Seagate, Assured Partners, IPL price; Calpine lags; funds lose $1.39 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 3 – The domestic high-yield primary market had three issues price during Thursday’s session.

Seagate Technology plc’s priced a $1 billion two-tranche offering (Ba1/BB+/BB+).

AssuredPartners Inc. priced an upsized $550 million issue of eight-year senior notes (Caa2/CCC+).

And IPL Plastics priced a $125 million issue of Intelligent Packaging Holdco Issuer LP senior PIK toggle notes due Jan. 15, 2026 (Caa2/CCC).

One deal remains on the forward calendar with pricing expected on Friday – Radiology Partners, Inc.’s $650 million offering of five-year senior secured notes.

Meanwhile, the secondary space continued to grind tighter on Thursday.

New issues remained in focus although some recent issues showed signs of weakness.

Albertsons Cos., Inc.’s 3½% senior notes due 2029 (B1/BB-) were active following an add-on the previous session with the notes trading at a premium to their reoffer price.

While the majority of new deals have traded at a premium in the secondary space, Calpine Corp.’s 3¾% senior notes due 2031 (Ba2/BB+) were lagging their issue price.

Meanwhile, as the market awaited Seagate’s latest offering, the company’s outstanding 4 7/8% senior notes due 2027 were losing ground in high-volume activity.

While the market was strong for the early part of the week, high-yield mutual and exchange-traded funds logged an outflow of $1.393 billion through Wednesday’s close, according to the Refinitiv Lipper Fund Flow Report Newsline.

Thursday’s primary

Amid a steady news flow in the Thursday primary market three high-yield issuers priced four dollar-denominated tranches.

Seagate Technology priced two of them in a $1 billion dual-tranche offering of senior notes (Ba1/BB+/BB+).

A $500 million tranche of 3 1/8% notes due July 2029 and a $500 million tranche of 3 3/8% notes due July 2031 both came at par, at the tight ends of talk.

Both tranches were marked at par bid, par ½ offered after breaking for trade, a source said.

AssuredPartners priced an upsized $550 million issue (from $500 million) of 5 5/8% eight-year senior notes (Caa2/CCC+) at par, inside of talk.

The deal was heard to be six-times oversubscribed.

And IPL Plastics priced a $125 million issue of Intelligent Packaging Holdco Issuer LP senior PIK toggle notes due Jan. 15, 2026 (Caa2/CCC) at 99 to yield 9.246%.

The notes pay a 9% cash coupon which steps up by 75 basis points to 9¾% for PIK payments.

The PIK toggle holdco dividend deal, one of the most aggressive structures that the junk bond market ever sees, came on top of final talk, but at the wide end of the 8½% to 9% initial coupon guidance.

And despite a use of proceeds that investors are known to dislike, namely the financing of a dividend, the IPL Plastics deal was heard to have been driven into the market by reverse inquiry amounting to 75% of the issue size.

Only one deal is on deck for Friday.

Radiology Partners unveiled a $650 million offering of five-year senior secured notes on Thursday, talked to yield in the 5 3/8% area.

Albertsons active

Albertsons’ 3½% senior notes due 2029 were active on Thursday following an add-on the previous session.

The notes were trading at a premium to their reoffer price.

They were changing hands in the 99 5/8 to par context throughout the session and stood poised to close the day at 99 7/8, a source said.

There was more than $40 million in reported volume heading into the market close.

The grocery store chain operator priced a $600 million add-on to the 3½% notes at 99 to yield 3.64% on Wednesday.

Pricing came at the rich end of talk for a reoffer price in the 98.75 area. Initial talk was 98.5 to 99.

The notes were hovering around par in the run-up to Wednesday’s add-on.

Calpine lags

Calpine’s newly priced 3¾% senior notes due 2031 were lagging their issue price on Thursday.

The notes were marked at 99½ bid, 99¾ offered heading into the close, a source said.

However, the large issue saw relatively light volume with about $20.5 million on the tape.

While the notes were rated BB, the company is from the energy sector, which investors have been wary of, a source said.

The notes were also a longer duration with shorter duration notes favored by investors, a source said.

Calpine priced a downsized $900 million issue of the 3¾% notes at par in a Wednesday drive-by.

Pricing came on top of talk for a yield of 3¾%.

The issue size was downsized from $1 billion with proceeds shifted to the concurrent term loan.

Seagate comes in

As the market awaited Seagate’s new offering, the hard disk manufacturer’s outstanding 4 7/8% senior notes due 2027 were trading down.

The notes shaved off more than 2 points.

They stood poised to close Thursday at 111 with the yield now 2.93%, according to a market source.

The notes were active with more than $27 million in reported volume.

Holders were most likely rotating out of the 2027 notes to participate in the new offering, which carried a higher yield, a source said.

Indexes mixed

Indexes were mixed on Thursday with some continuing to eke out gains while others were flat to down slightly.

The KDP High Yield Daily index rose 14 points to close the day at 68.29 with the yield now 4.64%.

The index gained 8 bps on Wednesday and 14 bps on Tuesday after shaving off 1 bp on Monday.

The ICE BofAML US High Yield index gained another 26.5 bps with the year-to-date return now 4.829%.

The index was up 15.1 bps on Wednesday and 23.3 bps on Tuesday.

The CDX High Yield 30 index was flat on Thursday and closed the day at 109.1, flush with Wednesday’s close.

The index rose 16 bps on Wednesday after shaving off 6 bps on Tuesday.

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