DISH jumps on wireless reports; Tenet Healthcare active in junkland; Hilton in demand

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 2 – The junk bond new issue market came yawning into the summer of 2023, with only two issuers, bringing a tranche apiece, raising just $538 million during the holiday-abbreviated post-Memorial Day week.

Things figure to pick up in the week ahead, sources say.

Watch for bonds backing Apollo’s $8.1 billion buyout of Univar Solutions Inc. during that timeframe.

Meanwhile, it was a strong day in the secondary space on Friday with a potential government default in the rearview, the Federal Reserve signaling a pause at its June meeting, strong earnings and a nonfarm payrolls report alleviating recession concerns.

The cash bond market added ½ point with the CDX index up 5/8 point, sources said.

With strong inflows over the past two sessions, ETFs were buyers and lifted the broader market.

There was some selling into the rally with real money accounts “taking advantage of the move in some names,” a source said.

However, the market ended the session near the highs of the day.

DISH Network Corp.’s senior notes were among the largest benefactor of the rally with topical news and ETF buying lifting the notes 1 to 2 points.

Tenet Healthcare Corp.’s 6¾% senior secured first-lien notes due 2031 (B1/BB-/BB-) were active with the notes sought after in Friday’s buying spree.

Hilton Worldwide Holdings Inc.’s 3 5/8% senior notes due 2032 (Ba2/BB) gained more than 1 point in heavy volume as accounts added to their positions.

The calendar

In the week ahead, bonds backing Apollo’s $8.1 billion buyout of Univar Solutions are on the radar.

Tranche sizes and other details remain to be announced.

A debt commitment announced in March set forth a structure including $3.5 billion of senior secured credit facilities and a $2 billion senior secured bridge loan.

Other new issue business is expected to surface during the June 5 week, sources say, although no issuer names were volunteered during Friday conversations.

Meanwhile over the weekend the active forward calendar carries just one deal over into the week ahead.

Jailhouse telecom Aventiv Technologies is understood to still be in the market with a $400 million offering of four-year first-lien senior secured notes (B3/B), a source said on Friday.

However, it has been radio silence for well over a week on the deal, which was first announced to the market in early May.

DISH jumps

DISH Network’s senior notes made strong gains during Friday’s session with topical news and a strong day for the market propelling the notes higher.

DISH’s 11¾% senior secured notes due November 2027 (Ba3/B) were the most actively traded issue in the secondary space.

They added 1½ points to trade in the 98 to 98½ context heading into the market close, according to a market source.

The yield fell to 12¼%.

There was $28 million in reported volume.

Friday’s level marks the highest for the 11¾% notes since early March.

DISH’s soon-to-mature 5 7/8% senior notes due Nov. 15, 2024 (B3/B-) also made strong gains in heavy volume.

The notes rose 1½ points to an 87 handle.

They were trading in the 87 3/8 to 87 5/8 context heading into the market close with the yield about 16%.

There was $18 million in reported volume.

DISH’s notes jumped following renewed media reports that Amazon was in talks with several wireless providers to sell wireless plans through Amazon Prime.

News that Amazon and DISH were in talks to sell DISH wireless plans late last week also boosted the company’s struggling capital structure.

DISH has become a highly speculative name and a default candidate since a ransomware attack in February took a toll on the company’s bottom line.

The refinancing risk for the company is large with several maturities approaching in 2024.

Tenet active

Tenet Healthcare’s 6¾% senior secured first-lien notes due 2031 continued to gain strength on Friday with the notes now trading firmly above par.

The 6¾% notes added ½ to 5/8 point to trade in the par 5/8 par 7/8 context heading into the market close.

There was $22 million in reported volume.

The notes broke above par the previous session after dropping below earlier in the week.

Tenet was actively sought after during Friday’s session with the name front and center on several ETF OWICs, a source said.

Hilton in demand

Hilton’s 3 5/8% senior notes due 2032 were lifted more than 1 point in Friday’s buying activity.

The 3 5/8% notes gained 1¼ points to trade in the 84½ to 85 context during the session.

The yield was 5 7/8%.

There was $15 million in reported volume, more than 3x their normal average, a source said.

The name was also actively sought after by ETFs and has a heavy weighting in indexes.

Fund flows

High-yield ETFs had hefty daily cash inflows of $897 million on Thursday, the most recent session for which data was available at press time, according to a market source.

Those trail the $334 million of daily inflows by the ETFs on Wednesday.

Meanwhile actively managed high-yield funds sustained $50 million of outflows on Thursday, the source said.

News of Thursday’s daily fund flows trails a Thursday afternoon report that the combined funds sustained $2.174 billion of net outflows in the week to the Wednesday, May 31 close, according to fund-tracker Refinitiv Lipper.

That was the largest weekly outflow since the beginning of March, and the fourth outflow in five weeks, totaling $4.7 billion, according to the market source.

Indexes

The KDP High Yield Daily gained 22 points to close Friday at 50.55 with the yield now 7.33%.

The index was up 16 points on Thursday, shaved off 3 points on Wednesday and gained 22 points on Tuesday.

The index posted a cumulative gain of 60 points on the week.

The CDX High Yield 30 index rose 60 basis points to close Friday at 101.98.

The index gained 38 bps on Thursday, fell 29 points on Wednesday and gained 33 bps on Tuesday.

The index posted a cumulative gain of 102 bps.

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