Junk: StoneX, FirstCash price issues; AAR shoots higher; funds see first outflow of 2024

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 15 – Thursday’s session in the dollar-denominated junk primary market saw StoneX price a $550 million issue of seven-year senior secured second-lien notes (Ba3/BB-) at par to yield 7 7/8%, at the tight end of talk.

Timing was accelerated. When announced Thursday morning the deal was scheduled to remain in the market until Friday.

Also, FirstCash, Inc. priced a $500 million issue of 6 7/8% eight-year senior notes (Ba2/BB) at par, at the tight end of talk.

Meanwhile, the secondary space continued to firm on Thursday with the market recuperating from Tuesday’s post-CPI sell-off, which sources described as a knee-jerk reaction to the report’s unexpectedly high inflation figures.

The macro data that has come in since has painted an ambiguous picture of inflation and the economy.

The Producer Price Index report was revised lower than expected on Wednesday, reflecting an easing of inflationary pressures.

While retail sales figures released Thursday fell more than expected, reflecting a pull-back by the surprisingly resilient consumer, jobless claims also came in much lower than expected, reflecting the continued strength of the labor market.

Treasuries were largely flat as market players sifted through the latest macro data.

However, the secondary space was firm with the cash bond market adding about ¼ point, sources said.

New and recent deals were dominating the tape.

The strong demand for AAR Corp.’s 6¾% senior notes due 2029 (Ba2/BB) seen during bookbuilding followed the notes into the secondary space with the notes shooting higher in heavy volume after a strong break.

TransDigm Inc.’s two tranches of first-lien senior secured notes (Ba3/B+) continued to improve in active trade with the notes now trading at a premium to their issue price.

Outside of new paper, earnings-related news continued to spark large movements in the space.

Avis Budget Group, Inc.’s senior notes (B1/BB-) were again driven lower on Thursday with the notes seeing some selling pressure since their Tuesday earnings report.

Meanwhile, high-yield mutual funds and exchange-traded funds saw the first outflow of 2024 with $88.8 million leaving the space in the week through Wednesday’s close.

AAR gains continue

AAR’s 6¾% senior notes due 2029 continued to shoot higher after a strong break with the demand seen during bookbuilding following them into the secondary space.

The 6¾% notes were up another ¼ point to a 101-handle.

They closed the day in the 101 to 101¼ context, a source said.

The notes played to strong demand during bookbuilding with the notes upsizing and pricing through talk.

AAR priced an upsized $550 million, from $500 million, issue of the 6¾% notes at par on Wednesday.

Pricing came tighter than talk for a yield in the 7% area.

Timing was accelerated with the deal initially slated to price during Thursday’s session.

TransDigm at a premium

TransDigm’s recently priced tranches of first-lien senior secured notes continued to improve in active trade on Thursday with the notes now at a premium to their issue price.

The 6 3/8% senior secured notes due 2029 added ¼ point with the notes closing the day wrapped around par 3/8, according to a market source.

The 6 5/8% senior secured notes due 2032 added 3/8 to ½ point.

The notes were trading in the par ¼ to par ½ context heading into the market close.

While TransDigm’s mega-deal played to heavy demand during bookbuilding, the notes were driven to a 99-handle amid Tuesday’s heavy market conditions.

TransDigm priced a $2.2 billion tranche of the 6 3/8% notes and a $2.2 billion tranche of the 6 5/8% notes at par in a Monday drive-by.

Avis lower

Avis’ senior notes continued to move lower on Thursday with the notes seeing selling pressure since the rental car company reported earnings on Tuesday.

Avis’ 8% senior notes due 2031 were down another 1 point to a 97-handle.

They were trading in the 97 to 97¼ context heading into the close.

The yield was about 8½%.

The notes were trading at par heading into the company’s earnings report.

The 5¾% senior notes due 2027 were also off about 1 point with the notes closing the day wrapped around 95½.

The yield was about 7¼%.

The 5 3/8% senior notes due 2029 were also down another 1 point with the notes closing the day at 90½.

The yield was about 7 5/8%.

The notes were trading around 93 heading into the company’s earnings.

The notes have been on a steady downtrend since reporting earnings with the company’s Ebitda coming in lower than expected, a source said.

Indexes

The KDP High Yield Daily index added 9 basis points to close Thursday at 50.53 with the yield 6.89%.

The index was up 13 bps on Wednesday, fell 38 bps on Tuesday and inched up 2 bps on Monday.

The ICE BofAML US High Yield index added 19.1 bps with the year-to-date return now negative 0.06%.

The index added 11.3 bps on Wednesday, fell 58.9 bps on Tuesday and added 4.3 bps on Monday.

The CDX High Yield 30 index gained 34 bps to close Thursday at 106.25.

The index added 16 bps on Wednesday, sank 40 bps on Tuesday and added 11 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.