HY primary prices deals to high demand; Coinbase, SWF bounce off lows, remain under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 21 – A busy Tuesday session had four issuers price a total of $4.27 billion of dollar-denominated high-yield notes in six tranches.

Meanwhile, the secondary space improved on Tuesday with the cash bond market up about 1/8 point after Monday’s sell-off, a source said.

However, volume outside of recent issues remained light with focus on the onslaught of new offerings in the works.

Pactiv Evergreen Group Issuer Inc.’s 4 3/8% senior secured notes due 2028 (B1/B+) again topped par after lagging their issue price during heavy market conditions on Monday.

SWF Escrow Issuer Corp.’s (Springs Window Fashions) 6½% senior notes due 2029 (Caa2/CCC) and Coinbase Global, Inc.'s two tranches of senior notes (Ba1/BB+) bounced off their lows from the previous session.

However, the recently priced issues remained well below par.

Tuesday primary

In the Tuesday primary space, demand across most of the deals was heard to be high, a dynamic that was reflected in executions which saw two of the six tranches price at the tight ends of downwardly revised talk, while three priced at the tight or rich ends of original talk, and one priced in the middle of original talk.

In a drive-by, Rocket Mortgage, LLC priced the session's biggest amount of dollar-denominated issuance, an upsized $2 billion amount (from $1.5 billion) of senior notes (Ba1/BB+) in two tranches: $1.15 billion of 2 7/8% notes due 2026 and $850 million of 4% 12-year notes due 2033.

Both tranches came at par.

The deal was heard to be playing to $1 billion of reverse inquiry (see related stories in this issue).

Pactiv tops par

In the secondary, Pactiv’s 4 3/8% senior secured notes due 2028 again topped par during Tuesday’s session after lagging during Monday’s rout.

The notes were changing hands in the par to par 3/8 context on Tuesday after closing the previous session at 99½ bid, par offered.

The notes regained their previous level after breaking for trade last Friday, which sources expected if the market regained its footing.

Improved

SWF Escrow’s (Springs Window Fashions) 6½% senior notes due 2029 and Coinbase’s senior notes were bouncing off their lows on Tuesday although the recently priced paper remained under pressure.

SWF’s 6½% notes reclaimed a 98-handle after trading as low as 97¼ on Monday.

The 6½% notes were changing hands in the 98 3/8 to 98 5/8 context throughout Tuesday’s session.

The notes have been under pressure since SWF priced the $625 million issue at par last Friday and the notes quickly traded down to 98.

Coinbase’s two tranches of senior notes also bounced off their lows from the previous session although they remained well below par.

Coinbase’s 3 3/8% senior notes due 2028 traded as high as 98½ early in the session. However, they were changing hands in the 97½ to 97¾ context heading into the close, sources said.

The notes traded down to a 96-handle on Monday.

Coinbase’s 3 5/8% senior notes due 2031 also returned to a 97-handle on Tuesday.

The notes were changing hands in the 97 to 97½ context heading into the close.

The notes traded as low as 95¾ on Monday before closing the day on a 96-handle.

Coinbase’s senior notes have been under pressure since the crypto-currency exchange priced the $2 billion offering at par on Sept. 14.

The notes are heavily shorted, sources said.

$522 million Monday outflows

The dedicated high-yield bond funds sustained $522 million of net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $577 million of outflows on the day.

Actively managed high-yield funds were positive on Monday, posting $55 million of inflows on the day, the source said.

The combined funds are tracking $277 million of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index slid 8 basis points to close Tuesday at 70.31 with the yield now 3.52%.

The index was down 9 bps on Monday.

The CDX High Yield 30 index gained 10 bps to close Tuesday at 109.3.

The index dropped 40 bps on Monday.

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