HCA up on week; Cheniere Energy drops; PBF Energy gives back gains in HY secondary

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 3 – While the domestic high-yield primary market remained dormant on Friday, sources expect an active September with some forecasting new deal volume to hit $60 billion.

Meanwhile, the already thin liquidity in the secondary space all but dried up on Friday with the highly anticipated nonfarm payroll report failing to spark activity in the space.

The most actively traded name had about $12 million in reported volume. And that name belonged to HCA Healthcare, Inc.

The company’s 3½% senior notes due 2030 inched higher in active trading with the notes up about 1 point on the week.

Cheniere Energy, Inc.’s 4 5/8% senior notes due 2028 were down in active trading on Friday after rising earlier in the week.

After a strong rally the previous week, PBF Holding Co. LLC’s junk bonds gave back some of their gains and closed the week lower.

New deal forecasts

The new issue market remained generally quiet on Friday ahead of the extended Labor Day holiday weekend in the United States.

The August-September crossover week saw a modicum of dollar- and euro-denominated business, most of it transacted on the syndicate desks of the Scandinavian investment banks.

Aside from a couple of small add-on deals, the high-yield syndicate desks in New York and London generated very little news during the period.

Some market sources forecast a robust September, with as much as $60 billion of new issue volume, as low rates in the leverage markets are expected to continue to power a vigorous mergers and acquisitions calendar through the remainder of 2021 and beyond, according to a sellside source.

However, September forecasts seemed to be tempered, somewhat, as mid-August gave way to late August, a high yield portfolio manager said.

HCA gains

HCA Healthcare’s 3½% senior notes due 2030 inched higher in active trading on Friday with the notes up about 1 point on the week.

The 3½% notes were wrapped around 108 headed into Friday’s close, according to a market source.

The notes saw about $12 million in reported volume, making it the most actively traded name during Friday’s session.

HCA’s unsecured notes surged in June after Moody’s Investors Service lifted the health care company’s unsecured ratings to investment grade.

HCA is being eyed as a potential rising star with some market participants expecting the other ratings agencies to follow suit.

Cheniere down

Cheniere’s 4 5/8% senior notes due 2028 were down in active trading on Friday.

After trading up to 106 earlier in the week, the liquid natural gas company’s notes gave back their gains.

They were changing hands in the 105½ to 105 5/8 context for the majority of the session, which is where they closed out the previous week.

However, the final prints of the day were 104 7/8, according to a market source.

There was about $10 million in reported volume.

PBF gives back gains

After a strong rally over the past two weeks, PBF Energy’s junk bonds were giving back some of their gains on Friday.

The 9¼% senior secured notes due 2025 fell 2 points to close the day at 92¾, according to a market source.

The petroleum refiner’s 7¼% senior notes due 2025 also fell 2 points to 64½ in light volume.

The 6% senior notes due 2028 continued to trade on a 61-handle after falling about 4 points the previous session.

PBF Energy’s junk bonds saw a strong rally heading into the week with the 9¼% notes jumping almost 7 points to trade up to a 97-handle and the 6% senior notes trading up to a 67-handle, due to an anticipated revision of biofuel blending mandates.

However, the notes were giving back their gains with the destruction wrought by Hurricane Ida to the company’s refineries outweighing the benefits of higher gasoline prices due to supply chain disruptions.

It may take weeks for PBF’s oil refineries in Louisiana to resume operations which is expected to cost the company tens of millions in lost revenue, Reuters reported.

Indexes

The KDP High Yield Daily index gained 2 basis points to close Friday at 70.37 with the yield now 3.54%.

The index was up 7 bps on Thursday, 5 bps on Wednesday, 8 bps on Tuesday and 10 bps on Monday.

The index posted a cumulative gain of 32 bps on the week.

The CDX High Yield 30 index shaved off 4 bps to close Friday at 109.84.

The index was up 2 bps on Thursday and 5 bps on Wednesday after shaving off 2 bps on Tuesday.

The index was flat on Monday. It posted a cumulative gain of 1 bp on the week.

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