High-yield forward calendar eyed; Level 3 notes bounce; Gray Television selling continues

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 8 – The dollar-denominated primary market was quiet on Friday, and the first week of the bond market’s autumn came to a close having seen an underwhelming $815 million face amount of issuance in three tranches.

However, the pace promises to pick up in the week ahead, with an active forward calendar that features $2.35 billion heading into the weekend and more expected to be announced, sources said.

Star Parent, Inc. is roadshowing the $1.7 billion offering of seven-year senior secured notes (B1/B) coming in support of the buyout of Syneos Health Inc.

Banijay Entertainment SASU and Greenfire Resources Ltd. are also in the market with offerings.

The shadow calendar also continues to take shape with a $4 billion equivalent amount of senior secured notes backing the buyout of Worldpay and a possible offering from Shelf Drilling Holdings, Ltd. also expected.

Meanwhile, it was a quiet and flat day in the secondary space with the weekly issuance a disappointment to many.

Trading activity surrounding Permian Resources Corp.’s new 7% senior notes due 2032 (B2/BB-/BB-) tempered, although the notes improved after a flat start in the aftermarket.

With market players awaiting the active pipeline and fresh inflationary data in the week ahead, many remained on the sidelines on Friday.

However, topical news continued to spark movement in outstanding issues.

Lumen Technologies, Inc.’s subsidiary Level 3 Financing, Inc.’s senior notes (B3/CCC+) were once again in focus with the notes bouncing after Lumen presented at the Goldman Sachs Communacopia + Technology Conference.

Gray Television, Inc.’s senior notes (B3/B) continued to see selling pressure with investors wary of the sector amid continued carriage fee disputes.

Forward calendar eyed

Star Parent is on the road through Wednesday with a $1.7 billion offering of seven-year senior secured notes (B1/B).

Initial guidance is in the 9% area.

The notes will support the buyout of Syneos Health by Elliott Investment Management, Patient Square Capital and Veritas Capital.

French TV producer/distributor Banijay Entertainment is shopping a $350 million minimum offering of 5.5-year senior secured notes (B1/B+/BB-). The roadshow wraps up Monday.

Initial talk is in the low-to-mid 8% area.

Banijay Entertainment’s overall €910 million equivalent two-part offering also includes a €350 million minimum tranche of the notes with initial guidance in the mid-to-high 7% area.

Calgary-based Greenfire Resources is on the road with a $300 million offering of five-year senior secured notes (B3/B+), set to price during the week ahead.

Initial guidance has the deal coming with a 12% all-in yield at a discount of about two points.

The Sept. 11 week could also see the launch of an M&A megadeal, according to a portfolio manager.

A $4 billion equivalent amount of senior secured notes backing the buyout of Worldpay is expected to come in tranches of dollar- and euro-denominated notes, the manager said, adding that Goldman Sachs and JPMorgan will have the lead.

And United Arab Emirates-based Shelf Drilling, engaging the services of Goldman Sachs, held one-on-one meetings with bond investors in the United States ahead of a possible speculative-grade notes offering that could surface in the week ahead, the trader said, with proceeds to address intermediate-term maturities.

The company’s EM zip code notwithstanding, domestic high-yield accounts are having a look, the source added.

Permian improves

Trading of Permian Resources’ new 7% senior notes due 2032 was thin on Friday, although the notes improved in the light volume.

The 7% notes gained 1/8 point.

They were marked at par 1/8 bid, par 5/8 offered early in the session and closed the day wrapped around par 3/8.

The notes have largely been stuck at par since breaking for trade on Wednesday with the tight pricing of the notes leaving little room for movement.

Permian priced a $500 million issue of the 7% notes at par in a Wednesday drive-by.

Level 3 bounces

Level 3’s senior notes were once again in the spotlight following a volatile few months with buyers once again emerging for the notes following a presentation by parent company Lumen at an investors conference.

The notes bounced 1 to 2 points after heavy selling in the name due to downgrades from Moody’s Investors Service, S&P and Fitch Ratings in August.

The heavy selling in August was preceded by heavy buying in July as investors tapped law firms to explore the use of proceeds from an overseas asset sale.

Level 3’s notes are now more or less flat to their trading levels in early July.

The 4 5/8% senior notes due 2027 gained 1 3/8 point to close the day at 77 with the yield 12%, according to a market source.

There was $12 million in reported volume.

The 4¼% senior notes due 2028 jumped 2 points to close the day in the 65½ to 66 context, according to a market source.

The yield was about 14¼%.

There was $8 million in reported volume.

The 3¾% senior notes due 2029 jumped 1½ points to close the day at 60 with the yield about 14%.

There was $7 million in reported volume.

The buying interest came after Lumen’s chief financial officer presented at the Goldman Sachs Communacopia + Technology Conference, a source said.

Lumen investors are already organizing out of concern about the ability of the company to meet its upcoming maturities with $1.8 billion coming due in 2025 and $9.4 billion due in 2027.

Gray Television down again

Gray Television’s senior notes continued to see selling on Friday with the sector under pressure amid continued carriage fee disputes.

Gray’s 7% senior notes due 2027 fell another 1 point to close the day at 84½ with the yield 12 3/8%, according to a market source.

There was $11 million in reported volume.

The 4¾% senior notes due 2030 sank another 1½ points to close the day at 63 with the yield 12 7/8%.

The notes have fallen 3½ to 4 points on the week, a source said.

Investors have soured on the sector since the Disney-Charter carriage fee dispute erupted last week.

Fund flows

High-yield exchange-traded funds saw a healthy $412 million amount of daily cash inflows on Thursday, according to a market source.

Actively managed funds endured negative cash flows on Thursday, sustaining $64 million of outflows on the day.

News of Thursday’s daily cash flows follows a Thursday report that the combined funds saw $252 million of net inflows on the week to the Wednesday close.

The ETFs accounted for that amount and more, posting $452 million of inflows on the week, their second weekly inflow in the past seven weeks, the source said.

Meanwhile, the actively managed accounts, the asset managers, saw their fourth weekly outflow in the past six weeks.

Year-to-date cash flows of the dedicated junk bond funds stood at negative $11.7 billion at Thursday’s close, according to the market source.

Indexes

The KDP High Yield Daily index added 6 basis points to close Friday at 50.28 with the yield 7.56%.

The index was down 1 bp on Thursday, 11 bps on Wednesday and 20 bps on Tuesday.

The index was down 26 bps on the week.

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