Junk primary raises $2.1 billion; Coinbase disappoints; Caesars up; Wynn under pressure

By Paul A. Harris and Cristal Cody

Tupelo, Miss., Sept. 15 – Three issuers priced a total of four tranches, raising an overall total of $2.1 billion during Wednesday's high-yield primary market session.

Executions were sharp, with two tranches coming inside of talk, and the other two at the tight ends of talk.

In the secondary, Diversey Holdings Ltd.’s $500 million of senior notes due October 2029 (Caa1/B) rallied 1 5/8 points on more than $96 million of volume by the close.

“It’s mostly new issues trading,” a source said. “That seems to be the most active stuff and everything was up about 1 point or so today.”

Crypto trader Coinbase Global, Inc.’s $2 billion two-part offering of senior guaranteed notes (Ba1/BB+) priced to strong demand on Tuesday was an exception with both tranches down about 1 point.

The tranches were among the most heavily traded junk bonds on Wednesday.

Caesars Entertainment Inc.’s newly priced 4 5/8% senior notes due October 2029 (Caa1/CCC+) picked up steam with the paper up 1¼ points by the close.

The prospect of tighter casino regulations pushed China’s dollar gaming bonds lower Wednesday.

Wynn Las Vegas LLC’s 5½% senior notes due March 2025 (B1/BB-) were down about 3 points midmorning before clawing back losses to end the day off 1 7/8 points.

Wynn Macau Ltd.’s paper dove about 3¾ points by the finish.

In other junk issues active Wednesday, AMC and Sundance TV channel owner AMC Networks Inc.’s 4¼% senior notes due February 2029 (Ba3/BB) traded up about a point, a source said.

The bonds rose to 101, 101½.

Wednesday primary

ASP Unifrax Holdings, Inc. priced $1.2 billion of notes in two resized tranches, both of which came inside of talk.

The deal saw $100 million of proceeds shifted to the secured notes from the unsecured notes.

It included an upsized $800 million tranche of 5¼% seven-year senior secured notes (B2/B-), and a downsized $400 million tranche of 7½% eight-year senior unsecured notes (Caa2/CCC+).

The deal was well oversubscribed, with both tranches trading in the context of 102 bid, 102½ offered late Wednesday afternoon, according to a bond trader.

The unsecured notes were better bid, and had perhaps traded as well as 102½ bid, 103 offered, the trader remarked.

Diversey Holdings Ltd. priced a vastly oversubscribed $500 million issue of 4 5/8% eight-year senior notes (Caa1/B) at par, at the tight end of talk.

Investors heaped on orders for the notes resulting in a book that ended up being around 10-times the size of the deal, a trader said.

Meanwhile the Wednesday session saw one drive-by.

CNX Midstream Partners LP priced a $400 million issue of 4¾% 8.5-year senior notes (B1/BB-) at par, at the tight end of talk.

Diversey climbs

Diversey Holdings’ $500 million of senior notes due October 2029 (Caa1/B) priced earlier in the session rallied to 101 5/8 bid on more than $96 million of volume by the close, a source said.

The notes, issued by the Fort Mill, S.C.-based hygiene and cleaning solutions company’s subsidiary, Diamond (BC) BV, were priced at par to yield 4 5/8%.

The yield printed at the tight end of talk in the 4¾% area. Initial guidance was in the low-to-mid 5% area.

Coinbase declines

Coinbase’s upsized $2 billion of senior guaranteed notes (Ba1/BB+) surprised the market Wednesday with both tranches down about 1 point by the end of the day.

“The new Coinbase deal traded off a little bit and was the only real shocker,” one source said. “It priced yesterday at 3 3/8% and initially traded up around 101. But today, it just came in. The market opened a little bit weaker.”

The Wilmington, Del.-based cryptocurrency exchange platform’s offering included $1 billion of notes due October 2028 that priced at par to yield 3 3/8% and $1 billion of notes due October 2031 that priced at par to yield 3 5/8%.

The 2028 notes declined to 99¾, 100¼ by the close Wednesday but were off the lows from earlier in the day.

“At one point at the open, it traded as low as 98¾, 99¼,” the market source said.

The issue was quoted by another source after the close at 99 bid on more than $251 million of secondary volume.

The 3 5/8% notes due 2031 also were weaker at 99 bid on $172.5 million of secondary supply Wednesday.

Yield talk on the seven-year issue was 3½% to 3¾% with initial guidance in the high 3% area.

The 2031 notes were talked at 3¾% to 4%, in from initial guidance in the low 4% area.

Both tranches were upsized from $750 million in Tuesday’s offering.

Book demand was said to be at $9.5 billion across both tranches.

Caesars stronger

Caesars Entertainment’s new 4 5/8% senior notes due October 2029 (Caa1/CCC+) improved 1¼ points by the close to 102¼ bid, a source said.

The Las Vegas-based gaming and lodging company sold $1.2 billion of the notes on Friday at par to yield 4 5/8% in a Rule 144A and Regulation S deal upsized from $1 billion.

The yield priced 12.5 basis points tighter than talk in the 4¾% to 5% area. Initial guidance was in the low 5% area.

Elsewhere in the casino space, Wynn Las Vegas’ paper was heavily traded Wednesday, a source said.

The company’s 5½% senior notes due March 2025 (B1/BB-) finished the session off 1 7/8 points at 103 7/8 bid. Secondary volume totaled more than $30.5 million.

Wynn Las Vegas’ 5¼% senior notes due 2027 fell 5/8 point to 103 bid in secondary supply totaling over $64 million.

Wynn Macau’s 5½% senior notes due January 2026 (B1/BB-) fell 3¾ points to 97 bid on over $10 million of paper traded.

$176 million Tuesday inflows

The dedicated high-yield bond funds saw $176 million of net daily inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $94 million of inflows on the day.

Actively managed high-yield funds saw $82 million of inflows on Tuesday, the source said.

Indexes

The iShares iBoxx High Yield Corporate Bond ETF rose 13 cents to $88.14.

The KDP High Yield Daily index ended at 70.49 with a yield of 3.44%, mostly unchanged from 70.5 and a 3.44% yield on Tuesday after climbing 4 bps on Monday to 70.5 with a yield of 3.43%.

The CDX High Yield 30 index rose to 109.86 on Wednesday from 109.73 in the prior session and 109.78 on Monday.

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