Citgo, Midcontinent Communications, Global Partners price; JBS holds premium; Sprint gains continue

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 24 – The domestic high-yield primary market saw another active day on Wednesday with three deals clearing the market.

Citgo Holding, Inc. priced a $1.37 billion issue of five-year senior secured notes (Caa1/B/B+) at par to yield 9¼%.

Global Partners LP priced a $400 million issue of eight-year senior notes (B2/B+) at par to yield 7%.

In a drive-by, Midcontinent Communications and Midcontinent Finance Corp. priced an upsized $350 million issue of eight-year senior notes (B3/B) at par to yield 5 3/8%.

While the market was active on Wednesday, activity is expected to thin heading into a late July earnings blackout period, a market source said.

Meanwhile, it was slow and steady in the secondary space with the new issues occupying the majority of the market’s focus.

Global Partners’ new notes skyrocketed out of the gate.

JBS USA Lux SA’s newly priced 5½% senior notes due 2030 (Ba3/BB-) were holding onto their premium in high-volume activity on Wednesday.

Sprint Corp.’s junk bonds were once again active and posting gains as details of T-Mobile’s and Sprint’s divestiture deal with DISH Network Corp. emerged.

The news also continued to drive the upward momentum of DISH’s 7¾% senior notes due 2026.

Citgo, Global Partners, Midcontinent price

The primary market remained busy on Wednesday.

However, new issue activity is apt to thin heading into a late July earnings blackout period, a syndicate banker said.

Among Wednesday's issuers, Citgo Holding priced a $1.37 billion issue of five-year senior secured notes (Caa1/B/B+) at par to yield 9¼%.

The yield printed 12.5 basis points beneath the tight end of yield talk in the 9½% area.

Global Partners priced a $400 million issue of eight-year senior notes (B2/B+) at par to yield 7%.

The yield printed at the tight end of the 7% to 7¼% yield talk and in line with initial talk in the low 7% area.

The 7% notes skyrocketed out of the gate. The new notes reached 101 bid, 101½ offered shortly after breaking for trade.

However, the notes had only just begun to trade in the late afternoon, and it was unclear if that is where the market for them would be, a market source said.

In drive-by action, Midcontinent Communications and Midcontinent Finance Corp. priced an upsized $350 million issue of eight-year senior notes (B3/B) at par to yield 5 3/8%.

The issue size was increased from $300 million.

The yield printed at the tight end of yield talk in the 5½% area and inside of initial 5½% to 5¾% guidance.

Earnings blackout

The calendar has thinned and is apt to remain on the thin side heading into early August, as potential issuers are restrained from hitting the new issue market until their investors are furnished with fresh earnings numbers, an investment banker said on Wednesday.

The market is just beginning to enter the new blackout period, which will encompass more and more issuers as the month of July advances, the source added.

One deal that is on the calendar, Sirius Minerals plc, is heard to be widening.

Last week, the London-based fertilizer company began marketing a $500 million offering of eight-year senior secured notes (/B-/B), with proceeds to fund a big capital project.

Early talk was in the 12% area, a trader said.

However, pricing may have moved as high as 15%, a market source said on Wednesday.

The deal is running a full roadshow and is expected to price in early August.

JBS USA holds premium

JBS USA’s 5½% senior notes due 2030 were holding onto their premium in secondary trading on Wednesday.

The notes were quoted at par ½ bid, par ¾ offered by one source in the early afternoon.

The notes were changing hands between par 3/8 and par 7/8 throughout Wednesday’s session.

They were active with more than $94 million in reported volume by the late afternoon, a market source said.

The notes saw a strong start out of the gate. They traded up to par ½ soon after breaking for trade on Tuesday.

JBS USA priced an upsized $1.25 billion issue of the 5½% notes at par on Tuesday.

The issue size increased from $1 billion.

The yield printed at the tight end of the 5½% to 5 5/8% yield talk, which was tight to initial guidance in the mid-to-high 5% area.

Sprint gains continue

Sprint’s junk bonds were again in focus on Wednesday with the notes continuing to post gains with regulatory approval for the wireless telecommunications company’s merger with T-Mobile expected to come by the end of the week.

Sprint’s 8¾% senior notes due 2032 were the most active in the capital structure with about $43 million in reported volume by the late afternoon, according to a market source.

The notes rose about 3 points to 124½ bid, 125 offered, a market source said.

Sprint’s 7 5/8% due 2026 were up about 2 points to 112½ bid, 113 offered. There was about $24 million on the tape by the late afternoon.

With details of T-Mobile’s and Sprint’s divestiture deal with DISH Networks public, the merger between T-Mobile and Sprint appeared to be one step closer to completion.

Regulatory approval for the merger is expected by the end of the week despite a lawsuit filed by the attorneys general of several states attempting to block it.

DISH’s deal

News that DISH would launch a new wireless network with assets T-Mobile and Sprint divested pushed its junk bonds higher.

DISH’s 7¾% senior notes due 2026 continued their upward momentum on Wednesday. The notes were up another 1½ points to close the day at 102.

The notes have gained 3 points since the start of the week as the market awaited details of its deal with Sprint and T-Mobile.

DISH agreed to pay $5 billion for wireless assets from T-Mobile and Sprint, including $1.5 billion for prepaid mobile businesses and $3.5 billion for spectrum, Bloomberg reported.

Tuesday inflows

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

High-yield ETFs saw $476 million of inflows on the day.

Actively managed high-yield funds saw $50 million of inflows Tuesday, the source said.

Indexes gain

Indexes continued to gain on Wednesday.

The KDP High Yield Daily index was up 10 bps to close Wednesday at 71.70 with the yield 5.44% The index was up 5 bps on Tuesday after shaving off 1 bp on Monday.

The ICE BofAML US High Yield index rose 13.7 bps with the year-to-date return 10.528%. The index was up 15.4 bps on Tuesday and 9.4 bps on Monday.

The CDX High Yield 30 index gained 16 bps to close Wednesday at 107.62. The index was up 29 bps on Tuesday and 22 bps on Monday.

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