Fortress, ams-Osram, Helix price; Nabors lags; TransDigm rises; funds add $4.55 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 16 – As it has throughout the week, the high-yield primary market generated a strong and steady volume of news on Thursday.

Three issuers priced dollar-denominated tranches of notes for a $1.2 billion combined total.

Fortress Transportation and Infrastructure Investors LLC priced $500 million of 7 7/8% seven-year senior notes (Ba2/B+/BB-) at 99.333 to yield 8%, ams-Osram AG priced $400 million of 12¼% notes due March 30, 2029 at 99.087 to yield 12½%, and Helix Energy Solutions Group, Inc. priced $300 million of 9¾% senior notes due March 1, 2029 (B1/BB-/BB-) at 99.526 to yield 9 7/8%.

None of the deals upsized.

One of the three came as a drive-by, while one deal that ran a brief roadshow priced on timing that was accelerated by a day.

Executions appeared solid, with all three deals pricing in the middle of talk.

In a market accustomed to seeing new issues price at par, all three of Thursday’s dollar deals, interestingly, came at discounts.

In fact, of seven dollar tranches priced Wednesday and Thursday, six came at discounts to par.

Thursday’s action left a substantial $1.75 billion active calendar – one tranche apiece from three prospective issuers – left to clear ahead of the weekend, so an active session is in store for Friday.

Sideways secondary session

Meanwhile, the secondary space saw a sideways session on Thursday with the cash bond market either side of unchanged despite Treasury yields that were once again dropping.

The latest U.S. jobless claims, which reflected the highest number of continued unemployment applications in two years, added more support to market expectations for an end to the Fed rate hike campaign.

However, the weakening labor market combined with dwindling retail sales has also reawakened recession concerns with several sources skeptical about the Fed’s ability to pull off a soft landing.

While the great rate and recession debate remains center stage as market players eye 2024, new issues were the focus of activity on Thursday.

However, several deals that cleared the primary market the previous session were struggling in the aftermarket.

Nabors Industries, Inc.’s 9 1/8% senior priority guaranteed notes due 2030 (Ba3/B-/B+) lagged their issue price in heavy volume on a weak day for the energy sector.

Avis Budget Group, Inc.’s 8% senior notes due 2031 (B1/BB-) were also soft in the aftermarket with the notes closing the day below their discounted issue price.

However, TransDigm Inc.’s 7 1/8% first-lien senior secured notes due 2031 (Ba3/B+) were putting in a solid performance with the notes closing the day at a premium to their discounted issue price.

While TransDigm’s latest offering was above water, the new paper sparked a repricing of its outstanding issues, which were weaker in active trade.

Meanwhile, high-yield mutual funds and exchange-traded funds saw another record-setting inflow after the historic inflow of the previous week.

Funds added another $4.55 billion in the week through Wednesday’s close, according to a market source.

The inflow comes after last week’s $6.26 billion inflow, the fourth largest weekly inflow on record.

Nabors lags

Nabors’ 9 1/8% senior priority guaranteed notes due 2030 were lagging their issue price in heavy volume on Thursday.

The 9 1/8% notes were off ¼ to ½ point.

They were changing hand in the 99½ to par context heading into the market close with the notes poised to end the day at 99¾, a source said.

There was $150 million in reported volume.

While the deal played to strong demand, the pricing was considered fair value, leaving little room for movement to the upside, sources said.

Thursday was also a heavy day for the energy sector with crude oil futures tumbling almost 5%.

Nabors Industries priced an upsized $650 million, from $550 million, issue of the 9 1/8% notes in a Wednesday drive-by.

The yield printed at the tight end of yield talk in the 9¼% area.

The deal was heard to be 4 times oversubscribed.

Avis weak

Avis Budget’s new 8% senior notes due 2031 saw a soft start in the aftermarket with the notes closing Thursday below their discounted issue price.

The 8% notes traded in a range of 98 7/8 to 99½ in heavy volume.

They were wrapped around 99 heading into the market close, a source said.

There was $77 million in reported volume.

Avis Budget priced a $500 million issue of the 8% notes at 99.341 to yield 8 1/8% in a Wednesday drive-by.

The yield printed at the wide end of yield talk in the 8% area.

TransDigm at a premium

TransDigm’s 7 1/8% first-lien senior secured notes due 2031 were putting in a solid performance in the aftermarket with the notes closing the day at a premium to their discounted issue price.

The 7 1/8% notes were trading in the 99¼ to 99¾ context throughout the session, a source said.

There was $101 million in reported volume.

TransDigm priced a $1 billion issue of the 7 1/8% notes at 99.25 to yield in 7¼% on Wednesday.

The yield printed in the middle of yield talk in the 7¼% area.

While the 7 1/8% notes were putting in a strong aftermarket performance, the new offering sparked a repricing of TransDigm’s outstanding issues.

The aircraft components supplier’s 6¾% senior secured notes due 2028 (Ba3/B+) fell ½ to 5/8 point to close the day in the 98 7/8 to 99 1/8 context, a source said.

The yield rose to 7%.

The 5½% senior subordinated notes due 2027 (B3/B-) were off ½ point with the notes wrapped around 94¾ heading into the market close.

The yield also rose to about 7%.

Both tranches saw about $12 million in reported volume.

Indexes

The KDP High Yield Daily index added 9 basis points to close Thursday at 49.14 with the yield 7.69%.

The index fell 16 bps on Wednesday, gained 54 bps on Tuesday and rose 2 bps on Monday.

The ICE BofAML US High Yield index was down 7.2 bps with the year-to-date return now 7.716%.

The index was down 15.8 bps on Wednesday after surging 102.6 bps and adding 6.5 bps on Monday.

The CDX High Yield 30 index was flat on Thursday to close the day at 103.17.

The index was down 7 bps on Wednesday, gained 64 bps on Tuesday and rose 6 bps on Monday.

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