Midstream’s two tranches were also active although with little movement in price.

The 4 1/8% senior notes due 2029 and the 4 3/8% senior notes due 2031 stood poised to close the day at par ½.

Each tranche saw about $30 million in reported volume.

DT Midstream priced a $1.1 billion tranche of the 4 1/8% notes and a $1 billion tranche of the 4 3/8% notes at par on Tuesday.

Reopening trade

With new issue activity slowing down, there was an uptick in activity in some outstanding issues with the reopening trade coming back into favor.

Carnival’s 5¾% senior notes due 2027 were nominally improved with the notes up about 3/8 point to close the day at 106½.

AMC’s 12% senior notes due 2026 continued their upward momentum in active trading. The notes rose another 2¼ points to close the day at 97¾.

The notes have gained about 6½ points on the week since the movie chain operator priced a secondary equity offering.

While the secondary equity offering increased the company’s liquidity, which is a positive for the bonds, sources continued to question the company’s fundamentals.

“I just don’t see how they’re going to survive with this amount of debt with these kinds of coupons,” a source said.

Indexes gain

Indexes were on the rise on Thursday.

The KDP High Yield Daily index was up 6 points to close the day at 69.5 with the yield now 3.91%.

The index was flat on Wednesday and Tuesday and shaved off 1 point on Monday.

The CDX High Yield 30 index rose 15 bps to close Thursday at 109.6. The index was unchanged on Wednesday, fell 10 bps on Tuesday and rose 15 bps on Monday.

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