Secondary quiet yet firm; American Airlines gains continue; First Quantum pares losses

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 22 – The high-yield primary market remained shuttered Thursday ahead of the Thanksgiving holiday, which will extend into a four-day weekend for some market participants, while others expect to be back to their desks on Friday morning.

Prior to the pre-holiday week, each of the previous two weeks saw junk-rated, dollar-denominated issuance top $8 billion, and a syndicate banker looks for a similar new issue pace in the run-up to year-end, starting when business gets underway on Monday.

The banker looks for an additional $10 billion of issuance before 2023 primary market business concludes.

Junk issuance for 2023 to Thanksgiving ($159.8 billion) is a full 35% above the previous year’s anemic $103.4 billion, for the same interval.

However, the 2023 pre-Thanksgiving total is 42% below the $277.5 billion average pre-Thanksgiving issuance seen over the past half decade, according to Prospect News data.

The biggest year to Thanksgiving came in the record-setting year of 2021. In that year to the Thanksgiving holiday, which came on Nov. 25, the market put up a whopping $466.8 billion.

Post-Thanksgiving issuance in the record-setting year of 2021 came in a bit shy of the $10 billion mark, with 2021 finishing at $476.4 billion, the greatest amount of yearly issuance in the history of the market.

Meanwhile, the secondary space was quiet yet firm on Wednesday on the eve of the Thanksgiving holiday in the United States.

The cash bond market was up about 1/8 point in light volume with recent issues continuing to drive volume, a source said.

The new deals to price since the dramatic post-CPI rate move of the previous week have had mixed performances in the secondary with several trading underwater.

Avis Budget Car Rental, LLC/Avis Budget Finance, Inc.’s 8% senior notes due 2031 (B1/BB-) were a notable example with the notes unchanged on Wednesday at 98½ bid, 99 offered after pricing at 99.341 to yield 8 1/8% on Nov. 15.

However, American Airlines, Inc.’s new 8½% senior secured notes due 2029 (Ba2/BB/BB-) continued to see lift-off, adding to the strong gains of the previous two sessions.

First Quantum Minerals Ltd.’s beleaguered 8 5/8% senior notes due 2031 (/B+) saw a temporary reprieve on Wednesday with buyers lifting the notes after they hit a new all-time low the previous session.

American gains altitude

American Airlines’ new 8½% senior secured notes due 2029 continued to gain altitude on Wednesday, climbing another ½ point to close the day on a 101-handle.

The 8½% notes were trading in the 101¼ to 101¾ context throughout the session, a source said.

There was $13 million in reported volume.

The 8½% notes saw a slow start in the aftermarket with the notes flat when the $1 billion issue, which priced at par, broke for trade on Nov. 17.

However, they saw lift-off on Monday and have made solid gains over the past three sessions.

First Quantum pares losses

First Quantum’s beleaguered 8 5/8% senior notes due 2031 (/B+) saw a temporary reprieve from the heavy selling of the past month.

Buyers lifted the notes 1¼ points after they hit an all-time low earlier in the week.

The notes returned to an 80-handle and were trading in the 80 to 80¼ context heading into the market close, a source said.

There was $10 million in reported volume.

The notes traded down to a 78-handle on Monday.

The $1.3 billion issue priced at par in May.

First Quantum’s capital structure has been decimated over the past month as protests put the company’s largest asset, its Panamanian copper mine, in jeopardy.

First Quantum’s senior notes have seen heavy selling since the Panamanian president called for a citizen’s vote on the country’s contract with First Quantum, which is scheduled for Dec. 17.

The citizen’s vote was in response to widespread protests about the government’s approval of a 20-year contract with First Quantum.

However, protests have escalated in recent weeks with the company warning that it may have to halt operations at the mine due to a blockade at the port.

The 8 5/8% notes were trading in the 97 to 98 context in mid-October before doubts were cast over the future of the Panamanian copper mine.

Indexes

The KDP High Yield Daily index added 10 basis points to close Wednesday at 48.94 with the yield now 7.59%.

The index fell 46 bps on Tuesday after adding 11 bps on Monday.

The CDX High Yield 30 index gained 30 bps to close Wednesday at 103.89.

The index slid 1 bps on Tuesday.

© 2015 Prospect News.
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