Primary starts one roadshow; Carnival flat; Party City gains; Bombardier recovers

By Paul A. Harris and Cristal Cody

Tupelo, Miss., Feb. 16 – The abbreviated post-Presidents’ Day week got off to a slow start in the high-yield primary market on Tuesday.

The session saw one dollar-denominated roadshow start.

In the secondary market, Carnival Corp.’s new 5¾% senior notes due 2027 (B2/B+) treaded water on Tuesday in heavy volume.

Party City Holdings Inc.’s recently priced 8¾% notes due 2026 (Caa1/CCC+) were quoted up 1/8 point on the day.

In other secondary trading, Bombardier, Inc.’s junk bonds saw gains following a 1½ to 3 points drop on Friday after the company announced it was ending production of its Learjet.

Elsewhere, Vista Outdoor Inc.’s 5 7/8% senior notes due 2023 (Caa1/B+) softened on news the company is marketing bonds with proceeds slated to refinance the 2023 issue.

Primary

The new issue bourse is entering the umbra of an earnings blackout, which will sideline a number of potential issuers that must await the posting of fresh financial numbers before accessing the junk bond market, source say.

A single roadshow started on Tuesday.

Vista Outdoor Inc. kicked off a $350 million offering of eight-year senior notes (B3/B+) whispered in the mid-to-high 4% area, and expected to price Thursday.

Meanwhile a substantial shadow calendar began to build.

On the heels of a non-deal roadshow last week American Tire Distributors is expected to launch a $1 billion minimum offering of unsecured notes during the present week. Early yield discussions took place in the 8½% area, a trader said (see related stories in this issue).

Florida-based burglar alarm maker Vivint was mentioned in a similar context, expected to show up with a deal on the heels of a recent round of pre-marketing with the accounts.

Another name out there is Alcoa Inc., a bond trader said.

Should these and/or other deals appear they will find themselves in a scrap for a place in the spotlight's beam.

That's because American Airlines Group Inc. is expected to appear this week with a very large deal, as it seeks to repay $7.5 billion it owes to the government which loaned the money to keep the airline afloat during the pandemic.

Pending an official announcement Goldman Sachs is heard to be the lead for a bond deal expected to be backed by American's AAdvantage frequent flyer program and related assets.

The airline is looking to put in place a substantial amount of longer-term capital with an interest rate somewhere in the sixes, a market source said.

Carnival notes unchanged

Carnival’s new 5¾% senior notes due 2027 headed out flat on the day at 99 3/8 on heavy reported volume of $64 million, a source said.

The Miami-based cruise operator priced a $3.5 billion issue of the 5¾% notes at par on Wednesday.

As previously reported, the notes have struggled since breaking for trade with hedge funds leaning into the issue.

Party City edges up

In other new issue trading, Party City Holdings’ recently priced 8¾% notes due 2026 were quoted up 1/8 point at 102¼ over the day on reported volume of nearly $17 million, a source said.

The Rockaway, N.J.-based retailer sold $750 million of the notes on Feb. 9 at par.

Bombardier improves

Elsewhere, Bombardier’s junk bonds recovered some of Friday’s losses in the first session back after the holiday, a market source said.

The 7½% senior notes due 2025, down 1 5/8 points on Friday, rose more than 2 points Tuesday to 91¾.

Bombardier’s 7 7/8% senior notes due 2027 climbed to 90 over the day from 89¾ at the start of the session.

The notes were down 1¾ points on Friday at 89½.

The Canadian manufacturer of business jets’ bonds had declines on Friday after the company announced that it was ending the production of the Learjet and eliminating 1,600 jobs.

Vista active

In other secondary trading, Vista Outdoor’s 5 7/8% senior notes due 2023 softened to 101 5/8 in heavy supply from 101¾ bid on Friday, a source said.

The Anoka, Minn.-based sporting goods manufacturer is marketing a $350 million offering of eight-year senior notes (B3/B+) with proceeds slated to refinance the 2023 issue.

$223 million Friday inflows

The dedicated high-yield bond funds had $223 million of net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed funds had $234 million of inflows on the day.

High-yield ETFs were slightly negative on Friday, sustaining $11 million of outflows on the day, the source said.

Indexes mixed

Indexes were mixed on Tuesday.

The KDP High Yield Daily index closed the day at 69.84 with a yield of 3.74% after ending Friday at 69.83 with a 3.75% yield.

The index posted a cumulative gain of 15 points last week.

The CDX High Yield 30 index declined Tuesday to 109.38 from 109.46 on Friday.

The index ended Friday with a cumulative loss of 3 points on the week.

Meanwhile, the ICE BofAML US High Yield index finished Tuesday with a year-to-date return of 1.41%, compared to 1.385% ahead of the holiday.

The index was up 29.6 bps over the past week.

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