Primary sells $6.79 billion in nine deals; PG&E circulates talk; secondary gains continue

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 16 – A torrid Tuesday in the domestic high-yield primary market saw a mix of issuers place a $6.79 billion face amount of new debt, most of it junk

Ford Motor Credit Co. LLC, EQM Midstream Partners LP, Standard Industries Inc., Warner Music Group Corp., Lummus Technology Inc., Dana Inc., Comstock Resources, Inc., Constellium SE, and Cleveland-Cliffs Inc. all tapped the market on Tuesday.

Several of the deals were massively upsized and came well inside of talk.

The forward calendar also grew with Navios South American Logistics Inc. joining with a $500 million offering.

And initial price talk circulated the market for PG&E Corp.’s highly anticipated $3.75 billion three-part megadeal.

Meanwhile, the secondary space continued to gain on Tuesday with the buyers outnumbering sellers as investors flocked back to risk assets.

“The Federal Reserve is basically propping everything up,” a source said.

The Federal Reserve’s announcement that it would begin to buy corporate bonds, better-than-expected retail sales numbers and President Donald Trump’s proposed $1 trillion infrastructure spending bill pushed the cash bond market up ½ point on Tuesday, sources said.

All eyes were on the active pipeline of deals with new paper from Lummus and Dana seeing a strong break.

Ford Motor Co.’s senior notes continued to gain in high-volume activity as the market awaited a new issue from the company’s financing arm.

Univision Communications Inc.’s 6 5/8% senior notes due 2027 (B2/B) topped par after struggling below following last Thursday’s sell-off.

$6.79 billion prices

A torrid Tuesday in the primary market saw a mix of issuers place $6.79 billion face amount of new debt, most of it junk

Ford Motor Credit priced a $1.75 billion issue of five-year senior notes (expected ratings Ba2/BB+) at par to yield 5 1/8%.

The yield printed on top of final yield talk. Initial guidance had the deal coming to yield 5 5/8 to 5¾%.

EQM Midstream Partners priced a massively upsized $1.6 billion amount of senior notes (Ba3/BB-) in two bullet tranches.

The deal included $700 million of five-year notes which priced at par to yield 6%. Initial talk was in the 6½% area.

It also included $900 million of seven-year notes which priced at par to yield 6½%. Initial talk was in the 7% area.

In a split-rated trade, Standard Industries priced a massively upsized $1.1 billion issue of 10-year senior notes (existing Ba2/confirmed BBB-) at par to yield 4 3/8%.

The issue size increased from $500 million.

The yield printed in the middle of yield talk in the 4 3/8% area. Initial guidance had the notes coming to yield in the mid-to-high 4% area.

Warner Music Group priced an upsized $535 million issue of 10-year senior secured notes (BB) at par to yield 3 7/8%.

The issue size increased from $525 million.

The yield printed 12.5 basis points through the 4% to 4¼% yield talk.

A €325 million offering of eight-year notes, non-callable for three years, is expected to price Wednesday.

Comstock Resources priced an upsized $500 million non-fungible add-on to its 9¾% senior notes due Aug. 15, 2026 (Caa1/CCC+/B+) at 90 to yield 12.096%.

The issue size was increased from $400 million.

The issue price came on top of price talk.

Lummus Technology priced a $460 million issue of eight-year senior notes (Caa1/B-) at par to yield 9%.

The yield printed at the tight end of the 9% to 9¼% yield talk. Initial guidance was in the mid-to-high 9% area.

The deal underwent document changes.

The 9% notes skyrocketed out of the gate and were changing hands in the 105½ to 106 context heading into the market close.

Dana priced a $400 million issue of eight-year senior notes (B2/BB-/BB+) at par to yield 5 5/8% in a Tuesday drive-by.

The yield printed 12.5 basis points inside of the 5¾% to 5 7/8% price talk.

Dana was three- to four-times oversubscribed at noon Tuesday, according to a trader who added that there was some reverse inquiry in the deal.

The notes shot up to a 101-handle shortly after pricing, a market source said.

France-based Constellium SE priced an upsized $325 million issue of eight-year senior notes (B2/B) at par to yield 5 5/8%.

The yield printed at the tight end of yield talk in the 5¾% area. Initial talk was in the low 6% area.

And Cleveland-Cliffs priced a $120 million add-on to its 6¾% senior secured notes due March 15, 2025 (Ba3/B) at 99.25, resulting in a 6.907% yield.

The deal priced at the rich end of price talk in the 99 area.

The calendar

Initial price talk circulated Tuesday on the expected PG&E Corp. $3.75 billion three-part public offering of senior secured notes (B1/BB-/BB).

The deal features a tranche of five-year notes talked to yield 5½% to 5¾%, a tranche of eight-year notes talked to yield 5¾% to 6%, and a tranche of 10-year notes talked to yield 6% to 6¼%.

Tranche sizes remain to be determined.

The notes are expected to price Friday.

Navios South American Logistics Inc. and Navios Logistics Finance (US) Inc. plan to price $500 million of five-year senior secured notes on Thursday.

Initial guidance has the notes coming to price in the high 9% to 10% area.

High-yield accounts are having a look, sources say.

And Synthomer plc began a telephone roadshow on Tuesday for a €520 million offering of five-year senior notes (existing ratings Ba2/B).

Ford in focus

Ford’s three tranches of senior notes were in focus and making large gains on Tuesday as the company’s financing arm prepped a new offering.

Ford’s 8½% senior notes due 2023 gained another point to trade up to 108 on Tuesday with more than $31 million in reported volume, according to a market source.

The 9% senior notes due 2025 gained 3 points to trade up to 111½ shortly before the market close. There was more than $48 million in reported volume during the session.

Ford’s 9 5/8% senior notes due 2030 rose 2 points to 120 with $21 million in reported volume.

The notes have staged a dramatic recovery over the past few weeks.

Each tranche initially struggled in the aftermarket and traded well below par until the Federal Reserve announced the launch of its secondary market corporate credit facility in mid-May.

Ford priced a $3.5 billion tranche of the 8½% notes, a $3.5 billion tranche of the 9% notes and a $1 billion tranche of the 9 5/8% notes at par on April 17.

Univision tops par

Univision’s 6 5/8% senior notes due 2027 traded back up to par on Tuesday after dropping below late last week.

The notes were wrapped around par for the majority of Tuesday’s session, sources said.

The notes were active with more than $20 million on the tape.

While the notes initially traded with a premium after the Spanish-language television network priced the $1.5 billion issue at par on June 5, they dropped below in the sell-off that rocked the market last Thursday.

Monday fund flows

High-yield mutual funds had $334 million of daily cash inflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were flat on the day, sustaining $5 million of outflows on Monday, the source said.

Indexes mixed

Indexes were again mixed on Tuesday after a mixed start to the week.

The KDP High Yield Daily index rose 56 basis points to close Tuesday at 66.38 with the yield now 6.18%.

The index took off 7 bps on Monday.

The ICE BofAML US High Yield index jumped 133.6 bps with the year-to-date return now negative 2.808%. The index was down 10.1 bps on Monday.

The CDX High Yield 30 index shaved off 9 bps to close Tuesday at 101.63. The index gained 115 bps on Monday.

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