Junk bond pipeline eyed; W&T tucked away; Venture, Transocean flat in active trade

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 13 – The junk bond new issue market was quiet ahead of the holiday weekend.

Meanwhile, the secondary space capped a strong week with an uneventful day with the market sideways in light volume, a source said.

Few were making moves ahead of the long weekend with buyers reluctant to push the market higher and few sellers in the market.

While new paper continued to drive trading activity in the space, W&T Offshore Inc.’s 11¾% senior secured second-lien notes due 2026 (Caa1/B-) were nowhere to be found with the few bonds that did trade well above issue price.

Venture Global Calcasieu Pass, LLC’s 6¼% senior secured notes due 2030 (B2/BB+) were active although with little movement in price.

Transocean Titan Financing Ltd.’s 8 3/8% amortizing senior secured notes due 2028 (B2/B-) were also flat in heavy volume.

Looking ahead

The new issue market is poised to reactivate in the week ahead, possibly in volume not seen in months, sources say.

One trader, in conversations with clients, said that the market is looking for $3 billion to $5 billion of new issue volume in the week ahead.

Names that came up in that conversation included Norwegian Cruise Line Holdings Ltd., NRG Energy Inc. and Nine Energy Service, Inc.

Another trader said there is a buzz in the market that new issue volume during the holiday-abbreviated Jan. 16 week could be substantially above $5 billion.

One name that came up in this source's conversations with clients was the above-mentioned Transocean, which played to big investor demand, last Monday, and is believed to desire to raise another $500 million to $1 billion, should market conditions support such a transaction.

Later in the Friday session a portfolio manager said that Nine Energy, NRG and Transocean are all likely in the week ahead.

W&T tucked away

W&T’s 11¾% senior secured second-lien notes due 2026 were hard to find in the secondary space with the small issue largely tucked away.

The few bonds that did trade during Friday’s session were wrapped around 102, a source said.

W&T Offshore priced a $275 million issue of the 11¾% notes at par on Thursday.

The yield printed at the tight end of the 11¾% to 12% yield talk.

Flat but active

New paper remained active on a low-volume day in the secondary space although the deals to price over the past week had largely leveled off.

Venture Global’s 6¼% senior secured notes due 2030 were marked at par 7/8 bid, 101 3/8 offered on Friday and remained in that context throughout the session, sources said.

There was $15.5 million in reported volume.

While the notes made nominal gains the previous session to break above a par handle, they were largely flat on Friday, a source said.

Venture Global priced a $1 billion issue of the 6¼% notes at par in a Tuesday drive-by.

Transocean’s 8 3/8% amortizing senior secured notes due 2028 also remained active although the notes have been largely range-bound since hitting the secondary space.

The notes remained at 101¾ bid, 102¼ offered in heavy volume on Friday, the level the notes reached shortly after breaking for trade, a source said.

There was $14 million in reported volume.

Transocean priced a $525 million issue of the 8 3/8% notes at par in a Monday drive-by.

Fund flows

High-yield ETFs had $238 million of daily cash inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were modestly negative on the day, sustaining $10 million of outflows on Thursday, the source said.

News of Thursday's daily fund flows trails a Thursday report that the combined funds saw $2.51 billion of net inflows during the week to the Wednesday, Jan. 11 close, according to fund-tracker Refinitiv Lipper.

Indexes

The KDP High Yield Daily index shaved off 3 points to close Friday at 53.44 with the yield 6.83%.

The index rose 27 points on Thursday, 20 points on Wednesday, shaved off 5 points on Tuesday and gained 31 points on Monday.

The index posted a cumulative gain of 70 points on the week.

The ICE BofAML US High Yield index inched up 4.1 basis points with the year-to-date return now 3.905%.

The index rose 52.3 bps on Thursday and 43.7 bps on Wednesday, fell 3.8 bps on Tuesday, and gained 66.4 bps on Monday.

The index posted a cumulative gain of 162.7 bps on the week.

The CDX High Yield 30 index inched up 3 bps to close Friday at 103.

The index rose 46 bps on Thursday and 63 bps on Wednesday after sliding 2 bps on Tuesday and 6 bps on Monday.

The index posted a cumulative gain of 104 bps on the week.

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