MultiPlan upsizes; secondary junk ‘in gridlock’; American Axle struggles; Southwest hovers

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 17 – The primary junk bond market was less active in terms of issuers as a single upsized domestic deal cleared the market on Tuesday.

Meanwhile, it was another weak day in the secondary space although the lack of liquidity in the market prevented major price movements, sources said.

While there was some selling activity taking place, it did little to drag down prices.

“Markets in the street are locked; there may be bids or offers but no trades, the market’s gridlocked,” a source said.

Outside of new and recent issues, there was little activity taking place.

American Axle & Manufacturing, Inc.’s 5% senior notes due 2029 (B2/B+) were struggling in the aftermarket with the notes below par.

While Southwestern Energy Co.’s 5 3/8% senior notes due 2030 (Ba3/BB-/BB) were trading in a tight range throughout Tuesday’s session, they were at a premium to their issue price.

Primary

MultiPlan Corp. priced Tuesday's sole deal, an upsized $1.05 billion issue of seven-year senior secured notes (Ba3/B+) that was sold at par to yield 5½%.

The issue size increased from $775 million

The yield printed in the middle of yield talk in the 5½% area, and in line with initial guidance in the mid-5% area.

That left two deals on the active forward calendar.

Cooke Aquaculture Inc. was scheduled to wrap up a roadshow for its $580 million offering of eight-year senior notes (Caa1/CCC+) on Monday.

No new information on the deal surfaced on Tuesday, sources say.

Pending official price talk, initial guidance is in the high 5% to 6% area.

And Sylvamo is in the market with a $500 million offering of eight-year senior notes, initial guidance high 5% area, on a timeline that has it pricing Thursday.

The sense is that primary market business may have run its course for the summer until after the Labor Day weekend, which gets underway following the Friday, Sept. 3 close, market sources say.

However, we may see one or two more deals come during that interval, a trader said on Tuesday.

Finally, despite volatility in equities on Monday the high-yield ETFs reported $233 million of inflows on the day, the trader said.

American Axle struggles

American Axle’s 5% senior notes due 2029 were struggling in the aftermarket.

The notes traded below par out of the gate.

They were marked at 99¼ bid, 99¾ offered heading into Tuesday’s close.

The 5% notes priced aggressively and there was not overwhelming demand for the deal, a source said.

American Axle priced a $600 million issue of the 5% notes at par on Monday.

Pricing came on top yield talk in the 5% area.

Southwestern at a premium

Southwestern Energy’s 5 3/8% senior notes due 2030 were trading in a tight range during Tuesday’s session.

However, they remained at a premium to their issue price.

The notes were marked at par ¼ bid, par ½ offered heading into the market close, a source said.

They were stuck in that range for the majority of the session.

The notes were holding above par despite a weak day for the market and for energy with crude oil futures slipping.

WTI crude oil settled at $66.59, a decrease of 70 cents, or 1.04%, on Tuesday.

However, Southwestern is a solid credit with a solid story and the pricing of the notes was reasonable, a source said.

Southwestern priced an upsized $1.2 billion, from $1 billion, issue of the 5 3/8% notes at par on Monday.

The yield printed at the tight end of the 5 3/8% to 5½% yield talk.

The deal was heard to have played to $2.3 billion of orders.

Indexes

The KDP High Yield Daily index shaved off 1 basis point to close Tuesday at 69.82, although the yield remained unchanged at 3.81%.

The index was also down 1 bp on Monday.

The CDX High Yield 30 index fell 30 bps to close Tuesday at 109.07.

The index was down 12 bps on Monday.

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