Playtika prices; Cinemark at a premium; Twilio above 102; Consolidated Communication flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 5 – The domestic high-yield primary market saw one deal clear during Friday’s session with market volatility beginning to take its toll on the calendar.

Israel-based Playtika Holding Corp. was the sole issuer to price on Friday. The deal was heavily oversubscribed and had a strong break.

However, Vericast Corp. pulled its $1.78 billion two-part deal from the market.

Meanwhile, the secondary space saw another wild session with exchange-traded fund-driven selling dragging down the overall market early in the session, a source said.

The majority of selling pressure was from ETFs. However, there was little participation from real money accounts or dealers to stabilize the market.

However, after the European markets closed, the secondary space improved dramatically, the source said.

Despite market conditions on Friday, several recent deals continued to perform well.

While coming in from the heights reached after breaking for trade, Cinemark USA, Inc.’s 5 7/8% senior notes due 2026 (Caa1/B/B) were trading with a solid premium in the aftermarket.

Twilio Inc.’s two tranches of senior notes outperformed (Ba3/BB) with the tranches 2 to 3 points above their issue prices.

However, Consolidated Communications Inc.’s 5% senior notes due 2028 (B2/B+) fell flat in active trading.

Friday’s primary

Early Friday market volatility related to rising Treasury rates on the heels of strong nonfarm payroll numbers dampened down activity in the high-yield new issue market, according to market sources.

Israel-based Playtika Holding priced a $600 million issue of 4¼% eight-year senior notes (B2/B) at par, in the middle of talk.

The deal was “packed,” a source said, with more than $2.8 billion in orders.

The notes had a strong break and were marked at 101¼ bid, 101½ offered heading into the close.

While Playtika was in demand, Vericast pulled its $1.78 billion two-part deal from the market (see related stories in this issue).

Cinemark at a premium

Cinemark USA’s 5 7/8% senior notes due 2026 were putting in a solid performance in the secondary space, which some sources saw as a surprise given the credit.

The notes traded as high as 101¼ before dropping down to a par-handle amid the height of the sell-off, sources said.

They were marked at par ¾ bid, 101 offered heading into the close.

There was more than $44 million on the tape.

Cinemark priced a $405 million issue of the 5 7/8% notes at par in a Thursday drive-by.

Pricing came tighter than the 6% to 6¼% yield talk.

Twilio outperforms

Twilio’s two tranches of senior notes outperformed on a weak day for the market.

The 3 5/8% senior notes due 2029 were marked at 101¼ bid during the morning sell-off.

However, they jumped to a 102-handle as the market rebounded.

The notes were marked at 102¼ bid, 102½ offered heading into the close.

There was more than $60 million in reported volume.

The 3 7/8% senior notes due 2031 were even stronger.

After trading as low as 101¾, they rocketed up to 102¾ bid, 103 offered heading into the close.

In a heavily oversubscribed offering, the cloud communications company priced a $500 million tranche of the 3 5/8% notes and a $500 million tranche of the 3 7/8% notes at par.

The 3 5/8% notes priced at the tight end of yield talk in the 3¾% area; the 3 7/8% notes priced at the tight end of yield talk in the 4% area.

Consolidated Communications flat

Consolidated Communications’ 5% senior notes due 2028 fell flat in active trading.

The notes were wrapped around their issue price heading into the market close.

There was more than $25 million on the tape.

Consolidated Communications priced a $400 million issue of the 5% notes at par on Thursday.

Pricing came at the tight end of the 5% to 5¼% yield talk.

Big Thursday outflows

The dedicated high-yield bond funds sustained $1.2 billion of net outflows on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had huge outflows of $1.06 billion on the day.

Actively managed high-yield funds saw $140 million of outflows on Thursday, the source said.

News of Thursday's daily outflows trails a Thursday report that the combined funds saw $601 million of net inflows for the week to the Wednesday, March 3 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

That was the second-largest weekly inflow in the year to date, according the market source who added that the dedicated high-yield bond funds had four $1 billion-plus outflows during the first eight weeks of the year.

Year to date flows for the combined junk funds stood at negative-$3.7 billion, at Thursday's close, the source said.

Indexes

Indexes closed a volatile week mixed.

The KDP High Yield Daily index dropped 18 points to close the day at 69.31 with the yield now 4.08%.

The index was down 3 points on Thursday and was flat on Wednesday after gaining 2 points on Tuesday and 11 points on Monday.

The index posted a cumulative loss of 8 points on the week.

The ICE BofAML US High Yield index dropped 24 bps on Friday with the year-to-date return now 0.528%.

The index was down 17.6 bps on Thursday and 8.8 bps on Wednesday after gaining 9.8 bps on Tuesday and 26.3 bps on Monday.

The index, which crossed above the 1% year-to-date return threshold on Tuesday only to sink below it again on Wednesday, posted a cumulative loss of 14.3 bps on the week.

The CDX High Yield 30 index gained 50 bps to close Friday at 108.65.

The index was down 43 bps on Thursday, 27 bps on Wednesday and 18 bps on Tuesday after gaining 82 bps on Monday.

The index posted a cumulative gain of 44 bps on the week.

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