Four junk issuers sell $2.94 billion; AmWINS, MoneyGram at a premium; energy pressured

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 15 – The domestic high-yield primary market remained active on Thursday with four issuers pricing a cumulative $2.94 billion.

ADT Inc. priced a $1 billion issue of eight-year first-priority senior secured notes (Ba3/BB-); Centerfield priced a $785 million issue of five-year senior secured notes (B2/B); Healthcare Royalty, Inc. priced a downsized $650 million issue of eight-year notes (B2/BB); and Strathcona Resources Ltd. priced a $500 million issue of five-year senior notes (B3/BB-/B+) at discount.

While the primary market remained active with new deals, for the most part, playing to solid demand, weakness continued in the secondary space.

The cash bond market was off another 1/8 point on Thursday with Federal Reserve Chair Jerome Powell’s congressional testimony doing little to appease concerns over rising inflation, sources said.

The energy sector and low-quality credits were leading losses in the space as supply concerns drove down oil futures and investors shed riskier names.

Laredo Petroleum, Inc.’s 7¾% senior notes due 2029 (B3/B) continued their downward spiral in active trading.

However, Laredo was an outlier among recent deals, most of which have performed well in the aftermarket despite the overall weakness in the space.

AmWINS Group, Inc.’s 4 7/8% senior notes due 2029 (B3/B-) were in focus with the notes maintaining the large premium reached after breaking for trade.

While the notes continued to trade with a large premium, MoneyGram International, Inc.’s 5 3/8% senior notes due 2026 (B2/B+) were coming in from the heights reached after breaking for trade.

Meanwhile, outflows once again resumed after three consecutive weeks of inflows.

High-yield mutual and exchange-traded funds saw $1.396 billion leave the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow Report.

Thursday’s primary

Four issuers, each with a single dollar-denominated tranche, priced a $2.94 billion amount of new junk on Thursday.

In a drive-by, ADT priced a $1 billion issue of 4 1/8% eight-year first-priority senior secured notes at par, in the middle of talk.

Los Angeles-based technology company Centerfield priced a $785 million issue of 6 5/8% five-year senior secured notes at par, inside of talk.

Healthcare Royalty priced a downsized $650 million issue (from $750 million) of 4½% eight-year unsecured notes at par, at the tight end talk.

And Strathcona Resources priced a $500 million issue of 6 7/8% five-year senior notes at 99.47 to yield 7%, at the wide end of talk.

Thursday's action left a thin active new issue calendar.

At the close, just one deal was parked on that calendar as business expected to clear the market ahead of the coming weekend.

CURO Group, on deck for Friday, talked its $700 million offering of seven-year senior secured notes (B3/B-) to yield 7½% to 7¾%.

Official talk comes inside of 7¾% to 8% initial guidance.

AmWINS in focus

AmWins’ 4 7/8% senior notes due 2029 were in focus on Thursday with the notes maintaining the premium reached after breaking for trade.

The notes traded in a range of par 7/8 to 101½ during Thursday’s session with the notes poised to close the day in the 101¼ to 101 3/8 context, according to a market source.

There was more than $74 million in reported volume.

The notes traded up to a 101-handle shortly after breaking for trade on Wednesday.

AmWINS priced a downsized $790 million, from $890 million, issue of the 4 7/8% notes at par on Wednesday with proceeds shifted to the concurrent term loan.

Pricing came at the tight end of yield talk in the 5% area.

MoneyGram comes in

While the notes continued to trade with a large premium to their issue price, MoneyGram’s 5 3/8% senior secured notes due 2026 were coming in from the heights reached after breaking for trade.

The 5 3/8% notes were changing hands in the 101½ to 102¼ context throughout Thursday’s session and stood poised to close the day at 101 5/8.

The notes shot up to a 102-handle shortly after breaking for trade on Wednesday, closing the day at 102 1/8 bid, 102 3/8 offered.

While some sources felt the Dallas-based provider of cross-border P2P payments and money transfers had a weak business model with little competitive advantage, the notes were in demand during bookbuilding and in the aftermarket.

MoneyGram priced a $415 million issue of the 5 3/8% notes at par on Wednesday.

The yield printed tighter than the 5½% to 5¾% yield talk.

Energy under pressure

Laredo’s recently priced 7¾% senior notes due 2029 sank further below par on Thursday with the energy sector, in general, under pressure.

The 7¾% notes, which priced at par on Tuesday, dropped another 1 point to close the day at 97.

There was more than $26 million in reported volume.

Laredo’s 7¾% notes have been under pressure since pricing with the notes immediately dropping below par.

However, several energy companies were trading off on Thursday as crude oil futures sank on the heels of an OPEC agreement that raised concerns about a supply glut.

West Texas Intermediate crude oil futures settled at $71.65, a decrease of $1.48 or 2.02%, on Thursday. Brent crude oil settled at $73.29, a decrease of $1.47 or 1.97%.

Following an impasse earlier in the month, Saudi Arabia and the United Arab Emirates were reported to have reached an agreement on an OPEC output policy, which many expect to result in increased supply.

Indexes mixed

The KDP High Yield Daily index dropped 7 points to close Thursday at 70.24 with the yield now 3.66%.

The index shaved off 3 points on Wednesday, was unchanged on Tuesday and was down 1 point on Monday.

The ICE BofAML US High Yield index dropped below the 4% year-to-date return threshold on Thursday.

The index was down 9.8 basis points with the year-to-date return now 3.972%. The index was down 3 bps on Wednesday and 3.6 bps on Tuesday after gaining 11.9 bps on Monday.

The CDX High Yield 30 index dropped 18 bps to close Thursday at 109.68. The index rose 5 bps on Wednesday after dropping 19 bps on Tuesday and 5 bps on Monday.

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