Brightline, ION price; Encino, Vail unchanged after early drop; funds add $604.3 million

By Abigail W. Adams

Portland, Me., April 25 – The high-yield primary market continued to churn out offerings on Thursday with two deals clearing the calendar despite a heavy day for the market.

Brightline East LLC priced an upsized $1.325 billion offering of senior secured notes due Jan. 31, 2030 (B/B), and ION Corporates priced its two-tranche dual-currency offering of five-year senior secured notes (B2/B).

While the deals played to strong demand during bookbuilding, they were weak on the break with Brightline dropping below issue price and ION’s dollar-denominated tranche flat.

The activity came on a heavy day for the market with the latest GDP print throwing cold water on the goldilocks, soft-landing scenario the market had widely come to anticipate.

With the GDP print coming in much softer than expected and still reflecting elevated inflation, a new scenario was beginning to take shape.

“Can anyone say stagflation?” a source said.

The market was also questioning whether there would be rate cuts with one of the more dovish officials signaling markets may need to recalibrate their expectations.

However, the secondary space held up better than anticipated with the market quickly paring its losses from the heavy selling early in the session.

While off as much as a ½ point early in the session, the cash bond market closed down ¼ point.

With coupons at heights not seen since the 1990s, any selling in the market quickly triggered buyers, a source said.

The market’s attention remained focused on new issues.

While Encino Acquisition Partners Holdings, LLC’s 8¾% senior notes due 2031 (B3/B-/B) and Vail Resorts, Inc.’s 6½% senior notes due 2032 (Ba3/BB) were weak early in the session, they quickly eliminated their losses and closed the day unchanged.

Meanwhile, fund flows again turned positive after marking their largest outflow of year the previous week.

High-yield mutual funds and exchange-traded funds saw inflows of $604.3 million in the week through Wednesday’s close after last week’s $3.75 billion outflow.

ION prices

ION Corporates priced an upsized $500 million tranche and a €300 million tranche of five-year senior secured notes through Helios Software Holdings, Inc. and ION Corporate Solutions Finance Sarl on Thursday.

The $500 million tranche, which was upsized from $400 million, priced at par to yield 8¾%; the €300 million tranche priced at par to yield 7 7/8%.

Both tranches priced at the tight end of talk with the dollar-denominated tranche talked to yield 8¾% to 9% and the euro-denominated tranche talked with a yield in the 8% area.

The dollar-denominated tranche was wrapped around issue price on the break.

Brightline prices wide

Brightline priced $1.325 billion, upsized from $1.25 billion, of senior secured notes due Jan. 31, 2030 at par with a coupon of 11% on Thursday.

Pricing came at the wide end of price talk for a yield of 10¾% to 11%.

While the deal carried a chunky yield, the notes were lagging on the break and marked at 99½ bid, par offered, a source said.

Encino reclaims heights

Encino Acquisition’s 8¾% senior notes due 2031 gave back some of the strong gains made on the break early in Thursday’s session at the height of the market’s weakness.

However, they quickly regained their heights to close the day unchanged.

The notes were off ½ point to trade in the par ¼ to par ½ context in early trade, a source said.

However, they shook off their early weakness and closed the day unchanged in the par 7/8 to 101 1/8 context.

Encino’s offering was very well subscribed, and the oil and gas exploration and production company is “from the right sector,” a source said.

Oil and gas names have been well bid in 2024 with the companies fundamentally strong with leverage low and yields high.

Encino was no exception with the company backed by solid fundamentals, a source said.

Encino priced a $500 million issue of the 8¾% notes at par on Wednesday.

Vail unchanged

Vail Resorts’ 6½% senior notes due 2032 were off to a heavy start alongside the broader market on Thursday.

The notes were off 3/8 to ½ point amid the early morning heaviness with the notes trading on a 99-handle.

The 6½% notes were seen changing hands in the 99 5/8 to 99 7/8 context early in the session.

However, they pared their losses as the market rebounded and closed the day unchanged in the par to par ¼ context, a source said.

While the tight pricing left little room for upward movement in the aftermarket, Vail is a strong credit and a well-known name in the market, a source said.

After the initial post-pricing bout of activity, sources expect the notes to be tucked away with coupon clipping the name of the game.

Vail priced a $600 million issue of the 6½% notes at par in a Wednesday drive-by.

The yield printed in the middle of yield talk in the 6½% area.

Indexes

The KDP High Yield Daily index was down 18 basis points to close Thursday at 49.38 with the yield 7.32%.

The ICE BofAML US High Yield index was down 33.5 bps with year-to-date returns now 0.085%.

The index dipped 3.4 bps on Wednesday after adding 38.7 bps on Tuesday and 30.1 bps on Monday.

The CDX High Yield 30 index was off 11 bps to close Thursday at 105.92.

The index fell 21 bps on Wednesday after adding 39 bps on Tuesday and 50 bps on Monday.

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