Primary prices $2.8 billion; Uniti flat; TMS, Bloomin’, Century Aluminum at a premium; GEO gains

By Paul A. Harris and Abigail W. Adams

Portland, Ore., April 7 – It was another fully and busy day in the junk bond primary space with five issuers pricing notes for a combined $2.8 billion face amount of new paper.

Meanwhile, the secondary space was quiet on Wednesday with the cash bond market flat and new paper continuing to dominate the tape.

Several recent deals were putting in strong performances in the aftermarket.

While coming in from the heights reached after breaking for trade, Bloomin' Brands, Inc.’s 5 1/8% senior notes due 2029 (B2/B) continued to trade with a healthy premium in high-volume activity.

TMS International Corp.’s 6¼% senior notes due 2029 (Caa1/B) were also trading well with the notes on a 102-handle.

While volume in the name was light, Century Aluminum Co.’s 7½% senior secured notes due 2028 (Caa1/B) outperformed with the notes more than 3 points above their issue price.

However, Uniti Group Inc.’s 4¾% senior secured notes due 2028 (B2/B) fell largely flat in the aftermarket.

Outside of recent issues, GEO Group Inc.’s senior notes were making large gains in active trading after the company announced it was suspending its dividend to focus on repaying its debt.

Busy Wednesday

A news-heavy Wednesday session saw five issuers, each packing a single tranche of notes, price a $2.8 billion face amount of junk.

Executions tended to be tight.

A notable exception was the day's biggest deal.

Netherland's-based UPC Broadband Finco BV priced a $1.25 billion issue of 10.25-year senior secured notes (B1/BB-/BB+) at par to yield 4 7/8% in a drive-by.

Pricing on the deal widened during the time it was in the market. The yield printed at the wide end of official talk in the 4¾% area. That talk came wide to the 4 5/8% to 4¾% early guidance.

There was also a buildup in what has become a massive $9 billion equivalent active deal calendar that is expected to clear in the two remaining sessions of the week.

The big dog is Organon & Co.'s $4.5 billion equivalent offering of notes in three tranches: $2 billion seven-year senior secured notes talked Wednesday to yield 4 1/8% to 4¼% (initial talk in the low 4% area), $1 billion equivalent euro-denominated seven-year senior secured notes talked to yield in the 3% area (initial talk low 3% area) and $1.5 billion 10-year senior unsecured notes talked to yield 5 1/8% to 5¼% (initial talk mid-to-high 5% area).

With respect to the dollar-denominated trances, demand is bunched in the unsecured notes, according to a bond trader who said that the $1.5 billion tranche was heard to be playing to $6 billion of demand on Wednesday.

The $2 billion secured tranche was playing to $4 billion of demand.

Pricing is set for Thursday (see related stories in this issue).

Bloomin’ in focus

While the issue was small, Bloomin’ Brands’ 5 1/8% notes due 2029 were active and putting in a strong performance in the aftermarket.

The 5 1/8% notes due 2029 were coming in from the heights reached after breaking for trade.

However, they maintained a large premium with the notes continuing to trade on a 101-handle.

After closing the previous session at par 5/8, the 5 1/8% notes traded as high as 102 on Wednesday.

However, there were changing hands in the 101¼ to 101 3/8 context heading into the close.

There was $55 million in reported volume during the session.

Bloomin' Brands priced a $300 million issue of the 5 1/8% notes at par on Tuesday.

Pricing came significantly lower than the 5¾% to 6% initial guidance, sources said.

TMS on a 102-handle

TMS International’s 6¼% senior notes due 2029 were also putting in a strong performance in the aftermarket with the notes on a 102-handle.

The 6¼% notes were marked at 102½ bid, 102¾ offered heading into the close, a source said.

TMS International priced an upsized $325 million, from $300 million, issue of the 6¼% notes at par on Tuesday.

The yield printed at the tight end of the 6¼% to 6½% yield talk.

Century Aluminum outperforms

While trading of the small issue was light, Century Aluminum’s 7½% senior notes due 2028 outperformed in the aftermarket.

The 7½% notes were marked at 103¾ bid, 104 offered heading into the close.

Century Aluminum priced a $250 million issue of the 7½% notes at par on Tuesday.

The yield printed at the tight end of the 7½% to 7¾% yield talk.

Uniti flat

While several other recent issues were outperforming in the secondary space, Uniti’s 4¾% senior notes due 2028 fell flat.

The notes were marked at par bid, par ¼ heading into the close, a source said.

There was $44 million on the tape heading into the close.

Uniti Group priced a $570 million issue of the 4¾% notes at par on Tuesday.

The yield printed at the tight end of the 4¾% to 5% yield talk.

GEO gains

GEO Group’s junk bonds were in focus on Wednesday with the notes making large gains after the company announced it was suspending its dividend to focus on debt repayment.

GEO Group’s 5 1/8% senior notes due 2023 and 6% senior notes due 2026 were up more than 3 points on the news.

The 5 1/8% notes traded up to 91 5/8 in active trading. There was about $20 million in reported volume.

The 6% senior notes traded up to 73½ with more than $17 million in reported volume.

GEO Group’s stock was taking a hit on news the private prison and mental health facility-focused REIT was suspending its quarterly dividend.

However, the junk bonds were on the rise.

“It’s a positive for the bonds,” a source said.

$1.05 billion Tuesday inflows

The dedicated high-yield bond funds saw big net daily inflows of $1.05 billion on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $791 million of inflows on the day.

Actively managed high-yield funds saw $260 million of inflows on Tuesday, the source said.

With Wednesday's daily fund flow numbers remaining to go into the tally the combined funds are tracking a whopping $3.8 billion of net inflows for the week to Wednesday's close, according to the market source.

Indexes

Indexes continued to rise on Tuesday.

The KDP High Yield Daily index rose 8 points to close Wednesday at 69.54 with the yield now 3.96%.

The index was up 9 points on Tuesday and 8 points on Monday.

The ICE BofAML US High Yield index rose 10.5 bps with the year-to-date return now 1.567%.

The index gained 16.9 bps on Tuesday and 19.9 bps on Monday.

The CDX High Yield 30 index climbed 4 bps to close Wednesday at 109.6.

The index climbed 6 bps on Tuesday and 15 bps on Monday.

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