Starwood prices; Ciena, Golden Nugget on tap; ZipRecruiter outperforms; Medline under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 10 – Starwood Property Trust, Inc. priced Monday's sole deal, a $500 million issue of 4 3/8% five-year senior sustainability-linked bullet notes (Ba3//BB+) that came at par, in the middle of talk.

The deal was heard to be playing to $1.2 billion of demand at 1 p.m. ET Monday, according to a trader who added that at least a portion of it was in the form of limit orders at 4½%.

In the wake of Starwood just two issuers have deals on the active forward calendar.

As things stood at Monday's close the week's megadeal figures to be from Fertitta Entertainment, LLC, formerly known as Golden Nugget, LLC.

The Las Vegas entertainment and hospitality company is selling $3.7 billion of notes: $1.85 billion of seven-year senior secured first lien notes (expected ratings B1/B+) with initial guidance in the 4½% area and $1.85 billion of eight-year senior unsecured notes (expected ratings Caa2/CCC+) with initial guidance in the 6¼% area.

As of late Monday, each tranche was heard to be playing to around $1 billion of orders, according to a bond trader who added that the market is expecting some of the proceeds from the first lien bonds to be shifted to the concurrent $1.85 billion term loan.

Also Ciena Corp. began a brief roadshow on Monday for a $400 million offering of five-year senior notes (Ba1/BB), initially guided to yield 4¼% to 4 3/8%.

Meanwhile, volatility continued to roil the secondary space with the cash bond market opening the day down 1/8 point but closing the day largely unchanged.

The 10-year Treasury yield continued to hit new highs with the yield trading as high as 1.809% before coming in to close the day largely flat at 1.766%.

While the majority of deals that hit the secondary space last week have struggled below par, ZipRecruiter Inc.’s 5% senior notes due 2030 (B2/BB-/BB-) were not among them.

The notes continued to post gains after a strong break, trading up to a 101-handle in high-volume activity.

However, Realogy Holdings Corp.'s 5¼% senior notes due 2030 (B2/B+) continued to weaken with the notes hitting a new low.

Medline Industries’ two tranches of senior notes were also under pressure in high-volume activity.

Coinbase Global, Inc.'s two tranches of senior notes (Ba1/BB+) continued their downward momentum with the 3 5/8% notes due 2031 now on an 89-handle.

Junk ETFs see $1.05 billion Friday outflows

High-yield ETFs sustained $1.05 billion of daily outflows on Friday, the most recent session for which data was available at press time, according to a market source.

Those large outflows developed against a backdrop of capital markets volatility triggered by the Labor Department's non-farm payrolls report, which investors interpreted as a unlikely hindrance to an anticipated hike in the Fed Funds rate that could materialize before the end of 2022's first quarter, the source said.

The cash flows of the actively managed high-yield funds were absolutely flat on Friday, according to the market source.

ZipRecruiter in demand

ZipRecruiter’s 5% senior notes due 2030 continued to rise in high-volume activity despite the weakness in the general market.

The notes were up another ¼ point. They were changing hands in the 101¼ to 101½ context heading into the market close, a source said.

There was $37 million in reported volume.

The notes saw a strong break on Friday, rising to par 7/8 bid out of the gate.

In a heavily oversubscribed offering, ZipRecruiter priced an upsized $550 million, from $500 million, issue of the 5% notes at par.

The yield printed at the tight end of the 5% to 5¼% yield talk.

Realogy’s new low

Realogy’s recently priced 5¼% senior notes due 2030 continued to struggle in the aftermarket with the notes hitting a new low.

The 5¼% notes fell about ½ point and were changing hands in the 98 7/8 to 99 1/8 context heading into the market close.

The notes have struggled since the real estate company priced the $1 billion issue at par on Jan. 5.

The notes traded as low as 99¼ bid after breaking for trade, but pared their losses and were trading in the 99½ to 99 5/8 context at Friday’s close.

Medline under pressure

Medline’s two tranches of senior notes were under pressure in high-volume activity on Monday as accounts reduce rate and credit risk amid market volatility.

Medline’s 5¼% senior notes due 2029 (Caa1/B-/B-) sank below par in intraday activity.

The notes traded as low as 99½ before paring their losses alongside the broader market.

However, the notes were still poised to close the day down about 5/8 point and were changing hands in the 99¾ to par context heading into the market close.

There was $30 million in reported volume.

Medline’s 3 7/8% senior notes due 2029 (B1/B+/BB-) were down about ½ point to trade in the 98 to 98 3/8 context heading into the close.

There was about $22 million in reported volume.

Medline marked the largest LBO financing deal since the global financial crisis with the company pricing a $4.5 billion tranche of the 3 7/8% notes and a $2.5 billion tranche of the 5¼% notes at par in October.

Proceeds were used to fund the buyout of the company by a consortium of private equity firms.

Coinbase down again

Coinbase’s two tranches of senior notes continued to struggle with the 3 5/8% notes due 2031 now firmly on a 98-handle.

The 3 5/8% notes were down about ½ point to trade in the 89 1/8 to 89 5/8 context on Monday, according to a market source.

There was about $15 million in reported volume.

While the crypto-currency exchange’s shorter-duration notes continued to hold up comparatively well, they were also trending lower in light volume.

The 3 3/8% senior notes due 2028 also continued to trend lower. The notes were off about 3/8 point to trade in the 91 to 91 3/8 context.

Coinbase’s senior notes have struggled since pricing.

However, the rout in Treasuries and Bitcoin have added extra pressure to the notes which have been on a strong downtrend over the past week.

Bitcoin briefly broke below its $40,000 support on Monday but bounced off its low to change hands at $41,725, a decrease of 0.36%, shortly before 6 p.m. ET.

Indexes

The KDP High Yield Daily index fell 20 points to close Monday at 65.02 with the yield now 4.26%.

The index posted a cumulative loss of 72 points on the week last week.

The CDX High Yield 30 index gained 4 basis points to close Monday at 108.39.

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