Global Partners opens junk primary; DISH in focus, mixed post-merger; Carnival softens

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 2 – Global Partners LP opened the 2024 high-yield primary market with the announcement of a $450 million offering of eight-year senior notes (B2/B+) on Tuesday morning.

Initial guidance has the debt refinancing deal coming to yield 8½% to 8¾%, and the deal is expected to price Wednesday.

It is heard to be playing to $900 million of demand, and appears likely to come at 8½%, according to a portfolio manager who was still kicking the tires at midafternoon on Tuesday.

Although Global Partners was Tuesday’s sole junk bond deal announcement, new issue volume is expected to be purposeful, or better, during the first half of January, sources say.

JPMorgan, who is leading the Global Partners deal, is telegraphing three new deals to be announced during the holiday-abbreviated opening week of January, the portfolio manager said.

BofA and Barclays are not expected to bring deals this week, the source added.

Meanwhile, it was a slow start to the year in the secondary space with the market soft but trading muted on Tuesday.

The cash bond market was off 3/8 to ½ point with the market giving back some gains from its phenomenal late-year rally to open 2024 with negative returns.

Topical news was the driver of activity in the space as market players awaited the reactivation of the calendar.

DISH Network Corp.’s senior notes were mixed in active trade following the completion of the DISH/EchoStar merger.

While the company’s soon-to-mature 5 7/8% senior notes due Nov. 15, 2024 (Caa2/B-) edged higher, its longer-duration notes were flat to lower.

Carnival Corp.’s senior notes (B3/BB-) were coming in alongside the broader market after bouncing in late December following the company’s earnings report.

DISH mixed

DISH’s senior notes were mixed in active trade after the company closed its merger with EchoStar Corp.

While its soon-to-mature 5 7/8% senior notes due Nov. 15, 2024 continued to benefit from the news, its longer-duration notes were flat to unchanged.

The 5 7/8% notes added about ½ point to trade firmly on a 94-handle.

While there was a trade as high as 95 in intraday activity, the notes were largely trading in the 94¼ to 94¾ context, a source said.

There was $33 million in reported volume with the notes the most actively traded issue in the secondary space.

However, DISH’s 11¾% senior secured notes due 2027 (B2/B) were off more than 1 point to close the day on a 103-handle.

They were trading in the 103¼ to 103¾ context heading into the market close, according to a market source.

The yield was about 10¼%.

There was $12 million in reported volume.

The 7¾% notes due 2026 were largely unchanged with the notes continuing to trade in the 69 3/8 to 69 5/8 context.

There was $9 million in reported volume.

The yield was 24¾%.

DISH’s 5 1/8% senior notes due 2029 fell more than 1 point.

They closed the day wrapped around 50 with the yield about 21%.

DISH’s senior notes enjoyed a late-year bounce as buyers returned to the credit on the eve of its merger with EchoStar.

The merger gives the heavily leveraged company some time, and increases the likelihood that it will be able to cover its 2024 maturities, a source said.

However, the company still faces substantial risks with several sources skeptical about its future viability.

Carnival lower

Carnival’s senior notes were lower in active trade with the notes continuing to give back gains from a late December earnings bounce.

Carnival’s 6% senior notes due 2029 were off ¾ to 1 point to close the day on a 95-handle.

They were trading in the 95½ to 95¾ context with the yield about 7%, according to a market source.

There was $16 million in reported volume.

The 5¾% senior notes due 2027 were off about ½ point to trade in the 97¼ to 97½ context.

The yield was about 6¾%.

There was $17 million in reported volume.

Carnival closed the year on a high note with its late December earnings release and a credit upgrade buoying its capital structure.

The company reported record fourth quarter and full-year revenue on Dec. 21.

S&P Global Ratings hiked their credit rating of the company to BB- from B with revenue and EBITDA expected to continue to grow in 2024.

Fund flows

High-yield ETFs sustained $137 million of daily cash outflows last Friday, ahead of the extended new year holiday weekend, according to a market source.

Actively managed high-yield funds had $29 million of inflows on Friday, the source said.

The combined funds are tracking $121 million of net outflows for the week that will conclude with Wednesday’s close, according to the market source.

The dedicated junk funds have now had eight consecutive weekly inflows totaling $15.2 billion, the market source said.

Indexes

The ICE BofAML US High Yield index fell 51.5 basis points on Tuesday with the secondary space launching 2024 with a year-to-date of negative 0.51%.

The CDX High Yield 30 index closed Tuesday at 105.5.

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