Mauser, Charter price; Martin Midstream on deck; CCO weaker; DISH, Evergreen lower

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 30 – The January-February crossover week got off to a big start in the high-yield new-issue market with three issuers pricing a combined $4.6 billion amount of junk-rated, dollar-denominated notes.

At the conclusion of its foreshortened roadshow Mauser Packaging Solutions Holding Co. priced a $2.75 billion issue of 7 7/8% 3.5-year senior first lien notes (B2/B) at par, at the tight end of talk, and deep inside of initial guidance.

The Mauser deal was heard to be playing to $7.3 billion of orders, according to a trader who added that the new 7 7/8% senior first-lien notes were trading at par 3/8 bid, par 7/8 offered late Monday afternoon.

Charter Communications, Inc. priced an upsized $1.1 billion issue (from $1 billion) of CCO Holdings, LLC and CCO Holdings Capital Corp. 7 3/8% eight-year senior notes (B1/BB-) at par, at the tight end of talk.

The deal was heard to be playing to $2 billion of orders early Monday afternoon, a trader said.

And Synchrony Financial priced a $750 million issue of 7¼% 10-year subordinated notes (BB+/BB+) at a 375 basis points spread, on top of spread talk, in a deal that came in a high grade-style execution.

Meanwhile Martin Midstream Partners LP and Martin Midstream Finance Corp. disclosed plans to price a $400 million offering of senior secured second-lien notes due 2028 on Tuesday.

The secondary space saw a heavy start to the week with the cash bond market off ¼ to 3/8 point as market players eye a slew of earnings reports due and the Federal Open Market Committee’s Wednesday rate-hike decision.

However, while the overall space was weak, credit continued to hold up well compared to equities with secondary activity light as market players eyed the new deal in the pipeline.

CCO Holdings' new offering sparked activity in its debt stack with its outstanding senior notes slightly weaker on the heels of the new offering.

New and recent issues remained active with Evergreen AcqCo 1 LP/TVI, Inc.’s (Savers Value Village) 9¾% senior secured notes due 2027 (B2/B) and DISH Network Corp.’s 11¾% senior secured notes due 2027 (Ba3/B+) lower on a heavy day for the market.

In a surprise twist, Carvana Co.’s 10¼% senior notes due 2030 (Caa2/CCC) led gains in the secondary space with the notes jumping more than 7 points with the company in the early phase of a soft restructuring.

Charter weaker

CCO’s outstanding senior notes were weaker in active trading as the market awaited the cable broadcaster’s latest issue to break for trade.

The notes were off ¼ point to 1 point with the longer duration notes the heaviest hit, a source said.

CCO’s 4½% senior notes due 2033 were down about 1 point to close the day wrapped around 80½, according to a market source.

The yield was lifted to 7 1/8%.

There was $19 million in reported volume.

CCO’s 4½% senior notes due 2031 were off about ¾ point with the notes closing the day in the 82 to 82¼ context, a source said.

The yield was also lifted to about 7 1/8%.

The 4¼% notes due 2034 were off ½ point to close the day wrapped around 77¾ with the yield about 7¼%.

CCO’s latest offering caused a moderate repricing at the long end of the curve with several issues pushed further down the capital structure, a source said.

Lower

Several recent deals were active on Monday with the notes lower alongside the broader market after their initial outperformance in the secondary space.

DISH’s 11¾% senior secured notes due 2027 were off ½ to ¾ point with the notes returning to a 103-handle.

The 11¾% notes were changing hands in the 103½ to 103¾ context heading into the market close.

There was $29 million in reported volume heading into the market close with the notes among the most actively traded issues in the secondary space as the market awaited the deals in the pipeline.

The 11¾% notes made strong gains the previous week after pricing a $1.5 billion add-on to the notes at 102 on Jan. 17.

The notes closed last Friday on a 104-handle.

Savers 9¾% senior secured notes due 2027 also continued to give back their gains after spiking on the break the previous week.

The 9¾% notes fell 1 point to return to a 98-handle.

They were changing hands in the 98 to 98½ context heading into the market close.

The 9¾% notes have nearly given back all gains since pricing at 97.986 on Jan. 27.

The notes spiked after breaking for trade, hitting as high as par. However, the notes have steadily declined since.

Carvana skyrockets

Carvana’s 10¼% senior notes due 2030 were the surprise winner of Monday’s session with the notes skyrocketing more than 7 points in heavy volume.

The 10¼% notes jumped to a 55-handle with the notes trading in the 55 to 55½ context heading into the market close, a source said.

The yield on the notes fell to about 23 1/8%.

There was $13 million in reported volume.

Carvana’s notes have largely traded on a 47-handle throughout January despite the broader market rally, particularly in CCC credits.

The company is pursuing a soft restructuring, sources said.

However, Carvana stock has seen a significant rally over the past two sessions with stock up more than 40%.

The stock move has widely been interpreted as another meme-inspired short squeeze, such as the move that sent Bed Bath & Beyond Inc.’s shares higher as news reports circulated about its imminent bankruptcy filing.

Indexes

The KDP High Yield Daily index fell 14 points to close Monday at 53.23 with the yield now 6.94%.

The index posted a cumulative gain of 5 points on the week last week.

The ICE BofAML US High Yield index was off 22.7 bps with the year-to-date return now 3.755%.

The CDX High Yield 30 index was down 46 points to close Friday at 102.20.

The index posted a cumulative gain of 55 bps on the week last week.

Fund flows

High-yield ETFs sustained $397 million of daily cash outflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were flat to slightly negative on the day, sustaining $7 million of outflows on Friday, the source said.

The combined funds are tracking $290 million of net outflows on the week that will conclude with Wednesday's close, according to the market source.

© 2015 Prospect News.
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