Charles River, Alcoa price; forward calendar grows; Playtika holds; Twilio active

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 8 – Two issuers brought a total of three dollar-denominated tranches of high-yield notes in Monday drive-by deals, raising a combined total of $1.5 billion.

All three tranches priced at the tight end of talk.

Charles River Laboratories International, Inc. priced $1 billion of senior notes (Ba2/BB) in two tranches.

Alcoa Nederland Holding BV priced a $500 million issue of eight-year senior notes (Ba1/BB+).

There was also a substantial buildup in the forward calendar with Crocs, Inc. and Synaptics Inc. starting roadshows.

The market was also abuzz about a $5 billion two-part amortizing secured bullet deal from American Airlines, Inc. and its frequent flyer business AAdvantage Loyalty IP Ltd.

Meanwhile, it was a soft day in the secondary space with more sellers than buyers in the market, a source said.

While the overall market was weak, several recent deals continued to perform well.

Playtika Holding Corp.’s 4½% senior notes due 2029 (B2/B) were holding onto their premium in active trading on Monday.

Twilio Inc.’s two tranches of senior notes outperformed (Ba3/BB) remained active with the notes continuing to gain.

Monday’s primary

Two issuers brought a total of three dollar-denominated tranches of high-yield notes in Monday drive-by deals, raising a combined total of $1.5 billion.

All three tranches priced at the tight end of talk.

The highest yield among the three tranches was 4 1/8%.

Charles River priced $1 billion of senior notes (Ba2/BB) in two tranches.

The deal included a $500 million tranche of 3¾% eight-year notes and a $500 million tranche of 4% 10-year notes.

Both priced at par.

The deal was heard to be three-times oversubscribed.

Alcoa priced a $500 million issue of 4 1/8% eight-year senior notes (Ba1/BB+) at par, in a deal heard to be to $2.3 billion of demand around 2:15 p.m. ET on Monday.

Meanwhile, the active forward calendar saw a spectacular buildup as the curtains were pulled back on a $5 billion two-part amortizing secured bullet deal from American Airlines and its frequent flyer business AAdvantage Loyalty IP Ltd., which the market had been anticipating for a couple of weeks.

It features $2.5 billion of five-year notes with initial guidance in the low-to-mid 6% area and $2.5 billion of eight-year notes with initial guidance in the mid-to-high 6% area.

Elsewhere, Crocs began roadshowing a $300 million offering of eight-year senior notes (expected ratings B1/BB-) with early guidance in the 5% area.

And Synaptics started a roadshow for a $400 million offering of senior notes due June 2029 (expected ratings Ba3/BB-/BB-), with early guidance in the mid-to-high 4% area.

All of that business is expected to price during the midweek period (see related stories in this issue).

Playtika holds

Playtika’s 4½% senior notes due 2029 were coming in from the heights reached after breaking for trade last Friday.

However, the notes continued to trade with a healthy premium.

The 4½% notes traded in a range of par 5/8 to 101½ during Monday’s session, a source said.

They were wrapped around 101 heading into the market close.

There was more than $35 million on the tape.

The notes saw a strong break and traded up to a 101-handle after freeing for trade.

In a heavily oversubscribed offering, Playtika priced a $600 million issue of the 4 ½% notes at par last Friday.

Pricing came in the middle of yield talk in the 4¼% area.

Twilio gains

While the overall market was weak on Monday, Twilio’s two tranches of senior notes continued to gain.

The 3 5/8% senior notes due 2029 traded as high as 102¾ during Monday’s session. They were changing hands in the 102 3/8 to 102½ context heading into the market close, a source said.

There was more than $35 million in reported volume.

The notes closed Friday at 102¼ bid, 102½ offered

Twilio’s 3 7/8% senior notes due 2031 closed Monday on a 103-handle.

The notes were changing hands in the 103 to 103 3/8 context heading into the market close.

There was more than $23 million in reported volume.

The notes closed the previous session at 102¾ bid, 103 offered.

$1.213 billion Friday outflows

The dedicated high-yield bond funds saw large outflows of $1.213 billion on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $973 million of outflows on the day.

Actively managed high-yield funds saw $240 million of outflows on Friday, the source said

The combined funds have sustained $3.7 billion of net outflows for the year to Friday's close, after having seen $44.9 billion of net inflows during the entire year of 2020, according to the market source.

Indexes down

Indexes launched the week in the red.

The KDP High Yield Daily index was down 7 points to close Monday at 69.24 with the yield now 4.12%.

The index posted a cumulative loss of 8 points on the week last week.

The ICE BofAML US High Yield index dropped 4.5 bps with the year-to-date return now 0.485%.

The index posted a cumulative loss of 14.3 bps on the week last week.

The CDX High Yield 30 index dropped 61 bps to close Monday at 108.04.

The index posted a cumulative gain of 44 bps on the week last week.

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