Five junk issuers price $2 billion; primary activity expected to keep up; GMS, Boyne at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 16 – The Friday session in the red-hot high-yield primary market had five issuers price a cumulative $2 billion.

Sources anticipate an active week ahead with $10 billion to $15 billion in new supply expected.

Meanwhile, the secondary space was largely unchanged on Friday with new paper dominating the tape on an otherwise quiet day.

Recent deals continued to perform well in the aftermarket.

While the issue was small, GMS Inc.’s 4 5/8% senior notes due 2029 (B2/B) were active with the notes trading with a solid premium to their issue price.

Boyne USA, Inc.’s 4¾% senior notes due 2029 (B1/B) maintained the large premium reached after breaking for trade with the notes continuing to trade on a 102-handle.

United Airlines’ two tranches of senior notes (Ba1/BB-/BB) remained active although with little movement in price.

Outside of recent issues, Carnival Corp.’s 5¾% senior notes due 2027 (B2/B+) were active with the notes continuing their upward momentum with investor sentiment about travel and leisure companies increasingly positive.

GMS gains momentum

GMS’4 5/8% senior notes due 2029 gained momentum in active trading on Friday. The notes traded to a low of par 7/8 on Friday but spent the majority of the session on a 101-handle.

The notes were changing hands in the 101 to 101½ context heading into the close, according to a market source.

While the issue was small, the notes were active with more than $66 million in reported volume.

GMS priced an upsized $350 million, from $300 million, issue of the 4 5/8% notes at par on Thursday.

Pricing came tighter than the 4¾% to 5% yield talk.

The deal was heard to be as much as 10x oversubscribed.

Boyne on a 102-handle

Boyne’s 4¾% senior notes due 2029 were putting in a strong performance in the aftermarket with the notes on a 102-handle.

The 4¾% notes traded in a range of 102 to 102¾ during Friday’s session.

They stood poised to close the day at 102 5/8.

There was more than $60 million in reported volume.

The owner and operator of mountain ski resorts priced a $540 million issue of the 4¾% notes at par on Thursday.

Pricing came on top of final yield talk which tightened from early talk in the mid-5% area,

The deal played to as much as $3.5 billion of demand, sources said.

The reopening trade

United Airlines’ two tranches of senior notes remained active in the secondary space although with little movement in price.

The 4 5/8% notes due 2029 continued to trade on a 104-handle.

The 4 3/8% notes due 2026 continued to trade on a 103-handle.

Both tranches had more than $45 million in reported volume during Friday’s session.

The notes have roughly traded at the same level since the heavily oversubscribed megadeal, which priced at par on Wednesday, broke for trade.

Carnival’s 5¾% senior notes due 2027 were posting gains in active trading.

The notes were up about ½ point to close the day at 106, according to a market source.

The notes, which priced at par in late February, initially struggled in the aftermarket with the notes sinking below par.

However, they have steadily gained momentum since.

The notes were on the rise in active trading on Friday, which was a reflection of investors’ increasingly positive sentiment about travel and leisure companies, a source said.

$599 million Thursday inflows

The dedicated high-yield bond funds saw $599 million of net daily inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $544 million of inflows on the day.

Actively managed funds saw $55 million of inflows on Thursday, the source said.

News of Thursday's flows trails a Thursday report that the combined funds sustained a modest $132 million of outflows on the week to the Wednesday, April 14 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

The high-yield ETFs saw a heftier $761 million of outflows during that week, the market sources said.

In contrast to the negative flows of the dedicated high-yield bond funds, bank loan funds saw $1.08 billion of net inflows in the week to Wednesday's close, their largest weekly inflow since January, according to the source.

Whereas high-yield bond funds are tracking $6.9 billion of year-to-date outflows, the bank loan funds have seen $16.1 billion of inflows in that time, the source added.

Indexes mixed

Indexes were mixed on Friday with some posting minor gains and others minor losses.

The KDP High Yield Daily index rose 7 points to close the day at 69.63.

The index was up 4 points on Thursday and 1 point on Wednesday after shaving off 3 points on Tuesday and 6 points on Monday.

The index posted a cumulative gain of 3 points on the week.

The CDX High Yield 30 index was down 7 bps to close Friday at 109.87.

The index gained 32 bps on Thursday, 3 bps on Wednesday and 7 bps on Tuesday after falling 12 bps on Monday.

The index posted a gain of 23 bps on the week.

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