Wynn Macau, Genworth, Pike, New Fortress price; Southwestern Energy, ON Semiconductor trade up

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 19 – The domestic high-yield primary market continued to churn out new issuance at an active clip with the daily average run rate now exceeding $2 billion for eight consecutive sessions.

On Wednesday, four issuers priced a cumulative $3.1 billion.

Genworth Mortgage Holdings, Inc. priced $750 million, New Fortress Energy Inc. priced an upsized $1 billion, Wynn Macau Ltd. priced $850 million, and Pike Corp. priced $500 million.

Meanwhile, it was another uneventful day in the secondary space with the market largely unchanged, a source said.

New deals remained in focus albeit with mixed performances.

ON Semiconductor Corp.’s newly priced 3 3/8% senior notes due 2028 (Ba2/BB) were trading with a large premium in high volume activity.

While the issue was small, Southwestern Energy Co.’s 8 3/8% senior notes due 2028 (Ba3/BB-) were active and traded up to a 101-handle.

Hannon Armstrong Co.’s 3¾% senior notes due 2030 were also trading at a premium to their discounted issue price.

However, iStar Inc.’s 5½% senior notes due 2026 (Ba3/BB/BB) saw a lackluster reception in the secondary space with the notes, at times, lagging their issue price.

Wednesday’s session

Four issuers priced single tranches of junk on Wednesday, for a total of $3.1 billion, as the roaring new issue market has now churned out $2 billion or more of high-yield bonds, daily, in eight consecutive sessions.

The market is very strong right now, said a trader focused on lower quality investment-grade bonds, crossovers and higher quality junk.

Secondary flows in the investment-grade market are pretty big.

In high yield they're fair.

People still have cash to put to work, although the huge calendar has reduced that amount of cash, the trader said.

However, there is still a lot of money flowing into high yield from other asset classes, especially investment-grade bonds, as people continue to look for yield.

Genworth Mortgage Holdings brought the sole drive-by deal of Wednesday’s session – a $750 million issue of 6½% five-year senior notes (Ba3/BB-) that priced inside of yield talk.

The deal was heard to have been driven into the market by as much as $1.25 billion of reverse inquiry, a trader said.

The rest of Wednesday's action cleared up a modest calendar of deals that had been on brief roadshows (“road” mostly being idiomatic for “telephone line”).

New Fortress Energy priced an upsized $1 billion (from $800 million) five-year senior secured notes (B1/B+) at the tight end of talk

Wynn Macau priced $850 million of senior notes (B1/BB-) in two tranches: a $250 million add-on to the company’s 5½% senior notes due Jan. 15, 2026 that priced atop final talk, and at the rich end of earlier talk, and a $600 million issue of new 5¾% eight-year senior notes that also priced atop final talk and tight to earlier talk.

And Pike Corp. priced a $500 million issue of 5½% eight-year senior notes (B3/CCC+) at the tight end of talk (see related stories in this issue).

ON Semiconductor in focus

ON Semiconductor’s 3 3/8% senior notes due 2028 were in focus on Wednesday with the notes trading with a healthy premium to their issue price.

The 3 3/8% notes were marked at par ¼ bid, par ¾ offered early in the session.

They rose as the session progressed and were seen at par ¾ bid, 101 offered heading into the market close, a source said.

The notes had heavy volume with almost $100 million on the tape during Wednesday’s session.

ON Semiconductor priced an upsized $700 million issue of the 3 3/8% notes at par on Tuesday.

Pricing came at the tight end of yield talk in the 4% area.

The deal was upsized from $500 million.

Southwestern Energy soars

Southwestern Energy’s 8 3/8% senior notes due 2028 soared in the aftermarket with the notes closing the day on a 101-handle.

The 8 3/8% notes traded to a low of par during Wednesday’s session.

However, the majority of prints were on a 101-handle with the notes seen at 101½ bid, 101¾ offered heading into the market close, a source said.

While the issue was small, the notes were active with more than $28 million in reported volume during Wednesday’s session.

The notes were trading well, which may be a reflection of investors’ attitude towards Southwestern Energy’s recently announced merger with Montage Resources, a source said.

Proceeds from the offering will be used to help take out Montage Resources’ senior notes.

The coupon was also hefty and the notes carry a mandatory redemption clause if the merger is not consummated.

Southwestern Energy priced a $350 million issue of the 8 3/8% notes at par on Tuesday.

Pricing came tighter than talk for a yield of 8½% to 8¾%.

Hannon Armstrong trades up

Hannon Armstrong’s 3¾% senior notes due 2030 were trading well above their discounted issue price in secondary market activity.

The 3¾% notes were wrapped around par early in the session, a source said.

They were marked at 99½ bid, par offered and stood poised to close the day at 99 7/8.

Hannon Armstrong priced an upsized $375 million issue of the 3¾% notes at 99 to yield 3.871% in a Tuesday drive-by.

Pricing came tight to yield talk in the 4% area. The issue size increased from $350 million.

iStar flat

iStar’s 5½% senior notes due 2026 saw a lackluster reception in the secondary space.

The notes were trading in a range of 99½ to par ½ and stood poised to close the day below par, a source said.

While the majority of deals have come at the mid-to-tight end of talk, iStar priced wide.

The REIT priced a $400 million issue of the 5½% notes at par on Tuesday, at the wide end of talk for a yield in the in the 5 3/8% area.

$735 million Tuesday inflows

After seeing two consecutive days of hefty outflows, the dedicated high-yield bond funds saw a robust $735 million of net daily inflows on Tuesday, according to a market source.

High-yield ETFs had $525 million of inflows on the day.

Actively managed high-yield funds saw $210 million of inflows on Tuesday, the source said.

With only Wednesday's daily fund flows numbers remaining to go into the tally, and factoring in the hefty outflows seen earlier in the week, the combined funds are tracking $716 million of net outflows in the week to Wednesday's close, according to the market source.

Indexes mixed

Indexes were again mixed on Wednesday, as they have been throughout the week.

The KDP High Yield Daily index shaved off 1 basis point to close Wednesday at 66.71 with the yield now 5.56%.

The index was down 3 bps on Tuesday and 9 bps on Monday.

The ICE BofAML US High Yield index gained 3.7 bps with the year-to-date return now negative 0.087%.

The index gained 7.5 bps on Tuesday after sliding 2.9 bps on Monday.

The CDX High Yield 30 index dropped 36 bps to close Wednesday at 104.41.

The index gained 29 bps on Tuesday and 48 bps on Monday.

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