Altice drives by junkland, old issues active; Allwyn starts roadshow; Lindblad at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 18 – The junk bond primary market used Tuesday for a new offering of notes from Altice USA, Inc.

Meanwhile, it was another uneventful day in the secondary space with the cash bond market launching the day strong but deflating into the close, sources said.

The market struggled, seeking direction, with the slew of recent bank earnings doing little to move the needle in the secondary space.

“It’s been really, really quiet. There’s very low conviction across asset classes,” a source said.

Lindblad Expeditions Holdings, Inc.’s 9% senior secured notes due 2028 (B3/B) were unchanged after a strong break with the notes holding a solid premium to their issue price.

CSC Holdings, LLC’s outstanding issues were active on the back of the new Altice offering with the short-dated 5¼% senior notes due 2024 (Caa1/B-) the largest benefactor of the new offering.

Spirit AeroSystems Inc.’s 7½% senior secured second-lien notes due 2025 (B3/B-) pared their losses from the previous week with the notes returning to a 99-handle.

Altice

Altice USA, a name that has been bandied about the new issue market for several weeks, priced Tuesday's sole deal, a $1 billion issue of CSC Holdings 11¼% five-year senior guaranteed notes (B1/B) that came at par to yield 11.245% in a drive-by.

The yield printed slightly inside of the 11¼% to 11½% yield talk. However, the yield came within the 11% to 11½% initial guidance.

By midafternoon on Tuesday the offer was heard to be playing to $4.5 billion of demand, a trader said.

Interestingly, the company declined to discuss its first-quarter earnings during the conference call with investors, the trader remarked, adding that management stated from the outset that they would not be discussing those earnings.

Nevertheless, the deal was multiple times oversubscribed.

It likely came on a fair amount of reverse inquiry, said the trader, a good deal of it emanating from holders of the CSC Holdings 5¼% senior notes due June 2024, who were exercising self-help by playing Tuesday's deal.

The issuer came to market to address bank debt and make provision for capital expenditures.

They will not take out those 2024 notes until closer to maturity because of the fact that the note is a bullet, and the coupon, by contemporary standards, is low, the trader said.

Another trader saw the new CSC Holdings 11¼% guaranteed notes going out Tuesday at par ½ bid, 101 offered, and added that the deal was trading with an implied yield of 11%, which seems to indicate that investors are hungry for big coupons.

Away from Altice, European lottery operator Allwyn began marketing a €1.3 billion equivalent three-part offering of Allwyn Entertainment Financing (UK) plc senior secured notes (expected ratings BB/BB-). The offering will include: euro-denominated seven-year fixed-rate notes, initial talk in the mid-to-high 7% area; euro-denominated six-year floating-rate notes, in the market with initial spread talk in the Euribor plus the mid-400 basis points area, and discount talk of one point to 1.5 points; and dollar-denominated six-year fixed-rate notes, initial talk low-to-mid 8% area.

Tranche sizes remain to be determined, however indications are that the floating rate tranche is expected to come sized at around €250 million, with the remainder to be distributed between the dollar and euro fixed-rate tranches, a market source said.

Lindblad at a premium

From Monday’s new issuance, Lindblad’s 9% senior secured notes due 2028 were unchanged after a strong break with the notes continuing to trade at a healthy premium to their issue price.

The 9% notes were marked at par ¾ bid, 101 offered heading into the market close, a source said.

There was $25 million in reported volume.

Lindblad priced a $275 million issue of the 9% notes at par in a drive-by.

The yield printed at the wide end of talk for a yield of 8¾% to 9%.

CSC active, short-duration gains

CSC Holdings’ outstanding senior notes were active on the back of the company’s new offering with the short-dated 5¼% senior notes due 2024 (Caa1/B-) the largest benefactor.

While CSC Holdings’ longer duration notes were largely unchanged in the heavy volume, the 5¼% notes shot up almost 2 points.

The 5¼% notes were changing hands in the 98¾ to 99¼ context on Tuesday with the yield about 6 1/8%.

There was $25 million in reported volume.

CSC Holdings’ 4½% senior guaranteed notes due 2031 (B1/B) were largely unchanged with the notes continuing to trade in the 70¼ to 70¾ context with the yield about 9 5/8%.

There was $17 million in reported volume.

The 7½% senior notes due 2028 (Caa1/B-) closed the day unchanged at 66 with the yield 18¼%.

The 5½% senior guaranteed notes due 2027 (B1/B) also closed the day largely unchanged at 84 7/8 with the yield 10¼%.

There was $16 million in reported volume.

While CSC Holdings’ new offering sparked activity in its outstanding notes, the largest price movement was in its nearest dated maturities.

Spirit AeroSystems rebounds

Spirit AeroSystems’ 7½% senior secured second-lien notes due 2025 were on the rebound on Tuesday after a Boeing supply gaffe drove the notes lower the previous week.

The 7½% notes jumped 1 point to return to a 99-handle.

They closed the day at 99 5/8 with the yield 7.7%, according to a market source.

There was $15 million in reported volume.

While still below their previous level, the notes pared their losses after falling 1½ points the previous week following news Spirit AeroSystems was the supplier responsible for the non-conforming parts that caused Boeing to halt delivery of some of its 737 Max jets.

Fund flows

The daily cash flows of the dedicated high-yield bond funds were generally flat on Monday, with the combined funds seeing $14 million of net inflows.

High-yield ETFs saw $34 million of inflows on the day.

However actively managed high yield-funds were negative on the day, sustaining $20 million of outflows on Monday, the source said.

The combined funds are tracking a very hefty $3.2 billion of net inflows on the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index gained 3 points to close Tuesday at 51.92 with the yield 7.06%.

The index was down 10 points on Monday.

The ICE BofAML US High Yield index rose 14.6 bps with the year-to-date return now 4.439%.

The index was down 19.8 bps on Monday.

The CDX High Yield 30 index fell 14 bps to close Tuesday at 101.55.

The index inched up 3 bps on Monday.

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