Norwegian launches; Gamenet prices; Carnival higher; American Airlines lower

By Paul A. Harrisand James McCandless

Portland, Ore., July 16 – The high-yield primary ambled along on Thursday, active but slowing from ferocious second-quarter activity.

On the heels of Carnival Corp. & plc’s financing on Wednesday, Norwegian Cruise Line launched an upsized $750 million 5.5-year senior note at 10¼% one day later.

Gamenet Group SpA priced, shifting amounts between tranches.

And, BBB Industries is ready to go for Friday with a $240 million offering.

In the secondary market, recent issuance from Carnival, Joseph T. Ryerson & Son, Inc. and Carpenter Technology Corp. took most of the attention.

Air traveler American Airlines Group Inc.’s issues were under pressure after warning 25,000 of its workers of a potential furlough.

Elsewhere, utilities provider PG&E Corp.’s paper trended upward in the run-up to new developments in the investigation of 2019 wildfires.

Primary cruises along

The high-yield primary market generated an altogether modest news flow on Thursday.

Norwegian Cruise Line Holdings Ltd. subsidiary NCL Corp. launched an upsized $750 million offering of 5.5-year senior notes at 10¼%.

The issue size increased from $675 million.

The deal launched 12.5 basis points through price talk in the 10½% area (early guidance in the 10¾% area) and was heard to be playing to orders exceeding $2.5 billion.

Like Carnival Corp. which priced $775 million and €425 million of 5.5-year second priority senior secured notes on Wednesday, Norwegian Cruise Line is making its second pass at the new issue market since the coronavirus pandemic sent the cruise business into a perilous tailspin in early spring.

Norwegian Cruise priced $675 million of 12¼% senior secured bullet notes due 2024 in early May.

The glut of issuance from the troubled cruise sector does not seem to have caused any indigestion among high-yield investors, thus far, a trader said, referring to Norwegian Cruise's well oversubscribed order book, as evidence.

In Europe on Thursday Rome-based Gamenet Group SpA priced €640 million of five-year senior secured notes (B1/B) in two resized tranches, with proceeds shifted to the fixed-rate tranche, which priced at the tight end of talk, from the floating-rate tranche, which priced at the wide end of talk (see related story in this issue).

The Friday session will get underway to a nearly empty calendar.

BBB Industries is on deck for Friday with a $240 million offering of five-year senior secured notes (Caa1/CCC+) talked Thursday with a 9¼% coupon to yield 10¼% to 10½%, in line with early guidance.

The stage may be set for a traditional midsummer Friday in the high-yield new issue market, in which nothing much happens, a trader suggested late Thursday.

Newer issues trend up

Recent issuance from this past week continued to hold most of the market’s attention, traders said.

Miami-based cruise line company Carnival’s fresh notes were on the rise.

The 10½% senior secured notes due 2026 grabbed ½ point to close at 101¾ bid.

About $66 million of the notes changed hands.

Chicago-based metals distributor Ryerson’s new issues followed the trend.

After pricing on Wednesday, the 8½% senior secured notes due 2028 were seen closing at 103½ bid.

By the end of the session, about $39 million was on the tape.

Philadelphia-based stainless steel and alloy supplier Carpenter Technology’s paper was seen trailing.

The 6 3/8% senior paper due 2028 declined by 2 points to close at 103 bid.

About $21 million of the paper was exchanged.

AA down

Air traveler American Airlines’ notes were under pressure, market sources said.

The 5% senior notes due 2022 chalked off 2 points to close at 56½ bid. The 3¾% senior notes due 2025 were docked 1½ points to close at 46¼ bid.

Late in the day Wednesday, reports indicated that the Fort Worth-based carrier had sent potential furlough notices to 25,000 frontline workers.

The company said that the notices are for October, when U.S. government payroll assistance is set to expire.

Earlier in the month, the name warned of a 25% reduction in international capacity for summer 2021.

At the start of July, American Airlines said that it would resume booking flights to capacity.

PG&E gains

Elsewhere, utilities name PG&E’s issues maintained an upward trend, traders said.

The 5¼% senior secured notes due 2030 tacked on ¼ point to close at 101¼ bid.

About $14 million was on the tape.

Towards the end of the day on Thursday, California investigators concluded definitively that one of the San Francisco-based electric utilities provider’s power lines sparked the largest fire in the state in 2019.

The Kincade fire forced the evacuation of thousands of residents in northern California and destroyed hundreds of structures.

After filing for bankruptcy in early 2019, the name exited the process at the end of June.

$834 billion inflows

The dedicated high-yield bond funds saw $834 million of net inflows in the week to Wednesday's close, according to information posted Thursday on the Internet by Lipper US Fund Flows.

It follows the previous week's $2.13 billion inflows, and represents the 14th week to see positive cash flows in the past 16 weeks, the source said.

The combined funds had $52 million of daily net inflows on Wednesday, the final day of the just-concluded reporting period.

High-yield ETFs saw $84 million of inflows on the day.

Indexes up

Two high-yield indexes were seen gaining ground on Thursday.

The KDP High Yield Daily index improved by 10 basis points on Thursday, closing the session at 65.74 with the yield moving to 6.37%.

The index jumped up 19 bps on Wednesday, went unchanged on Tuesday and rose 7 bps on Monday.

The ICE BofAML US High Yield index rose 13 bps with the year-to-date return finishing at negative 2.735%.

The index improved by 62 bps on Wednesday, declined by 11.1 bps on Tuesday and gained 39 bps on Monday.

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