Navacord prices add-on; MoneyGram at premium; VistaJet rises; funds lose $2.17 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 1 – Jones DesLauriers Insurance Management Inc., a broker partner of Navacord Inc., priced Thursday’s sole high-yield bond deal, an upsized $125 million fungible add-on to its 8½% senior secured notes due March 15, 2030 (B2/B-/B+) that came at 98.25 to yield 8.844% in a drive-by.

The size of the tap increased from $75 million.

The price came in the middle of the 98 to 98.5 price talk.

Primary market activity drooped during the post-Memorial Day week, perhaps coincidental with a debt ceiling showdown between the executive and legislative branches of the United States government, sources said.

Although Memorial Day typically signals the start of summer in the bond market, and summers have been known to be slow in terms of new issue volume, a syndicate banker looks for summer 2023 to be a relatively active one in the primary market.

With May having gone into the book as the biggest month for issuance this year to date, at $21.9 billion, June will probably come up a bit short of that amount, the banker said, adding that $15 billion to $20 billion seems entirely possible.

“A fair number of people are getting ready to go, so we should be active,” the source said.

One factor that should mitigate in favor of an efficient new issue market has been the steady reduction of a backlog of merger and acquisitions financings that started getting hung up on dealer balance sheets in the second half of 2022, sources said.

The most recent hung financing to clear was the Mobius Merger Sub, Inc. $500 million issue of 9% senior secured notes due June 2030 (B2/B/B+) backing the buyout of MoneyGram International Inc. by Madison Dearborn Partners.

The bonds priced at 83.00 to yield 12.742% on Wednesday, coming nearly 175 basis points beyond the wide end of early guidance.

However, they were trading smartly above issue price at 84¼ late Thursday morning, a trader said.

Some of the backlog of hung deals, perhaps as much as $23 billion, remains to be cleared, said the banker.

The 800-pound gorilla in the room is the Twitter Inc. acquisition financing, which could include up to $3 billion of secured bonds and $3 billion of unsecured bonds, sources said.

Overall, however, dealers have cleared more than two-thirds of the original backlog, the syndicate source reckoned.

Strong day in secondary

Meanwhile, it was a strong day in the secondary space with the cash bond market rising ¼ to 3/8 point following House approval of the U.S. debt-limit deal.

Exchange-traded funds were buyers on Thursday and circulating several offers-wanted-in-competition lists, a source said.

With the new issue calendar thin, topical news was a driver of activity in the space.

VistaJet Malta Finance plc’s senior notes (B3/B-) made large gains following earnings.

NGL Energy Operating LLC/NGL Finance Corp.’s 7½% senior secured notes due 2026 (B2/B+) were also on the rise following earnings with the company detailing its bond repurchase program.

Meanwhile, high-yield mutual funds and ETFs returned to outflows with $2.17 billion leaving the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

MoneyGram at a premium

MoneyGram’s new 9% senior secured notes due 2030 were putting in a strong performance in the aftermarket after a two-week struggle in the primary market.

The 9% notes were up 1 point to trade on an 84-handle.

They closed the day in the 84 to 84¼ context, a source said.

Mobius Merger Sub priced $500 million, upsized from $450 million, of the 9% notes at 83 to yield 12.742%.

The deal priced on top of official coupon, price and yield talk but came well wide of early guidance in the 10½% to 11% area.

The deal also underwent covenant changes, particularly in how the company may disburse cash and incur additional debt.

The LBO deal was on the primary calendar for more than two weeks before it was able to cross the finish line.

The completion of the financing was on a tight deadline with the financing marketing period to last up to 15 consecutive business days, according to the merger agreement.

With the LBO financing completed, Madison Dearborn Partners announced it had closed its $1.8 billion acquisition of MoneyGram on Thursday.

VistaJet’s numbers

VistaJet’s junk bonds made strong gains on Thursday on the heels of a positive earnings report.

The business aviation company’s 9½% senior notes due 2024 gained 2¼ point.

They were changing hands at 94¼ in the late afternoon with the yield 11%, a source said.

There was $29 million in reported volume.

The 6 3/8% notes due 2030 gained 3 points.

They were trading at 82¼ with the yield 10% in the late afternoon.

There was $11 million in reported volume.

VistaJet reported earnings on Wednesday, and “the numbers were good,” a source said.

The company saw a substantial increase of about 45% in EBITDA, a source said.

NGL Energy on the rise

NGL Energy’s 7½% senior secured notes due 2026 were on the rise in active trade after the company released earnings and detailed its bond repurchase program.

The 7½% notes jumped 1 point to a 97-handle.

They were trading in the 97 to 97½ context heading into the market close.

There was $20 million in reported volume.

The notes were on the rise despite a mixed earnings report with the market responding favorably to the company’s debt reduction program, sources said.

While NGL Energy missed revenue and earnings per share expectations, it beat on EBITDA and released guidance that was in line with expectations.

The company also announced it had repurchased $12.5 million in principal of its 7½% senior notes April 15, 2026 for $10.79 million and was committed to further reducing its debt.

Indexes

The KDP High Yield Daily gained 16 points to close Thursday at 50.33 with the yield now 7.42%.

The index shaved off 3 points on Wednesday after gaining 22 points on Tuesday.

The CDX High Yield 30 index gained 38 points to close Thursday at 101.38.

The index fell 29 points on Wednesday after gaining 33 points on Tuesday.

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