Warrior Met Coal prices, gains on break; HUB at slight premium in junkland; Hertz comes in

By Abigail W. Adams

Portland, Me., Nov. 19 – The domestic high-yield primary market cooled its pace on Friday with one small offering clearing the market.

Warrior Met Coal, Inc.’s $350 million offering of seven-year senior secured notes (B1/BB) was the sole deal to price on Friday.

The notes saw a strong break and were trading at a solid premium to their discounted issue price.

While the forward calendar is empty heading into the Nov. 22 week, a flurry of deals is expected on Monday and Tuesday before the market goes quiet for the Thanksgiving holiday in the United States.

Meanwhile, the secondary space was soft on Friday although volume remained light outside of new deals.

Nabors Industries, Inc.’s new 7 3/8% senior priority guaranteed notes due 2027 (B3/B-/B) were in focus with the notes putting in a strong performance.

However, the oil and gas drilling contractor’s 5¾% senior notes due 2025 were down in active trading.

HUB International Ltd.’s new 5 5/8% senior notes due 2029 (Caa2/CCC+) were trading with a slight premium although the notes were growing weaker as the session progressed.

Meanwhile, Hertz Corp.’s two tranches of senior notes (Caa1/B) were also weaker on Friday, which sources attributed to the weak market conditions.

Warrior Met Coal prices

Warrior Met Coal priced its $350 million offering of seven-year senior secured notes (B1/BB) on Friday with a coupon of 7 7/8% and a discounted offer price of 99.343 to yield 8%, according to a market source.

Price talk was for a yield in the 8% area. Initial guidance was for a yield in the low 8% area.

The new paper saw a strong break and was changing hands in the par ¼ to par ½ context heading into the market close, a source said.

There was more than $60 million in reported volume.

Nabors in focus

Nabors Industries’ new 7 3/8% senior priority guaranteed notes due 2027 (B3/B-/B) were in focus with the notes putting in a strong performance.

The 7 3/8% notes traded as low as par ¾ and as high as 102 during Friday’s session. However, the majority of trades were in the 101¼ to 101¾ area.

There was more than $159 million in reported volume.

Nabors priced a $700 million issue of the 7 3/8% notes at par on Thursday.

The notes were marketed in the mid-to-high 7% area.

While Nabors’ new notes were putting in a strong performance in the aftermarket, the oil and gas drilling contractor’s 5¾% senior notes due 2025 were under pressure.

The notes were down about 2 points in active trading. The notes traded as low as 89 7/8 but the majority of trades were around 90½, a source said.

There was about $11 million in reported volume.

HUB on a par-handle

HUB International’s new 5 5/8% senior notes due 2029 (Caa2/CCC+) were trading with a slight premium in the aftermarket although the notes were growing weaker as the session progressed.

The notes were marked at par ¼ bid, par ¾ offered early in the session, a source said.

However, they were changing hands in the par 1/8 to par ¼ context heading into the market close.

HUB priced a downsized $550 million issue of the 5 5/8% notes at par on Thursday.

Pricing came tighter than talk for a yield of 5¾% to 5 7/8%.

The offering was downsized from $1.2 billion with a proposed $650 million secured tranche eliminated with proceeds shifted to a concurrent term loan.

Hertz comes in

Hertz’s recently priced 5% senior notes due 2029 and 4 5/8% senior notes due 2026 gave back some of their gains in active trading on Friday.

The 5% senior notes due 2029 slid about ½ point. They were changing hands in the par 1/8 to par 3/8 context heading into the market close, a source said.

The notes closed the previous session at par ¾ bid after reaching as high as 101 bid after breaking for trade on Wednesday.

The 4 5/8% senior notes due 2026 were also down about ½ point to trade in the par 1/8 to par 3/8 context.

Both tranches saw more than $20 million in reported volume.

The weakness in the notes was attributed to generally weak market conditions on Friday.

Hertz priced a $500 million tranche of the 4 5/8% notes and a $1 billion tranche of the 5% notes at par on Wednesday.

Fund flows

Fund flows were negative on Thursday, the most recent session for which information was available.

High-yield mutual funds saw outflows of $215 million while actively managed funds saw outflows of $65 million.

The outflow came on the heels of the Refinitiv Lipper Fund Flow Report, which reported inflows of $99 million to high-yield mutual and exchange-traded funds through Wednesday’s close.

Indexes

The KDP High Yield Daily index fell 9 points to close Friday at 68.04 with the yield now 3.99%.

The index was down 2 points on Thursday, 5 points on Wednesday, 43 points on Tuesday and 14 points on Monday.

The index posted a cumulative loss of 73 bps on the week.

The CDX High Yield 30 index was down 18 basis points to close Friday at 108.99.

The index slid 2 bps on Thursday and 12 bps on Wednesday, was up 4 bps on Tuesday and was flat on Monday.

The index posted a cumulative loss of 28 bps on the week.

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