Carnival, Weatherford gains continue; Community Health lower; Xerox falls post-earnings

By Abigail W. Adams

Portland, Me., Oct. 25 – The domestic high-yield primary market remained dormant on Tuesday although the European market showed signs of life with one new offering in the works.

Cirsa Finance International Sarl began marketing a €350 million offering of five-year senior secured notes (B3/B-).

While the European market and the high-grade market showed promise, the forecast for new deal activity for the remainder of 2022 is low.

There is plenty of cash on the sidelines to put to work on new issuance.

However, the cost of financing is currently out of reach for lower-quality credits, a source said.

With the calendar currently clear, interest rates and earnings were the main movers of the secondary market with a deluge of companies reporting before the end of the week.

The cash bond market saw a strong session as Treasury and equity markets rallied with the market lifted ½ point.

ETF buyers were circulating large offers-wanted-in-competition lists, buoying the overall space.

However, actively managed funds were “taking advantage” of the buying interest with several bids-wanted-in-competition lists also in play, a source said.

Carnival Corp.'s 10 3/8% senior priority notes due 2028 (B2/B+), the most recent issue to clear the primary market, continued to rise in heavy volume.

Weatherford International Ltd.’s 8 5/8% senior notes due 2030 (B3/CCC+) also continued their upward momentum heading into earnings with the optimism justified by the results posted after the bell.

However, negative sentiment continued to drag down CHS/Community Health Systems Inc.'s senior notes with earnings expected later in the week.

And Xerox Holdings Corp.’s notes were dragged down by disappointing results.

Carnival gains steam

Carnival’s new 10 3/8% senior priority notes due 2028 continued to gain steam in heavy volume with the notes rising 3/8 to ½ point to a par-handle.

The 10 3/8% notes were trading in the par 1/8 to par 3/8 context throughout Tuesday’s session.

There was $34 million in reported volume.

Tuesday marked a new high for the 10 3/8% notes with the previous highest level for the notes set on Monday.

The $2.03 billion issue, which priced at 98.465 to yield 10¾%, broke for trade on Oct. 18.

Weatherford earnings

Weatherford’s 8 5/8% senior notes due 2030 continued their upward momentum in heavy volume on Tuesday in anticipation of positive earnings.

The earnings, reported after the bell, did not disappoint.

The 8 5/8% notes climbed another 1½ points on Tuesday.

They were changing hands in the 93½ to 94 area heading into the market close, a source said.

There was $23 million in reported volume.

The notes have been on a strong uptrend over the past three sessions with the notes up 3.5 points since late last week.

Expectations were high heading into earnings.

The oilfield services company handily beat expectations with revenue and EBITDA guidance strong.

Community Health’s earnings

Community Health’s senior notes continued to trade down with expectations low heading into earnings.

The health services company’s 8% senior secured notes due 2026 (B2/B) were off 1½ points in heavy volume.

The 8% notes stood poised to close the day at 78¾ with the yield about 16.4%.

There was $17 million in reported volume.

The 5 5/8% senior secured notes due 2027 (B2/B) also continued to lose ground.

The notes were 1¼ points lower to break below a 70-handle.

They were trading in the 69¾ to 70¼ context with a yield north of 15%.

The notes have dived more than 6 points since Tenet Healthcare Corp. reported earnings and issued a fourth-quarter revenue forecast that drove down the sector.

Community Health is scheduled to report earnings on Thursday.

Xerox’s earnings

Xerox’s capital structure was taking a hit after disappointing earnings results with its senior notes falling 3 to 5 points, a source said.

The company’s 5½% senior notes due 2028 fell 3¼ points to 79¼, a source said.

The 5% senior notes due 2025 were off 4½ points to trade at 88.

Xerox was taking a hit after the company reported disappointing EBITDA and reduced its forward guidance.

Indexes

The KDP High Yield Daily index rose 24 points to close Tuesday at 50.99 with the yield now 7.86%.

The index rose 20 points on Monday.

The ICE BofAML US High Yield index gained 52.4 basis points with the year-to-date return now negative 13.213%.

The index rose 21.7 bps on Monday.

The CDX High Yield 30 index gained 11 bps to close Tuesday at 98.64.

The index rose 18 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.