Four issuers sell $2.55 billion; Macy’s in demand; Clearway at a premium; Murphy Oil lags

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 3 – The domestic high-yield primary market had four single-tranche deals totaling $2.55 billion clear the market on Wednesday.

The deals were in demand despite the volatility that was again rattling risk assets.

Compass Group Diversified Holdings LLC, Owens & Minor, Inc., and Comstock Resources, Inc. were among the issuers to tap the market on Wednesday.

Meanwhile, the secondary space was soft with investors again rattled by the rising 10-year Treasury yield.

However, the market held up well compared to the sell-off in equities, a source said.

New paper remained in focus although the deals to clear the primary market on Tuesday were putting in mixed performances.

Macy's Retail Holdings LLC’s 5 7/8% senior notes due 2029 (B1/B) were in demand in the secondary space with the notes continuing to gain after a strong break the previous session.

While coming in from the heights reached after breaking for trade, Clearway Energy Co.’s 3¾% senior notes due 2031 (Ba2/BB) were also trading at a healthy premium to their issue price.

However, Murphy Oil Corp.’s 6 3/8% senior notes due 2028 (Ba3/BB/BB+) dropped below par in active trading.

Wednesday’s primary

Four issuers, each bringing a single tranche of dollar-denominated junk, priced a combined face amount of $2.55 billion on Wednesday.

Set against a backdrop of volatility in the stock market, executions on the day's quartet of high-yield deals were solid, with two pricing at the tight ends of talk, and the other two pricing in the middle of talk.

Compass Group Diversified Holdings priced an upsized $1 billion issue (from $750 million) of 5¼% eight-year senior notes (B1/B+) at the tight end of talk.

Although the wrapper said $750 million the market had expected Compass Group to do $1 billion all along, a trader said, adding that the deal was well oversubscribed.

Owens & Minor ($500 million) and Comstock Resources ($250 million) both priced deals that were playing to books sized $1 billion or better on Wednesday, sources said.

There was also a modest buildup in the forward calendar (see related stories in this issue).

In new issue activity to come, BofA Securities Inc. and J.P. Morgan Securities LLC expect to remain busy into the week ahead, a trader said.

Macy’s in demand

Macy’s 5 7/8% senior notes due 2029 were in demand in the secondary space with the notes continuing to gain after a strong break despite soft market conditions.

The 5 7/8% notes were trading in the 101¾ to 102 context heading into the market close, a source said.

There was more than $114 million in reported volume during the session.

The 5 7/8% notes continued to trade up after a strong break that saw them rise to a 101-handle.

Macy's priced a $500 million issue of the 5 7/8% notes at par on Tuesday.

Pricing came tighter than talk for a yield of 6% to 6¼%.

The deal played to $2.5 billion of demand, a source said.

Clearway at a premium

While coming in from the heights reached after breaking for trade, Clearway’s 3¾% senior notes due 2031 continued to trade with a healthy premium in the aftermarket.

The 3¾% notes traded in a range of par ½ to 101¼ during Wednesday’s session.

They stood poised to close the day at par 5/8, according to a market source.

There was more than $30 million in reported volume during the session.

The renewable energy company priced a $925 million issue of the 3¾% notes at par on Tuesday.

Pricing came at the tight end of yield talk in the 3 7/8% area.

Murphy lags

While Wednesday was a strong day for energy with WTI crude oil futures up $1.53, Murphy Oil’s 6 3/8% senior notes due 2028 were lagging their issue price.

The notes dropped to a 99-handle on Wednesday, a source said.

They were changing hands in the 99½ to 99 7/8 context heading into the market close.

There was more than $38 million in reported volume.

Murphy priced a $550 million issue of the 6 3/8% notes at par on Tuesday.

Pricing came in the middle of yield talk in the 6 3/8% area.

$363 million Tuesday inflows

The dedicated high-yield bond funds saw $363 million of net inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $353 million of inflows on the day.

Actively managed high-yield funds saw $10 million of inflows on Tuesday, the source said.

With only Wednesday's totals remaining to go in the tally the combined funds are tracking $1.77 billion of inflows on the week to Wednesday's close, their largest inflows since mid-November, according to the market source.

Indexes

Indexes were unchanged to down on Wednesday after starting the week firmly in the green.

The KDP High Yield Daily index was flat at 69.52 with a yield of 3.98%.

The index gained 2 points on Tuesday and 11 points on Monday.

After crossing the 1% threshold on Tuesday, the ICE BofAML US High Yield index sank below it on Wednesday.

The index was down 8.8 bps with the year-to-date return now 0.944%.

The index rose 9.8 bps on Tuesday and 26.3 bps on Monday.

The CDX High Yield 30 index sank 27 bps to close Wednesday at 108.58.

The index was down 18 bps on Tuesday after gaining 82 bps on Monday.

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