Tidewater caps active week: Univar struggles; Civitas holds; Brinker dips in junkland

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 23 – The domestic high-yield primary bond market capped a high-volume week for new issuance with one last offering.

Tidewater Inc. priced a $250 million offering of 10 3/8% five-year senior notes at 99 to yield 10 5/8%.

The offering lifted the weekly tally for the holiday-abbreviated week to $5.5 billion of dollar-denominated issuance in eight tranches.

The new paper followed different trajectories in the secondary space with some flat, some under water, and some trading with strong premiums.

The onslaught of issuance came during a soft week for the secondary space with selling pressure intensifying on Friday as markets began to price in a higher Fed terminal rate than anticipated.

The cash bond market was off ¼ to 3/8 point with a risk-off sentiment sweeping through the market ahead of the weekend.

However, Civitas Resources, Inc.’s two tranches of senior notes (B1/BB-/BB-) held the strong gains made on the break despite a heavy day for the market.

Windsor Holdings III, LLC’s 8½% senior secured notes due 2030 (B2/B+) backing the buyout of Univar Solutions Inc. continued to struggle in secondary market activity with the notes falling further below par in heavy volume.

Brinker International, Inc.’s new 8¼% senior notes due 2030 (B1/BB-) also dipped below par in active trade under Friday’s weighty market conditions.

Tidewater launches

In the only primary market action on Friday, Tidewater priced a $250 million offering of 10 3/8% five-year senior notes at 99 to yield 10 5/8%.

Figuring Tidewater in the tally the holiday-abbreviated June 19 week, there was $5.5 billion of dollar-denominated issuance in eight tranches.

The week ahead, the final week of June, should be an active one in the new issue market, according to a portfolio manager who did not have any issuer names to volunteer.

Civitas holds premium

In secondary trading, Civitas Resources’ two tranches of senior notes maintained the strong premiums made on the break although the notes were flat on the day.

The 8¾% senior notes due 2031 and 8 3/8% senior notes due 2028 were both at roughly the same level in secondary market activity.

They continued to trade in the par ½ to 101 context in heavy volume, a source said.

The 8¾% notes and 8 3/8% notes had $64 million and $51 million in reported volume, respectively.

Civitas priced a $1.35 billion tranche of the 8¾% notes and a $1.35 billion tranche of the 8 3/8% notes at par on Thursday.

The 8¾% notes came on top of talk which had the notes coming 3/8% behind their shorter-duration counterpart.

The 8 3/8% notes priced at the tight end of talk for a yield in the 8½% area and well inside of guidance for a yield in the high 8% to 9% area.

Proceeds from the offering will be used to fund two recent acquisitions to help the oil and gas producer expand into the Permian Basin.

The acquisitions include Tap Rock Resources, LLC’s Delaware Basin assets for $1.5 billion in cash and 13.5 million shares.

Tap Rock’s 7% senior notes due 2026 (B3/B) have jumped more than 7 points since Civitas announced the acquisition on Tuesday.

Tap Rock’s 7% notes, which were trading on a 96-handle heading into Tuesday’s session, are closing the week wrapped around 103.

Tap Rock plans to retire the notes with proceeds from the asset sale, a source said.

Univar struggles

Univar’s 8½% senior secured notes due 2030 continued to struggle in secondary market activity with the notes sinking further below par in heavy volume.

The 8½% notes fell another ½ point after breaking below par when they freed for trade on Thursday.

The notes were changing hands in the 99 to 99½ context heading into the market close.

There was $103 million in reported volume.

Windsor Holdings priced a downsized $800 million, from $1.8 billion, issue of the 8½% notes at par on Thursday.

Pricing came at the midpoint of talk for a yield in the 8½% area.

Proceeds from the bonds were shifted to concurrently pricing bank loan tranches.

The leveraged buyout deal came in support of Apollo’s buyout of Univar.

Brinker dips

Brinker’s 8¼% senior notes due 2030 dipped below par in the heavy market conditions on Friday.

The 8¼% notes were changing hands in the 99 7/8 to par 1/8 context throughout the session with the notes poised to close the day below par, a source said.

There was $29 million in reported volume.

Brinker priced a $350 million issue of the 8¼% notes at par on Thursday.

Pricing came at the wide end of the 8% to 8¼% yield talk.

Fund flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $303 million of outflows on the day.

However actively managed high-yield funds enjoyed positive cash flows on the day, posting $222 million of inflows on Thursday, the source said.

News of Thursday’s daily fund flows trails a Thursday afternoon report that the combined high-yield funds had $265 million of net inflows during the week to the Wednesday, June 21 close, according to fund-tracker Refinitiv Lipper.

That’s the fourth positive cash flow for the junk funds in the past five weeks, and the smallest among them, according to the market source.

Indexes

The KDP High Yield Daily index was off 13 points to close Friday at 50.28 with the yield now 7.47%.

The index was down 16 points on Thursday, 13 points on Wednesday and 7 points on Tuesday.

The index posted a cumulative loss of 49 points on the week.

The ICE BofAML US High Yield index was down 24 basis points with the year-to-date return now 4.568%.

The index was down 20.6 bps on Thursday, 31.4 bps on Wednesday and 8.3 bps on Tuesday.

The index posted a cumulative loss of 84.3 bps on the week.

The CDX High Yield 30 index closed Friday down 42 bps at 101.44.

The index was down 14 bps on Thursday, 33 bps on Wednesday and 18 bps on Tuesday.

The index posted a cumulative loss of 107 bps on the week.

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