Low-grade primary quiet; MultiPlan down again; MSCI gains; AMC loses

By Abigail W. Adams

Portland, Me., July 7 – The domestic high-yield primary market was again quiet on Wednesday with no new deals pricing during the session.

However, Seaspan Corp. remains on the forward calendar with its $500 million offering of eight-year senior blue transition notes (BB-/BB).

Meanwhile, it was another sideways day in the secondary space with the release of the Federal Reserve Open Committee meeting’s minute notes doing little to move the market.

Trading volume remained light amid the dry-up in primary market activity. However, topical news pushed some outstanding issues into focus.

MultiPlan Corp.’s 5¾% senior notes due 2028 (B3/B-) were in focus on Wednesday with the notes continuing to sell off amid concern the company was losing a major source of its revenue.

MSCI Inc.’s 3 5/8% senior notes due 2031 (Ba1/BB+/BBB-) continued their upward momentum in active trading on Wednesday.

However, AMC Entertainment Holdings, Inc.’s 12% senior notes due 2026 dropped below par after the company announced that it would not seek shareholder approval to issue more stock.

Quiet primary

The high-yield primary market put up a goose egg on Wednesday.

The new issue bourse has yet to see its first dollar-denominated post-Independence Day trade, although the European primary market has been active.

Reasons are various, with market sources citing slow business on either side of a market holiday.

Some prospective issuers remain snagged in protracted earnings blackout periods, an investment banker said.

Also, as always occurs when the market is hot, a lot of deals had been pulled forward in June, and the market awaits succeeding issuers to step in and fill the void, the source added.

The dearth of deals won't last long, simply because the market is presently well-bid, and rates are far too attractive sources say.

At Wednesday's open the Merrill Lynch US High Yield Master II Index yield to worst stood at 3.8%, its all-time tight, a trader noted.

July issuance could approximate that of June ($43 billion), the investment banker said, adding that the extended period of quiet that has surrounded the Independence Day holiday is likely to ultimately suppress the month's total.

Only one dollar-denominated deal is presently on the active calendar, and it is heard to be going well.

Hong Kong-based Seaspan Corp. is shopping a $500 million offering of eight-year senior blue transition notes (BB-/BB).

Initial talk is in the low 6% area, and the deal is heard to be two-times oversubscribed, driven into the market by means of a $250 million amount of reverse inquiry.

The original timeline has the deal in the market until Friday. However, that timing might be accelerated, given the fact that it appears to be playing to a vigorous appetite among investors, the trader said.

The containership company intends to use the proceeds to reduce its environmental impact by making investments in LNG-powered ships, which it characterizes as a viable option for the low-carbon transition of the shipping sector.

It is essentially a green deal with a seafaring aspect, sources say.

MultiPlan down again

MultiPlan’s 5¾% senior notes due 2028 continued to sell off in high-volume activity on Wednesday amid concern the company was losing a major source of its revenue.

The 5¾% notes dropped another 1 point to close the day at 99 1/8, according to a market source.

There was more than $38 million of the bonds on the tape, making them the most actively traded in the secondary space.

“They were definitely in focus,” a source said.

The 5¾% notes were also down a little more than 1 point on Tuesday.

The notes were trading off following a UnitedHealth Group policy change to no longer cover non-emergency services by out-of-network providers, a source said.

UnitedHealth Group is a major source of revenue for MultiPlan, a health care cost management company.

MultiPlan was under pressure late last year after short-seller Muddy Waters Research alleged the company was on the verge of losing United Healthcare as a client.

Following news of the policy change, Muddy Waters posted “Ya think?” to its Twitter account.

MSCI gains

MSCI’s 3 5/8% senior notes due 2031 continued their upward momentum in active trading on Wednesday.

The notes gained 1¾ points to close the day at 106¼, according to a market source.

There was more than $14 million of the bonds on the tape.

The notes have made large gains over the past week as Treasury yields continue to slip.

The 10-year Treasury yield fell to 1.318% at the market close on Wednesday, its lowest level since February.

Lower-coupon, longer-duration notes were under pressure in March as Treasury yields climbed, sparking concern over inflation.

While the decreasing Treasury yields left some sources scratching their heads, lower-coupon, longer-duration bonds have improved with the move in Treasuries.

AMC down

AMC’s 12% senior notes due 2026 dropped back below par in active trading on Wednesday after the company announced that it would not seek approval to issue more shares.

The 12% notes dropped 1¾ points to close the day at 99¾, according to a market source.

There was more than $17 million in reported volume.

AMC’s 12% notes have made large gains over the past two months as the meme stock revolution drove the company’s shares higher.

AMC completed two at-the-market equity offerings in response to its surging share price, raising $428 million in May and $587 million in June.

However, the company announced Tuesday that it would not be seeking shareholder approval to increase the total number of shares it can issue at its annual meeting.

$325 million Tuesday inflows

The dedicated high-yield bond funds had $325 million of net daily inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $227 million of inflows on the day.

Actively managed high-yield funds saw $98 million of inflows on Tuesday, the source said.

With only Wednesday's totals remaining to go into the tally, the combined funds are tracking approximately $725 million of net inflows for the week to Wednesday's close.

Should an inflow materialize, it will be the third consecutive weekly inflow, following a seven week stretch of consecutive outflows, according to the market source.

Indexes mixed

Indexes remained mixed on Wednesday.

The KDP High Yield Daily index rose 8 points to close the day at 70.4 with the yield now 3.6%.

The index was up 7 points on Tuesday.

The ICE BofAML US High Yield index rose 10.2 bps with the year-to-date return now 4.141%.

The index was up 15.5 bps on Tuesday.

The CDX High Yield 30 index fell 9 bps to close Wednesday at 110.1.

The index fell 18 bps on Tuesday.

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