Secondary trading volume light; Harland Clarke gains; Maxar Technologies active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 2 – The domestic high-yield primary market launched the new year quietly with no new deals on the tape.

However, the primary market is expected to return to business during the Jan. 6 week with a potential offering from Presidio Holdings Inc. eyed.

Meanwhile, the secondary space was firm on Thursday. However, it continued to see light trading volume with the midweek holiday dampening activity in the space, sources said.

Few names were active on the tape and those that did trade were mostly moving sidewise.

Harland Clarke Holdings Corp.’s 8 3/8% senior notes due 2022 were among the few issues to see notable movement with the bonds posting gains.

Rite Aid Corp.’s 6 1/8% senior notes due 2023 remained active in the secondary space with the notes continuing their upward trajectory following a late December earnings beat.

While flat, Maxar Technologies Inc.’s 9¾% senior notes due 2023 were active following news of the sale of a subsidiary.

Charter Communications Inc.’s 4¾% senior notes due March 1, 2030 (B1/BB/BB+) and Calpine Corp.’s 5 1/8% senior notes due 2028 remained the most active out of the deals to price in the final weeks of 2019.

However, they were also largely unchanged.

A big-ish January

The 2020 opener in the high-yield primary market came and went with no news hitting the tape, as expected, with numerous market participants managing to stretch the year-end holiday season a further two sessions into the coming weekend, sources said.

The 2020 high-yield primary market will likely await the beginning of the Jan. 6 week before it begins to undertake the new year’s business, they added.

When it does it could be a big-ish January, with one dealer, alone, forecasting $5 billion to $10 billion of issuance for the month, an investor said on Thursday.

Although right now it's difficult to sort the January deals from the early 2020 deals, one name that could show up in the week ahead is Presidio Holdings, with a $400 million offering of senior notes, a bridged deal which is part of the debt financing for BC Partners' $2.2 billion buyout of the New York-based IT solutions provider, the investor said (see related story in this issue).

Harland Clarke gains

Harland Clarke’s 8 3/8% senior notes due 2022 were among the few issues to see a notable movement during Thursday’s session.

The 8 3/8% notes rose more than 2 points to close the day at 84, sources said.

There were no current headlines to explain the trading activity.

However, news broke in mid-December that Harland Clarke is attempting to refinance its unsecured debt through a potential debt swap, which its senior creditors objected to.

Rite Aid’s run

Rite Aid’s 6 1/8% senior notes due 2023 remained active in the secondary space with the notes continuing their upward trajectory since a surprise earnings beat in late December.

The 6 1/8% notes were changing hands in the mid-90s on Thursday.

While largely unchanged from the previous trading session, the notes were trading in the mid-80s prior to the pharmacy retailer’s Dec. 19 third-quarter earnings report, a market source said.

Maxar Technologies active

Maxar Technologies’ 9¾% senior notes due 2023 saw renewed attention in the secondary space following news the company was selling a subsidiary.

The 9¾% notes were changing hands between 109 and 109½ in active trading on Thursday, according to a market source.

While unchanged from the previous trading session, the notes have gained about 2 points since the sale of one of its assets was announced.

Maxar Technologies announced on Dec. 30 that it was selling its subsidiary MDA to a consortium of buyers led by Northern Private Capital for $765 million, according to a company news release.

The sale was intended to help the space technology company deleverage itself, a market source said.

S&P revised its outlook for Maxar Technologies to stable from negative due to its deleveraging plans. (See related article in this issue.)

The 9¾% notes were among the deals that outperformed in 2019.

Maxar subsidiary SSL Robotics LLC priced a $1 billion issue of the 9¾% notes at 98 in November 2019.

Recent deals

Charter Communications’ 4¾% senior notes due 2030 and Calpine’s 5 1/8% senior notes due 2028 remained active in the secondary space, although the notes were largely moving sidewise, a market source said.

Charter’s 4¾% notes were continuing to change hands around 102½. Charter priced a $1.2 billion add-on to the 4¾% notes at 101.125 on Dec. 2.

Calpine’s 5 1/8% notes – the last deal to price in 2019 – continued to trade around 102 with more than $20 million in reported volume, according to a market source.

The 5 1/8% notes initially saw a lackluster reception after pricing on Dec. 19 with the notes largely hovering around par.

However, they improved dramatically heading into the final days of December and closed out 2019 at the 102 level.

Indexes

Indexes were flat to up slightly at the start of the new year.

The KDP High Yield Daily index rose 1 point to 71.81 although the yield was flat at 4.89%.

After closing out 2019 with returns of 14.41%, the ICE BofAML US High Yield index started the new year in the green with year-to-date returns of 0.135%.

The CDX High Yield 30 index closed Thursday at 109.86.

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