Lumen prices; Ancestry on deck; Carnival in focus; Double Eagle flat; American Bath gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 23 – Activity in the domestic high-yield primary market was muted on Monday with one deal clearing the market.

Lumen Technologies (formerly CenturyLink, Inc.) priced an upsized $1 billion issue.

Activity is expected to remain muted for the remainder of the truncated holiday week.

However, one large offering remains on the forward calendar.

Ancestry.com is set to price its $1 billion two-tranche offering on Tuesday.

Meanwhile, the secondary space continued to grind tighter as Covid-19 vaccines “come out of the woodwork,” a source said.

New deals continued to dominate the tape with most jumping in the aftermarket.

After a meteoric break last Friday, Carnival Corp.’s 7 5/8% senior notes due 2026 (B2/B) continued their upward momentum in high-volume activity.

The company’s latest offering sparked activity in its 11½% first-priority senior secured notes due 2023, which also posted nominal gains during Monday’s session.

CP Atlas Buyer, Inc. (American Bath Group LLC)’s newly priced 7% senior notes due 2028 (Caa2/CCC+) were also trading as much as 4 points above their issue price.

However, Double Eagle’s 7¾% senior notes due 2025 (B3/B/BB-) saw a lackluster reception in the secondary space with the notes largely wrapped around par.

Monday’s primary

New-issue activity was muted as the holiday-abbreviated pre-Thanksgiving week got underway on Monday.

Lumen Technologies (formerly CenturyLink, Inc.) priced an upsized $1 billion issue (from $750 million) of 4½% eight-year senior notes (B2/BB-) at par, in the middle of talk.

In the European market Amsterdam-based telecom United Group BV (B2/B) – which does business mostly in the former Yugoslavia, but also lately in Greece – priced an upsized €400 million issue (from €350 million) of 4% seven-year senior secured notes, also at par in the middle talk.

Looking ahead Ancestry.com, the online family history services provider, set price talk in its $1 billion two-part deal: $450 million of 7.5-year senior first-lien notes (B1/B) talked to yield 4¼% to 4½%, and $550 million of eight-year senior unsecured notes (Caa1/CCC+) talked to yield 6¼% to 6½%.

The deal, which is set to price Tuesday, is a blowout, a bond trader told Prospect News (see related stories in this issue).

The constrictive force that the pandemic is exerting on traditional American family Thanksgiving holiday customs notwithstanding, the remaining two sessions of the pre-holiday week are expected to continue to see muted new-issue activity, sources said on Monday.

With the above-mentioned Ancestry offer being the sole deal on the active calendar at Monday's close, it is conceivable that there could be other business on Tuesday, an investment banker said.

However, Tuesday will likely be the last day for new-issue activity until the post-Thanksgiving week, the banker added.

Carnival in focus

Carnival’s 7 5/8% senior notes due 2026 continued to gain in high-volume activity on Monday after a meteoric rise after breaking for trade.

The 7 5/8% notes were changing hands in the 103 7/8 to 104 1/8 context heading into Monday’s close. There was more than $70 million in reported volume.

The notes jumped to a 103-handle after breaking for trade last Friday.

Carnival priced a $1.45 billion tranche of the 7 5/8% notes at par last Friday, as part of a dual-currency offering that also included a €500 million tranche.

The 7 5/8% notes printed at the tight end of the 7 5/8% to 7¾% yield talk, which tightened from earlier talk was in the 8% area.

The 7 5/8% notes are the cruise line operator’s first unsecured deal since the outbreak of the Covid-19 pandemic.

The company’s 11½% first-priority senior secured notes due 2023 were also active on Monday with the notes up about 3/8 point to close the day at 113 5/8, a source said.

The 11½% notes currently trade with a yield of about 4½%.

Carnival priced a $4 billion issue of the 11½% notes at 99 to yield 11.901% on April 1.

American Bath gains

American Bath’s newly priced 7% senior notes due 2028 also saw a meteoric rise in the secondary space.

The 7% notes were trading in the 103 5/8 to 104 context on Monday.

There was about $13 million on the tape heading into the session.

While the notes fell on the lower side of the credit spectrum, the small issue was in demand during bookbuilding.

The demand followed the notes into the secondary space with accounts bidding the notes up to increase their position, a source said.

American Bath priced a $335 million issue of the 7% notes at par on Friday.

Pricing came at the tight end of the 7% to 7¼% yield talk, which tightened from earlier talk in the 7½% area. Initial guidance was in the 8% area.

Proceeds from the offering will be used to support Centerbridge Partners’ acquisition of the building materials company.

Double Eagle flat

While the majority of new deals were putting in strong performances in the aftermarket, Double Eagle’s 7¾% senior notes due 2025 fell flat.

The notes traded in a range of 99 7/8 to par ½ during Monday’s session with the notes largely wrapped around par heading into Monday’s close.

There was more than $31 million on the tape during the session.

The deal from the energy company was heard to have struggled during bookbuilding.

Double Eagle priced a $650 million issue of the 7¾% notes at par on Friday.

Pricing came wider than the wide end of the talk for a yield in the 7½% area.

Junk ETFs see $614 million Friday outflows

The high-yield ETFs sustained $614 million of net daily outflows on Friday, the most recent session for which data was available at press time, according to a market source.

The actively managed high-yield funds were positive on the day, posting $70 million of inflows on Friday, the source said.

Indexes gain

Indexes continued to eke out gains on Monday after all posted cumulative gains the previous week.

The KDP High Yield Daily index rose 2 points to close Monday at 67.69 with the yield now 4.94%.

The index posted a cumulative gain of 30 points on the week.

The ICE BofAML US High Yield index gained 21 bps with the year-to-date return now 3.613%.

The index gained 63.9 bps on the week last week.

The CDX High Yield 30 index rose 51 bps to close Monday at 107.74.

The index posted a cumulative gain of 11 bps on the week last week.

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