DISH prices; Spirit AeroSystems on deck; IAA jumps on buyout; Gray Television hits new low

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 7 – Two high-yield bond deals priced on Monday, one in London and one in New York.

DISH Network Corp. priced a $2 billion issue of 11¾% five-year senior secured notes (Ba3/B+) at 98.171 to yield 12¼%.

The coupon came on top of coupon talk, the price came in line with price talk and the yield came tight to yield talk.

The bonds broke lower, according to a sellside source who had them 97¼ bid, 97 ¾ offered, heading into the Monday close.

Accounts canvassed spoke of getting full allocations, the source added.

The deal underwent document changes, which boosted the book-size to $2.6 billion, according to the sellsider who added that there appeared to be a healthy amount of reverse inquiry.

Meantime a bond trader had the new DISH 11¾% at 97 ½ mid, commenting that they felt weak, and adding that there was little if any indication of a stabilizing bid from the dealer.

In the euro-denominated market France-based automotive supplier Faurecia SLB priced an upsized €700 million issue (from €400 million, then €550 million) of senior sustainability-linked notes due June 15, 2026 (Ba2/BB/BB+) at par to yield 7¼% in a drive-by.

The yield printed at the tight end of talk.

One dollar-denominated issuer began a roadshow

Spirit AeroSystems began marketing an $800 million offering of senior secured notes due November 2029 on Monday.

Initial guidance has the notes coming to yield 9½% to 9¾%.

Pricing is expected on Wednesday.

Elsewhere on the active forward calendar Neptune BidCo US Inc./Nielsen Holdings plc is in the market with a $1.96 billion offering of senior secured notes due April 15, 2029.

Early guidance specifies a 9¼% to 9½% coupon at a discount to yield in the 10% to 11% range, with much of the demand coming in the high 10% area to 11%, a trader said.

Covenant changes are expected, and the deal appears headed for a Wednesday execution, a sellside source said.

Meanwhile the market awaits an update on the Pegasus Merger Co./Tenneco Inc. $1 billion offering of six-year senior secured notes, with early guidance specifying a coupon of 8% at a discount to yield 12%, and expected to price before the end of the week.

Meanwhile, the secondary space was largely unchanged on Monday as market players eye the mid-term elections and inflation data due later in the week for the next major catalyst for market movement.

Topical news was the main driver for trading activity on Monday as the secondary space awaits the deluge of new paper in the pipeline.

IAA Spinco Inc. (Insurance Auto Auctions, Inc.)’s 5½% senior notes due 2027 (B2/B) were in focus on Monday with the notes making large gains following news the company would be acquired in a $7.3 billion deal.

Gray Television, Inc.’s 5 3/8% senior notes due 2031 (B3/B) plummeted to a historic low following last Friday’s earnings miss.

IAA’s buyout

IAA’s 5½% senior notes due 2027 made large gains in heavy volume on Monday following news Ritchie Bros Auctioneers Inc. will acquire the auto retailer in a $7.3 billion cash-and-stock transaction.

The 5½% notes jumped 4½ points to a 98-handle.

They were changing hands in the 98 3/8 to 98 5/8 context throughout the session, according to a market source.

There was $31 million in reported volume.

Ritchie Bros., a Vancouver-based auctioneer of industrial equipment, will pay $10 in cash and 0.5804 shares in common stock for each IAA share.

The deal’s $7.3 billion enterprise value includes $1 billion in debt.

New senior secured or unsecured notes may be part of the financing package that will replace the $2.8 billion covenant-lite bridge loan backing the acquisition.

The deal is slated to close in the first half of 2023.

Gray falls

Gray Television’s 5 3/8% senior notes due 2031 plummeted to a new historic low following an earnings miss.

The 5 3/8% notes sank 4 points.

The notes broke below a 72-handle in intraday activity but were changing hands in the 72 to 72½ context heading into the market close, a source said.

The yield on the notes was about 10 1/8%.

There was $15 million in reported volume.

Monday marked the lowest level for the notes since the $1.3 billion issue priced at par in October 2021.

The television broadcast company’s notes sank to new lows following a large earnings miss last Friday.

Fund flows

The daily cash flows of the dedicated high-yield bond funds were flat to slightly negative on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds sustained $142 million of outflows on the day.

High-yield ETFs took in cash on Friday, posting $131 million of inflows on the day, the source said.

As reported, the combined funds posted a huge $4.3 billion amount of net inflows in the week to the Nov. 2 close, according to fund-tracker Refinitiv Lipper.

Indexes

The KDP High Yield Daily index rose 7 points to close Monday at 50.98 with the yield now 7.89%.

The index posted a cumulative loss of 71 points on the week last week.

The ICE BofAML US High Yield index rose 11.4 bps with the year-to-date return now negative 12.924%.

The CDX High Yield 30 index gained 33 bps to close Monday at 99.44.

The index posted a cumulative loss of 82 bps on the week last week.

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