Civitas, Windsor/Univar price in junk primary; GrafTech holds premium; funds add $265 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 22 – Four issuers priced a total of five tranches of junk-rated, dollar-denominated notes for an overall total of $4.25 billion on Thursday, the biggest day in the primary market since early April.

The session’s biggest issuer was Civitas Resources, Inc., which priced $2.7 billion of senior notes (B1/BB-/BB-) split 50-50 between two tranches.

A $1.35 billion tranche of five-year notes priced at par to yield 8 3/8%, at the tight end of talk.

The long-dated tranche came as a $1.35 billion issue of eight-year notes that priced at par to yield 8¾%, on top of talk.

There was $6 billion of demand across both tranches at 1 p.m. ET on Thursday, according to a bond trader who had the notes in both tranches heading into the close at par ¾ bid, 101 offered.

Meanwhile, the bond financing backing Apollo’s buyout of Univar Solutions Inc., which had commandeered a lot of attention in the market during late spring, priced on Thursday.

Issuing entity Windsor Holdings III, LLC priced a downsized $800 million issue of seven-year senior secured notes (B2/B+/BB+) at par to yield 8½%, in the middle of talk.

The deal was downsized from about $1 billion after having been previously decreased from the $1.2 billion announced size.

Proceeds from the bonds were shifted to the concurrent bank loan tranches.

The new Windsor Holdings 8½% notes were lagging their issue price heading into the Thursday close, at 99 5/8 bid, 99 7/8 offered, a trader said.

Thursday’s new issue volume was the biggest since April 4, which saw $4.33 billion in three tranches, including $3.84 billion of the Cloud Software Group, Inc. (Citrix Systems, Inc.) hung bridge.

In the wake of Thursday’s action two deals remain on the active forward calendar, although timing on each of them remains to be determined, sources said.

HighPeak Energy Inc. remains in the market with a $575 million offering of five-year senior notes (B3/B+/B+). Guidance on that deal, which was announced to the market on June 12, has pushed out to the mid-to-high 12% area from earlier whisper of 11½% to 12%, according to a trader.

In a deal announced earlier this week, Houston-based operator of support vessels for the offshore energy industry Tidewater Inc. is attempting to place $250 million of unsecured notes.

The offer, which is being managed by a syndicate of Nordic banks, has guidance in the mid-to-high 10% area.

Another soft day

Meanwhile, the secondary space saw another soft day as the market continued to pull back from its recent rally amid a hawkish tone from the Fed, which signaled more rate hikes are in store.

The cash bond market was off about 1/8 point.

However, trading activity was focused on the new paper entering the space with new deals performing well.

GrafTech Global Enterprises Inc.’s new 9 7/8% senior secured notes due 2028 (B1/BB) were holding the strong premium gained after breaking for trade the previous session.

However, they were unchanged on the day.

OneMain Finance Corp.’s 9% senior notes due 2029 (Ba2/BB) remained active, although the notes were little changed and continued to trade at a slight premium to par.

Outside of recent issues, Spirit AeroSystems Inc.’s senior notes again saw selling pressure with the Boeing supplier set to stop production at its Wichita, Kan., plant as its union prepared to strike.

Meanwhile, high-yield mutual funds and exchange-traded funds continued to see inflows with $265 million entering the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

GrafTech holds premium

GrafTech’s new 9 7/8% senior secured notes due 2028 were holding on to the strong gains made after breaking for trade the previous session.

However, they were little changed in heavy volume on Thursday.

The 9 7/8% notes continued to trade on a 98-handle and were changing hands in the 98¼ to 98¾ context heading into the market close, a source said.

There was $56 million in reported volume.

GrafTech priced a $450 million issue of the 9 7/8% notes at 97.456 to yield 10½% on Wednesday.

The deal priced at the tight end of talk for a yield of 10½% to 10¾% with timing of the offering accelerating.

OneMain active

OneMain’s 9% senior notes due 2029 continued to see active trade although with little movement in price.

The notes remained in the par to par ¼ context in heavy volume on Thursday, a source said.

There was $22 million in reported volume.

The notes have traded in a tight range of par to par ¼ since the $500 million issue priced at par on Tuesday.

Spirit AeroSystems lower

Spirit AeroSystems’ senior notes were lower on Thursday as trouble mounted for the aerospace parts manufacturer.

Spirit AeroSystems’ 4.6% senior notes due 2028 (Caa1/CCC+) sank 1½ points and its 9 3/8% senior secured first-lien notes due 2029 (Ba2/BB-) fell about 1 point as workers at its Wichita, Kan., plant prepared to strike.

The 4.6% notes were changing hands in the 82½ to 83 context following the news with the yield about 8 7/8%, a source said.

There was $10 million in reported volume.

The 9 3/8% notes were changing hands in the 105½ to 105 ¾ context with the yield about 7¾%.

There was $7 million in reported volume.

Spirit’s 7½% senior secured second-lien notes due 2025 (B3/B-) were unchanged in light volume with the notes changing hands at 99 with a yield of 8%.

Spirit’s longer-duration notes were under pressure after the International Association of Machinists and Aerospace Workers voted to reject a contract offer and go on strike.

Spirit will suspend operations at the Wichita plant, and the strike is scheduled to go into effect on Saturday.

Spirit AeroSystems notes had only recently recovered from heavy selling in April after the company disclosed a gaffe in parts that resulted in Boeing halting the delivery of some of its 737 Max jets.

Indexes

The KDP High Yield Daily index was down 16 points to close Thursday at 50.41 with the yield 7.41%.

The index was down 13 points on Wednesday and 7 points on Tuesday.

The ICE BofAML US High Yield index was down 20.6 basis points with the year-to-date return now 4.808%.

The index was down 31.4 bps on Wednesday and 8.3 bps on Tuesday.

The CDX High Yield 30 index was down 14 bps to close Thursday at 101.86.

The index was down 33 bps on Wednesday and 18 bps on Tuesday.

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