Crown Americas prices; Carpenter holds on weak day; Occidental down with oil; Macy’s sinks

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 14 – Crown Americas LLC appeared to get a good execution on what one trader characterized as the worst day in high-yield in a long time, with some sectors down two points to three points, and not a lot of offers out there on Monday.

Crown priced a $500 million issue of eight-year senior bullet notes (Ba3/BB-) at par to yield 5¼% in a Monday drive-by.

Meanwhile, selling pressure resumed in the secondary space with the cash bond market down ¾ to 1 point as credit spreads continued to widen with the 10-year Treasury yield climbing over 145 bps in a single session.

The market is widely expecting a 25 bps rate hike on Wednesday; however, there is growing anxiety about the future course of monetary policy and its impact on the economy.

Recession fears were beginning to take hold in the market, a source said.

While the overall market was weak on Monday, Carpenter Technology Corp.'s 7 5/8% senior notes due 2030 (B2/BB+/BB) continued to hold at par although they gave back their early gains.

Occidental Petroleum Corp.’s 3½% senior notes due 2029 (Ba2/BB+) also gave back some of the gains seen since crude futures began their meteoric rise as futures continued to come in during Monday’s session.

Selling in Macy's Retail Holdings LLC’s recently priced tranches accelerated on Monday with the tranches losing more than 2 points in active trading.

Recession fears

It was a heavy start to the week in the high-yield secondary space on Monday as credit spreads continued to blow out amid rising anxiety over the Federal Reserve’s Wednesday’s announcement.

The cash bond market was down ¾ to 1 point as selling pressure mounted, sources said.

Bids-Wanted-In-Competition lists outnumber Offers-Wanted-In-Competition lists 4 to 1, a source said.

Treasuries saw a huge move with the 10-year Treasury yield skyrocketing 145 bps in a single session to close the day at a multi-year high of 2.144%.

“If you were a buyer, today was your day. You could have gotten anything you wanted,” a source said.

While Russia’s military offensive grinds on in the Ukraine, the market is refocusing on the domestic economic outlook and there is cause for concern, a source said.

The market has largely priced the Federal Reserve announcing a 25 bps rate hike on Wednesday.

However, there is growing anxiety about the language surrounding the Federal Reserve’s decision and the future path of monetary tightening.

Historically, rate hikes have resulted in a recession, a source said.

With the current inflationary figures, the market is beginning to recognize that the Federal Reserve may have no other option than to drive the economy into a recession.

Carpenter holds

Carpenter Technology’s 7 5/8% senior notes due 2030 were holding above water despite a heavy day for the market.

The 7 5/8% notes were wrapped around par heading into the market close.

They traded as high as a 101-handle on the break but “came back down to earth,” a source said.

The small issue carried a hefty coupon and priced cheap compared to the index, sources said.

Carpenter priced a $300 million issue of the 7 5/8% notes at par on Friday.

The yield printed in the middle of the 7½% to 7¾% yield talk.

Occidental down

Occidental’s 3½% senior notes due 2029 gave some of their gains since oils meteoric rise as futures continued to come in.

The 3½% notes sank 1½ points in high-volume activity.

The notes were changing hands at 97½ heading into the market close, a source said.

There was $23 million in reported volume.

Crude oil futures continued to come in on Monday after its meteoric rise the previous two weeks.

WTI crude oil futures sank $6.32 or 5.78% to settle at $103.01. Brent crude oil futures fell $6.80 or 6.04% to settle at $105.87.

The 3½% notes were among the benefactors of crude oil futures meteoric rise in early March with WTI crude peaking on March 8 at $123 a barrel.

The notes jumped more than 5 points to top par as crude oil futures gained.

However, they have been on a downward trajectory as oil futures have come in.

The 3½% notes are also rate sensitive and were under added pressure from the move in Treasuries.

Macy’s drops

Selling accelerated in Macy’s recently priced tranches, which sank more than 2 during Monday’s session.

Macy’s 6 1/8% senior notes due 2032 fell 2½ points to a 96-handle.

They were changing hands in the 96½ to 96¾ context heading into the market close.

There was $16 million in reported volume.

Macy’s 5 7/8% senior notes due 2030 fell 2¼ points with the notes wrapped around 96 5/8 at the market close.

Monday’s session marked a new low for the recently priced tranches which performed well their initial days in the market.

However, the notes have been on a steady downtrend over the past week with both tranches closing Friday on a 96-handle.

Indexes

The KDP High Yield Daily index fell 61 points to close Monday at 60.79 with the yield now 5.79%.

The index posted a cumulative decline of 110 basis points on the week last week.

The CDX High Yield 30 index sank 28 bps to close Monday at 103.75.

The index posted a cumulative loss of 39 bps on the week last week.

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