Junk calendar grows; DISH, Nielsen on tap; secondary falls post-Fed; Ford below par

By Abigail W. Adams

Portland, Me., Nov. 2 – While no deals priced during Wednesday’s session, the domestic high-yield primary market continued to show signs of life with two chunky offerings joining the forward calendar.

DISH Network Corp. plans to price $2 billion of five-year non-call two-year senior secured notes (B+) on Friday.

While some sources were not enamored with the offering, others found the pricing extremely attractive.

Neptune BidCo US Inc. also announced late in the session that it will start a roadshow on Wednesday for a $1.96 billion offering of senior secured notes due April 15, 2029 backing the buyout of Nielsen Holdings plc.

The offering is the second large leveraged buyout deal to start a roadshow in as many days.

Pegasus Merger Co. announced on Tuesday a roadshow for a $1 billion offering of six-year senior secured notes backing Apollo’s buyout of Tenneco Inc.

Both LBO deals are expected to price in the coming week.

The resurgence of new deal activity in the primary market was considered as one-offs, rather than an indication the market is open for business.

Market players were hopeful Federal Reserve chair Jerome Powell would strike a dovish tone at his press conference Wednesday afternoon, which would help bring potential issuers to the market.

But he did not.

The secondary space was in a holding pattern heading into the Federal Open Market Committee’s announcement and Powell’s press conference.

While there was “a massive uptrade,” following the 2 p.m. ET 75 basis points rate increase announcement, selling pressure set in as Powell began to speak, a source said.

The market’s optimism surrounding the dovish pivot proved unfounded as Powell reaffirmed the Central Bank’s commitment to fight inflation with restrictive monetary policy.

The CDX index sank 1 point from the intraday high to close at the low of the day, a source said. The cash bond market closed down ¼ point.

Ford Motor Credit Co. LLC’s newly priced 7.35% senior notes due 2027 (Ba2/BB+/BB+), the deal that reopened the primary after nearly two weeks, sank below par in heavy volume.

Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B), the last LBO deal to clear the primary market, gave back most of its gains from last week’s rally and returned to an 85-handle.

DISH eyed

DISH plans to price $2 billion of five-year non-call two-year senior secured notes on Friday with initial guidance for a 2-point OID and a yield in the mid to high 11% area, according to a market source.

The pricing was “absurdly cheap,” a source said.

The paper is secured and DISH is a solid company that has generated consistent revenue and has a healthy balance sheet.

However, others did not take an interest in the deal given some near-term maturities in DISH’s capital structure and the risks involved in its wireless network.

The company has paid a lot for its wireless spectrum and now has to build out its wireless infrastructure, which proceeds from the offering will be used for.

The wireless buildout, “has a decent amount of risk to it,” a source said.

LBOs on deck

Two large LBO deals are in the market after an extended period of time when riskier credits were shut out.

Neptune Bidco announced it would commence a roadshow on Thursday for a $1.96 billion offering of senior secured notes due April 15, 2029 backing the buyout of Nielsen Holdings plc.

The roadshow was announced in the late afternoon after Powell had dashed the market’s hope for a dovish pivot.

While the timing of the announcement was odd, banks may be looking to clear their books before the end of the year, a source said.

Several banks have been hit hard by financing commitments made before the surge in rates repriced the market.

While the dovish pivot was thought to be the catalyst that might drive issuers to the market, those that need to raise capital may want to do it now rather than later with Powell warning that the terminal rate going forward may be higher than anticipated, a source said.

The Nielsen deal joins Tenneco on the forward calendar with both offerings expected to price during the Nov. 7 week.

Ford below par

Ford’s new 7.35% senior notes due 2027 fell below par on Wednesday as selling pressure drove down the secondary space late in the session.

The notes traded as high as par ¼ on the break on Tuesday.

However, they were weaker early Wednesday with the notes changing hands in the 99¾ to par area, a source said.

The notes fell to a 99-handle in the late afternoon and were trading in the 99½ to 99¾ context heading into the market close.

Ford priced a $1.5 billion issue of the 7.35% notes at par in a Tuesday drive-by.

Pricing came at the tight end of initial talk for a yield in the 7 5/8% area.

Citrix gives back gains

Citrix’s 6½% senior secured notes due 2029 gave back the gains made in last week’s rally with the notes returning to an 85-handle on Wednesday.

The 6½% notes were trading in the 85 to 85¼ context in heavy volume on Wednesday.

The notes were brushing up against 88 last Friday, a source said.

The 6½% notes were the last leveraged buyout deal to clear the market with the notes pricing at a deep discount to get it out the door, sources said.

Tibco priced $4 billion of the 6½% notes at 83.561 to yield 10% in late September.

Indexes

The KDP High Yield Daily index fell 10 points to close Wednesday at 51.37 with the yield now 7.72%.

The index was down 3 points on Tuesday and 12 points on Monday.

The ICE BofAML US High Yield index was down 9.2 bps with the year-to-date return now negative 12.261%.

The index gained 1.9 bps on Tuesday after falling 36 bps on Monday.

The CDX High Yield 30 index fell 69 bps to close Wednesday at 98.94.

The index gained 42 bps on Tuesday and fell 72 bps on Monday.

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