Morning Commentary: Bausch tranches trade to smart premiums; 2019 deal calendar empty

By Paul A. Harris

Portland, Ore., Dec. 18 – Bonds priced Tuesday by Bausch Health Cos. Inc. in a massively upsized $2.5 billion two-part offering of senior notes (B3/B/B) changed hands at smart premiums to their issue prices in active Wednesday morning trading, according to a New York-based bond trader.

The Bausch Health 5% notes due January 2028 were 102 bid, 102½ offered at mid-morning Wednesday. Those notes came at par in a $1.25 billion tranche.

The Bausch 5¼% notes due January 2030 were even better at 103½ bid. The long maturity paper also priced at par in a tranche sized at $1.25 billion.

The deal, which came in what is expected to be the last big burst of issuance for 2019, was upsized from $1.25 billion, with both tranches pricing at the tight ends of talk.

The new Alliance Data Systems Corp. 4¾% notes due 2024, which came Tuesday at par in an upsized $850 million (from $600 million) issue, were straddling their issue price at 99 7/8 bid, par 1/8 offered on Wednesday.

Likewise, the upsized Qorvo Inc. $200 million (from $100 million) add-on notes to the 4 3/8% senior notes due Oct. 15, 2029 (existing ratings Ba1/BB+), which priced on Tuesday at 104.5, were straddling their reoffer price at 104.25 bid, 104.75 offered on Wednesday, the trader said.

Junk bonds priced Monday by Archrock Partners, LP and Archrock Partners Finance Corp., the 6¼% senior notes due April 2028 (B2/B+), were 101¾ bid, 102¼ offered on Wednesday morning.

The upsized $500 million issue (from $400 million) came at par.

Activity was focused on recent issues Wednesday morning, the trader said.

High-yield ETFs, which were big time buyers on Tuesday, charging into the high-yield market with extensive offers-wanted-in-competition (OWIC) lists, were half as active on Wednesday morning, according to the trader, who was seeing smaller OWIC lists here and there.

Liquidity in the market appeared to be thinning, a trend expected to continue in the run-up to the new year, the source added.

The active new issue calendar stood empty at mid-morning Wednesday and will probably remain thus until 2020, syndicate bankers say.

Fund flows eyed

The dedicated high-yield bond funds saw $342 million of daily net inflows on Tuesday, according to a market source.

While the high-yield ETFs saw $367 million of inflows on the day, actively managed junk funds actually sustained $25 million of outflows on Tuesday, the source said.

With only Wednesday’s fund flow numbers left to tally for the present week’s total, the combined junk funds are tracking $1.34 billion of inflows for the week to Wednesday’s close, the market source added.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.