Primary prices $3.6 billion; forward calendar grows; Bausch unsecured tranches drop; Square active

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 24 – Three drive-by high-yield issuers brought four tranches on Monday, pricing a total of $3.6 billion in a session that saw a reasonably steady flow of news from the new issue market.

Two of the three issuers upsized their deals.

The session's biggest issuer, an ultra-familiar name on the high yield bondscape, was Bausch Health Cos., Inc. (formerly Valeant Pharmaceuticals) which priced a $1.6 billion issue of 4 7/8% seven-year senior secured notes

Meanwhile, the secondary space was largely unchanged on Monday with volume light as market players awaited the new deals in the pipeline.

Bausch Health’s capital structure was active with several of the company’s unsecured issues trading down on the heels of the company’s latest offering.

Square, Inc.’s two tranches of senior notes (Ba2/BB/BB) were also active although with little movement in price.

While the overall secondary space was largely unchanged, the energy sector was strong on Monday as WTI crude oil futures jumped.

WTI crude oil futures settled at $66.05, an increase of $2.47 or 3.88%, on Monday.

Crude oil futures gained amid speculation of an active hurricane season, which could disrupt the supply chain, and doubt over a possible lifting of sanctions on Iranian oil exports.

Three tranches price

Executions were mixed, with one tranche pricing at the tight end of talk, two pricing in the middle of talk, and one at the wide end.

The session's biggest issuer was Bausch Health, which priced a $1.6 billion issue of 4 7/8% seven-year senior secured notes (Ba2/BB) at par, at the tight end talk, playing to a healthy book filled with around $4.25 billion of orders (see related stories in this issue).

$375 million Friday outflows

The dedicated high-yield mutual funds sustained $375 million of net daily outflows on Friday, the most recent session for which data was available at press time, according to a market source.

For the seventh consecutive session the actively managed high-yield funds saw big outflows, posting negative-$370 million on Friday, the source said.

Across that span of seven consecutive negative flows, the asset managers have seen $3.7 billion of outflows, the largest consecutive outflows they have seen since March 2020, according to the market source.

Meanwhile the high-yield ETFs were essentially flat on Friday, sustaining $5 million of outflows on the day, the source said.

Bausch Health down

Bausch Health’s unsecured senior notes were taking a hit in active trading on Monday with both issues down over 1 point.

The Quebec-based specialty pharmaceuticals company’s 5¼% senior notes due 2031 were the most active in the capital structure.

The notes were down 1¼ point to close the day at 93½. The yield on the notes was also 6 1/8%.

There was $51 million in reported volume.

The company’s 5¼% senior notes due 2030 were off 1 3/8 point to close the day at 93 3/8 with a yield of 6 1/8%, according to a market source.

There was $17 million in reported volume.

The 5% senior notes due 2029 dropped 1¼ point to close the day at 93½ with the yield about 6%.

Bausch Health’s latest offering of secured notes pushed its unsecured tranches further down the capital structure, a source said.

Square active

Square’s recently priced tranches of senior notes were active on Monday although with little movement in price.

The 2¾% senior notes due 2026 remained wrapped around 101 in the high-volume activity.

There was $23 million in reported volume

The 3½% senior notes due 2031 continued to trade in the par 1/8 to par 3/8 context, according to a market source.

There was about $20 million on the tape.

Indexes mixed

Indexes were mixed on Monday with some posting nominal losses and others nominal gains after all closed the previous week with cumulative losses.

The KDP High Yield Daily index shaved off 1 point to close Monday at 69.44 with the yield now 3.94%. The index posted a cumulative loss of 16 points on the week.

The ICE BofAML US High Yield index rose 7.7 bps with the year-to-date return now 2.006%.

The index posted a cumulative loss of 14.9 bps on the week last week.

The CDX High Yield 30 index rose 15 bps to close Monday at 109.55.

The index was down 32 bps on the week last week.

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