Junk market goes for small deals in primary; Sunoco, Bonanza Creek move up in secondary

By Cristal Cody and Paul A. Harris

Tupelo, Miss., Oct. 6 – Against the backdrop of a steepening Treasury yield curve that is said to be putting pressure on risk assets three issuers priced bite-sized junk issues on Wednesday.

None exceeded $300 million and all priced at the tight or rich ends of talk.

Overall secondary market tone remained soft Wednesday with equities mixed and oil prices retreating from highs on Tuesday.

Junk bonds sold Tuesday were among the most active high-yield issues trading Wednesday, sources reported.

The 4½% senior notes due 2030 (B1/BB-/BB) that Sunoco LP and Sunoco Finance Corp. priced late Tuesday held on to par through the early afternoon before trading higher than issuance by the close on over $81.5 million of volume.

The 6% second-lien secured notes due 2030 (Caa2/CCC+) that Frontier Communications Holdings, LLC and Frontier Communications Parent, Inc. sold Tuesday also saw nearly $70 million of bonds changing hands Wednesday. They stayed under par over the session.

Gannett Holdings LLC’s 6% first-lien senior secured notes due 2026 (B1//BB) that priced in an accelerated deal on Tuesday were pressured in heavy secondary action Wednesday, going out at 99 7/8 bid.

A timing-accelerated deal from Bonanza Creek Energy, Inc. saw a warmer reception over the day with the 5% senior notes due 2026 (B1/BB-/BB-) trading ½ point better than issuance.

Thor Industries, Inc.’s upsized $500 million of 4% senior notes due 2029 (B1/BB-) that priced in the prior session held its ground in secondary trading on Wednesday with the notes last seen at par.

$300 million and below

In the Wednesday high-yield primary market, APi Escrow Corp. priced a $300 million issue of 4¾% eight-year senior notes (B1/B) at par.

Group 1 Automotive Inc. priced a $200 million add-on to its 4% senior notes due Aug. 15, 2028 (Ba2/BB+) at 100.25.

And Bermuda-headquartered Golar LNG Ltd. priced a $300 million issue of 7% four-year senior notes at par, in a deal heard to play to a mix of Scandinavian high-yield accounts, U.S. hedge funds and emerging markets accounts.

All-in-all, Wednesday's new issue news flow remained light-to-moderate.

In the session's wake a biggish $3.7 billion active forward calendar of announced deals remained to be cleared ahead of the approaching weekend.

Sunoco ticks up

The new 4½% senior notes due 2030 (B1/BB-/BB) from Sunoco LP and Sunoco Finance Corp. had heavy interest in next-day secondary trading, sources said.

Sunoco’s notes held on to par through the early afternoon after trading as low as 99½ over the morning.

By the close Wednesday, the issue improved to 100 1/8 bid on over $81.5 million of paper traded.

The issuers priced $800 million of the notes at par on Tuesday on the tight side of talk in the 4 5/8% area and inside of initial guidance in the high 4% area.

The Dallas-based master limited partnership, which provides wholesale fuel distribution services, dropped a proposed tranche of 10.5-year senior notes following the deal announcement.

Frontier under par

Frontier Communication’s $1 billion of 6% second-lien secured notes due 2030 (Caa2/CCC+) brought to the primary market on Tuesday didn’t make it past par over Wednesday's session, a source reported.

The notes traded as low as 99 1/8 bid early in the session before mostly hanging around 99½ bid in heavy secondary action.

Frontier’s 6% notes went out down 0.375 point at 99 5/8 bid on over $69.5 million of trading volume.

The issue was quoted going out Tuesday at 99 7/8 bid.

The Norwalk, Conn.-based telecom sold $1 billion of the notes on Tuesday at par, at the tight end of the 6% to 6¼% talk.

Gannett lower

Gannett Holdings’ 6% first-lien senior secured notes due 2026 (B1//BB) priced in an accelerated deal on Tuesday traded by the close at 99 7/8 bid on over $62 million of supply, a source said.

Gannett sold $400 million of the notes on Tuesday at par.

The yield printed at the tight end of the 6% to 6¼% talk and inside of initial guidance in the mid-6% area.

The McLean, Va.-based media and marketing company’s offering had previously been expected to hit the primary market on Wednesday.

Bonanza Creek stronger

The 5% senior notes due 2026 (B1/BB-/BB-) from Bonanza Creek Energy and post-merger entity Civitas Resources, Inc. rose ½ point in heavy secondary action to 100½ bid during the session, a source said.

Over $61 million of paper was traded.

The companies sold $400 million of the notes on Tuesday at par to yield 5%, at the tight end of the 5% to 5¼% yield talk. Initial guidance was in the low-to-mid 5% area.

The offering was expected to stay in the market until Wednesday.

The notes carry a mandatory call at par plus accrued interest if the merger does not close by Dec. 31.

Civitas Resources will be a Denver-based energy exploration and production company.

Thor sticks to par

Thor Industries’ 4% senior notes due 2029 (B1/BB-) went out Wednesday wrapped around their par issuance price, a source said.

The issue saw over $55.7 million of secondary action.

Thor, an Elkhart, Ind.-based recreational vehicle manufacturer, priced $500 million of the notes on Tuesday at par in a deal upsized from $400 million.

The yield printed at the tight end of talk in the 4 1/8% area and tighter than the 4¼% to 4½% initial guidance.

$192 million Tuesday outflows

The dedicated high-yield bond funds sustained $192 million of net daily outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $132 million of outflows on the day.

Actively managed high-yield funds sustained $60 million of outflows on Tuesday, the source said.

Indexes decline

The iShares iBoxx High Yield Corporate Bond ETF softened 5 cents to end the day at $87.01 following a 4-cent drop on Tuesday and a 31-cent-decline on Monday.

The KDP High Yield Daily index softened to 69.68 and a 3.83% yield on Wednesday from 69.88 with a yield of 3.76% on Tuesday and 69.9 and a 3.73% yield on Monday.

The CDX High Yield 30 index declined to 109.017 from 109.04 on Tuesday and 109.12 on Monday.

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