Jane Street, Teva price HY bonds; Mr. Cooper improves; Navient flat; Molina struggles

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 2 – The junk new issue market saw $2.6 billion of dollar-denominated issuance on Tuesday.

Meanwhile, the secondary space was again flat on Tuesday as equities continued to broach all-time highs in the runup to the Federal Reserve Open Market Committee Meeting’s announcement.

New paper was in focus in the secondary space although several recent deals were putting in lackluster performances.

Molina Healthcare, Inc.’s 3 7/8% senior notes due 2032 (Ba3/BB-) were struggling in the aftermarket with the notes trading just shy of par.

However, Mr. Cooper’s 5¾% senior notes due 2031 (B2/B+) improved in active trading with the notes launching the day below par but closing with a premium.

And Navient Corp.’s 5½% senior notes due 2029 (Ba3/B+/BB-) remained stuck at par in active trading.

The latest offering from the financial services provider sparked activity in its capital structure with the company’s 4 7/8% senior notes due 2028 dropping more than 1 point.

Teva upsizes

Teva Pharmaceutical Industries Ltd. priced an upsized $5 billion equivalent amount of sustainability-linked senior notes (Ba2/BB-/BB-) in four bullet tranches, which included $1 billion of 4¾% 5.5-year notes and $1 billion of 5 1/8% 7.5-year notes that priced at par to yield 5 1/8%.

The overall deal size increased from $4 billion equivalent.

The notes in all tranches priced at the tight ends of final talk.

The massive offer was heard to have been playing to $14 billion equivalent of demand, skewed to the euro-denominated tranches, at close of books.

Allocations across all four tranches were expected to amount to 20% to 30% of order sizes.

The bonds were not expected to begin trading until Wednesday morning in Europe, a New York-based trader said.

Molina struggles

Molina Healthcare’s 3 7/8% senior notes due 2032 were struggling to stay above water in the aftermarket.

The 3 7/8% notes were marked at 99¾ bid, par offered during the session – a level the notes have been stuck at since breaking for trade.

There was more than $63 million in reported volume.

While the deal was heard to be well-oversubscribed, the notes carry a low coupon and a long duration.

Given the jitters surrounding rate-sensitive names, especially with the Federal Reserve set to outline bond tapering on Wednesday, the performance of the notes was not surprising.

Molina Healthcare priced a $750 million issue of the 3 7/8% notes at par on Monday.

The yield printed at the tight end of yield talk in the 4% area.

Mr. Cooper improves

Mr. Cooper’s 5¾% senior notes due 2031 improved in active trading on Tuesday with the notes launching the day below par but closing with a premium.

The 5¾% notes traded to a low of 99½ early in Tuesday’s session.

However, the notes improved alongside the broader market and were changing hands in the par ¼ to par ½ context heading into the market close.

Mr. Cooper priced an upsized $600 million, from $500 million, issue of the 5¾% notes at par on Monday.

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

Navient flat

Navient’s 5½% senior notes due 2029 fell flat in the aftermarket. The notes traded in a range of 99 7/8 to par ¼ throughout Tuesday’s session.

They were changing hands in the par to par 1/8 context heading into the market close.

Navient priced an upsized $750 million, from $500 million, issue of the 5½% notes at par on Monday.

The yield printed at the wide end of the 5 3/8% to 5½% yield talk.

The deal sparked activity in Navient’s capital structure with the company’s 4 7/8% notes trading off as a par-to-par result of the new offering.

The 4 7/8% notes dropped more than 1 point to close the day at 99 with the yield on the notes about 5%.

The 4 7/8% notes looked rich compared to Navient’s latest offering, a source said.

$1.01 billion Monday outflows

The high-yield ETFs sustained $1.01 billion of outflows on Monday, the most recent session for which data was available at press time, according to a market source.

The HYG ETF sustained $953 million of that large amount, the source said.

Actively managed funds were also negative on the day, sustaining $45 million of outflows on Monday, the market source said.

Indexes

The KDP High Yield Daily index gained 2 points to close Tuesday at 69.6 with the yield now 3.92%.

The index fell 6 points on Monday.

The CDX High Yield 30 index gained 21 points to close Tuesday at 109.02. The index fell 6 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.