PennyMac, Alliant price in junkland; Credit Acceptance expands; Enova at a premium

By Abigail W. Adams

Portland, Me., Dec. 6 – The domestic high-yield bond primary market was active again on Wednesday with two issuers pricing a cumulative $1.4 billion.

PennyMac Financial Services Inc. priced an upsized $750 million of six-year senior notes (Ba3/B+/BB-) and Alliant Holdings Intermediate LLC and Alliant Holdings Co-Issuer Inc. priced $750 million of seven-year senior secured notes (B2/B).

Wednesday’s session lifted the weekly tally to $5.15 billion with three deals totaling $1.835 billion remaining on the forward calendar.

XPO Inc.’s $585 million offering of eight-year senior notes (Ba3/BB-/BB+) and CQP Holdco LP and BIP-V Chinook Holdco LLC $700 million offering of 10-year senior secured notes (existing B1/BB) were heard to be going well with the deals believed to be pricing on Thursday.

However, J.B. Poindexter & Co., Inc.’s offering of $550 million eight-year senior notes (B2) was heard to be struggling.

While the recent wave of deals have commanded tighter terms due to the dramatic repricing of the market since mid-November, new notes continued to play to strong demand and put in solid performances in the aftermarket.

The secondary space was off to a strong start on Wednesday after the latest ADP report reflected a weakening labor market.

However, the market leaked into the close and ended the day largely unchanged, sources said.

However, new and recent deals continued to put in strong aftermarket performances.

Credit Acceptance Corp.’s 9¼% senior notes due 2028 (Ba3/BB) continued to shoot higher after a strong break with the notes closing the day above a 101-handle.

Enova International Inc.’s 11¼% senior note due 2028 (B2/B-) held on to the gains made on the break with the notes continuing to trade at a premium to their discounted issue price.

PennyMac drives by

PennyMac priced an upsized $750 million, from $650 million, offering of six-year senior notes (Ba3/B+/BB-) at 99.407 with a coupon of 7 7/8% to yield 8% in a Wednesday drive-by, according to a market source.

Pricing came at the tight end of talk for a yield of 8% to 8¼%. Early guidance was for a yield in the mid 8% area.

While the deal played to strong today, some sources felt the pricing was tight with the offering unattractive at early guidance.

Alliant clears calendar

Alliant priced $750 million of seven-year senior secured notes (B2/B) at par with a coupon of 7% on Wednesday, according to a market source.

Pricing came at the midpoint of talk for a yield in the 7% area. Early guidance was for a yield in the mid-7% area.

The deal played to decent demand with the books just over deal size early Wednesday.

However, the tight pricing caused some to pass on the deal which initially looked attractive at early guidance.

Calendar eyed

Three deals remain on the forward calendar with pricing expected before the week draws to a close.

CQP Holdco’s $700 million offering of 10-year, no-call-five senior secured notes (existing B1/BB) were heard to be doing well with books at deal size and pricing expected on Thursday, a source said.

The notes are being guided with a yield in the mid-7% area.

Books were also filling in for XPO’s $585 million offering of eight-year senior notes which were heard to be just shy of deal size early Wednesday.

XPO is also expected to price on Thursday.

However, J.B. Poindexter’s $550 million offering of eight-year senior notes were heard to be struggling with the investor call not well received.

There is some concern about the company’s fundamentals with a top customer responsible for 8% to 10% of sales not placing any orders in 2024.

Credit Acceptance gains

Credit Acceptance’s 9¼% senior notes due 2028 continued to shoot higher in active trade on Wednesday with the notes breaking above a 101-handle.

The notes added more than 1 point and were trading in the 101¾ to 102 context early in the session, according to a market source.

While the broader market started to wilt, Credit Acceptance marched higher with the notes trading in the 101 7/8 to 102 1/8 context heading into the close.

There was $76 million in reported volume.

Credit Acceptance priced an upsized $600 million, from $550 million, offering of the 9¼% notes at par on Tuesday.

Pricing came at the tight end of talk for a yield of 9¼% to 9½%.

Timing for the deal was accelerated with pricing initially expected on Wednesday.

Enova at a premium

Enova’s 11¼% senior note due 2028 were unchanged on the day but maintained the gains made on the break in active trade on Wednesday.

The 11¼% notes were changing hands in the 99 3/8 to 99 5/8 context throughout the session, according to a market source.

They stood poised to close the day wrapped around 99½.

There was $34 million in reported volume.

Enova priced $400 million of the 11¼% notes at 99.058 to yield 11½% on Tuesday.

Pricing came in line with talk for 1 point of original issue discount with an all-in yield in the 11½% area.

Indexes

The KDP High Yield Daily index was up 9 basis points to close Wednesday at 49.71 to yield 7.21%.

The index gained 7 bps on Tuesday and was flat on Monday.

The ICE BofAML US High Yield index gained 15.7 bps with year-to-date returns now 10.26%.

The index was up 24.1 bps on Tuesday and 6.5 bps on Monday.

The CDX High Yield 30 index was down 16 bps to close Wednesday at 103.71.

The index was off 15 bps on Tuesday and 15 bps on Monday.

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