Week’s junk bond market hits $4.29 billion; Clear Channel flat; Dream Finders gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 9 – The junk bond new issue market remained active on Wednesday, with a pair of single-tranche issuers raising an even $2 billion of proceeds, bringing the week’s running issuance total to $4.29 billion.

Meanwhile, it was a sideways day in the secondary space on Wednesday as market players turn their attention to the Thursday release of the Consumer Price Index report to gauge the Federal Reserve’s and the market’s next moves.

With the broader market in wait-and-see mode, new and recent issues continued to dominate the tape with the deals to clear the primary on Tuesday putting in mixed performances.

While Clear Channel Outdoor Holdings, Inc.’s 9% senior secured notes due 2028 (B1/B) fell flat in the aftermarket, Dream Finders Homes, Inc.’s new 8¼% senior notes due 2028 (BB-/BB-) jumped to a 101-handle.

However, topical news continued to spark large price movements in the space with the buying frenzy in DISH Network Corp.’s senior notes continuing.

DISH’s senior notes again claimed the title as the largest gainers of Wednesday’s session with its unsecured notes jumping 4 to 6 points while its secured notes added 1 point.

Penn National Gaming Inc.’s 4 1/8% senior notes due 2029 (B3/B) were also on the rise following news of a partnership with ESPN.

Primary

Both of Wednesday’s new junk bond deals came in drive-by trades, and priced at the tight ends of talk.

TransDigm Inc. priced a $1.45 billion issue of senior secured notes due Dec. 15, 2030 (Ba3/B+) at par to yield 6 7/8%.

The deal, which played to $2.5 billion of demand, broke to par ¾ bid, according to a bond trader in New York.

And Light and Wonder International, Inc. priced a $550 million issue of eight-year senior notes (B3/BB/BB) at par to yield 7½%.

The deal enjoyed an enthusiastic reception, playing to $2 billion of orders, and traded to par 5/8 bid, 101 1/8 offered, the bond trader said.

One deal is on deck for Thursday.

Cushman & Wakefield is talking a downsized $400 million offering (from $500 million) of Cushman & Wakefield U.S. Borrower, LLC eight-year senior secured notes (Ba3/BB) at 9¼% to 9½%, inside of initial guidance in the 9¾% area.

A trader, pressed for color on the downsize, said that it does not reflect demand for the notes because the order book was four-times oversubscribed on Wednesday afternoon.

The deal is set to price Thursday, which represents an acceleration of the timing; when announced the bond offer was expected to remain in the market until Friday.

Clear Channel flat

In secondary trading, Clear Channel’s new 9% senior secured notes due 2028 fell flat in the aftermarket with the notes stuck at par since breaking for trade.

The notes were trading in the 99 7/8 to par 1/8 context in heavy volume throughout the session.

There was $94 million on the tape.

The large upsize may have contributed to the notes’ lackluster performance in the secondary space, a source said.

However, the lack of price movement during the session was attributed to underwriters defending the notes at par, a source said.

Clear Channel priced an upsized $750 million, from $500 million, issue of the 9% notes in a Tuesday drive-by.

Pricing came at the tight end of the 9% to 9¼% yield talk.

Dream Finders strong

Dream Finders’ new 8¼% senior notes due 2028 were putting in a strong performance in the aftermarket with the notes jumping to a 101-handle.

They were trading in the 101 to 101½ context with volume heavy despite the small size of the issue, a source said.

There was $59 million on the tape heading into the close.

Dream Finders priced a $300 million issue of the 8¼% notes at par on Tuesday.

Pricing came at the tight end of the 8¼% to 8 3/8% yield talk.

DISH surge continues

DISH’s senior notes continued to surge on Wednesday with the notes again claiming the title of the largest gainers in the space.

DISH’s 7¾% senior notes due 2026 (Caa2/B-) made the largest gains in the debt stack with the notes up 6 points.

They opened the day on a 72-handle and were trading in the 77½ to 78½ context heading into the market close, a source said.

The yield fell to 17 5/8%.

There was $64 million in reported volume.

DISH’s 7 3/8% senior notes due 2028 added 5 points to close the day at 67.

The yield fell to 17¾%.

There was $13 million in reported volume.

The notes were up 4 points the previous session.

DISH’s 5 1/8% senior notes due 2029 added 4½ points to close the day at 60½ with the yield 15¾%.

There was $19 million in reported volume.

While gains were more modest, DISH’s secured paper also continued to add.

The 11¾% senior secured notes due 2027 (B2/B) gained 1 point to break above a 101-handle.

The notes closed the day at 102 1/8 with the yield 10 7/8%.

There was $40 million in reported volume.

DISH’s capital structure has surged since Tuesday when the satellite broadcaster announced it would merge with EchoStar in an all-stock transaction.

The deal was a credit positive event for the struggling company that has become an increasingly speculative credit as its 2024 maturities loom.

However, short-covering may be contributing to the senior notes’ outsized gains, a source said.

Penn Entertainment gains

Penn Entertainment’s 4 1/8% senior notes due 2029 were on the rise in heavy volume following news of a partnership with ESPN.

The notes traded as high as 86 after the news broke late Tuesday, a source said.

However, they settled on an 84-handle on Wednesday, marking a 2-points gain from their previous level.

The notes were trading in the 84¼ to 84¾ context heading into the market close.

There was $16 million in reported volume.

The notes had a flurry of activity after Penn Entertainment and ESPN announced a new partnership that gives Penn Entertainment the right to use the name ESPN Bet in the United States for a 10-year term.

ESPN Bet will replace Penn Entertainment’s Barstool sportsbook with the company simultaneously announcing that it was divesting from its Barstool Sports Inc. subsidiary, which it returned to controversial founder Dave Portnoy.

Indexes

The KDP High Yield Daily index added 3 basis points to close the day at 50.49 with the yield 7.43%.

The index added 5 bps on Tuesday and 2 bps on Monday.

The ICE BofAML US High Yield index was up 19 bps with the year-to-date return now 6.682%.

The index added 5.5 bps on Tuesday and 17.2 bps on Monday.

The CDX High Yield 30 index inched up 2 bps to close Wednesday at 102.53.

The index fell 23 bps on Tuesday and 26 bps on Monday.

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