Southwestern gains on strong day for energy; Sylvamo climb continues; Teva on the rise

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 30 – Amid a dearth of new issue news on Monday, the high-yield primary market appeared poised to limp to the end of summer.

The European market, which is expected to reactivate this week, failed to do so on Monday.

One deal – a euro-denominated one – is in the market.

Oslo-based debt collector Axactor SE was scheduled to begin marketing a €300 million offering of five-year senior notes (Ba3/B) on Monday, by means of telephone calls with investors.

Meanwhile, the secondary space launched the week on firm footing although volume remained light with liquidity issues continued to mar the market, a source said.

With no new paper entering the space and none expected over the course of the week, several recent issues that initially struggled in the aftermarket continued to improve on Monday.

Southwestern Energy Co.’s 5 3/8% senior notes due 2030 (Ba3/BB-/BB-) hit their highest level since pricing on Monday as crude oil futures continued to rebound.

Sylvamo Corp.’s 7% senior notes due 2029 (B1/BB) also continued to climb higher.

Outside of recent issues, Teva Pharmaceutical Industries’ 4.1% senior notes due 2046 were on the rise following the release of data from a long-term study.

Southwestern gains

Southwestern’s 5 3/8% senior notes due 2030 hit their highest level on Monday since pricing at par on Aug. 16.

The notes were up about 5/8 point. They were marked at 103 bid, 104 offered early in the session and were changing hands in the 103 5/8 to 103 7/8 context heading into the market close, sources said.

The notes were stuck on a par-handle until last week when improving oil futures and a slow-down in the new issue calendar pushed the notes higher.

Monday was a strong day for the energy sector as crude oil futures continued to climb higher.

WTI crude oil futures settled at $69.12, an increase of 38 cents or 0.55%, on Monday. Brent crude oil futures settled at $78.30, an increase of 60 cents or 0.83%.

Sylvamo up again

Sylvamo’s 7% senior notes due 2029 continued to climb higher on Monday with the notes trading north of 104 early in the session, according to a market source.

The 7% notes climbed to a 103-handle last Friday after launching last week on a par-handle.

Sylvamo priced a downsized $450 million, from $500 million, issue of the 7% notes at par on Aug. 20.

The deal was heard to have struggled during bookbuilding with the notes undergoing covenant changes and pricing well wide of the initial guidance, which was in the high 5% area.

Official price talk was for a yield of 6¾% to 7%.

Teva on the rise

Teva’s 4.1% senior notes due 2046 were on the rise in active trading on Monday following the release of data from a long-term clinical study.

The 4.1% notes climbed 2¾ point to close the day at 89½, according to a market source.

The notes were yielding 4.82%.

Teva’s 4.1% notes were posting gains after the pharmaceutical company released data from a open-label extension study for the use of the company’s treatment Austedo in the younger population.

While the study was not considered statistically significant, it found that the safety profile was similar across the two age groups.

Austedo is a treatment for tardive dyskinesia.

$770 million Friday inflows

The dedicated high-yield bond funds saw a solid-or-better $770 million of daily net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $490 million of inflows on the day.

Actively managed high-yield funds saw $280 million of inflows on Friday, the source said.

Indexes

The KDP High Yield Daily index gained 10 basis points to close Monday at 70.15 with the yield now 3.64%.

The index posted a cumulative gain of 29 bps on the week last week.

The CDX High Yield 30 index was flat on Monday, closing the day flush with Friday at 109.83.

The index rose 76 bps on the week last week.

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