Carnival, LogMeIn, Graphic Packaging price; Comstock adds; ANGI, QVC lag; Veritas gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 14 – The domestic high-yield primary market wrapped one of the highest volume weeks of the year with four issuers pricing a cumulative $2.5 billion.

LogMeIn, Inc. priced an upsized $950 million issue, Carnival Corp. again tapped the market and priced $900 million and Graphic Packaging International, LLC priced a $350 million issue.

Comstock Resources, Inc. priced an upsized $300 million add-on to its 9¾% senior notes due Aug. 15, 2026 (Caa1/B-/B+).

While the domestic high-yield primary market continued to churn out tightly priced deals, the secondary space was again soft on Friday with several recent deals struggling in the aftermarket.

ANGI Homeservices Inc.’s 3 7/8% senior notes due 2028 (Ba3/BB-) and QVC, Inc.’s 4 3/8% senior secured bullet notes due 2028 (Ba2/BB+/BBB-) became the latest new offerings to fall below par in the aftermarket.

While several new deals were struggling, LogMeIn’s new notes were not one of them with the issue skyrocketing.

Veritas US Inc. and Veritas Bermuda Ltd.’s 7½% senior secured notes (B2/B) due 2025 were also trading with a healthy premium.

$20 billion week

Notwithstanding the fact that a mere four tranches of junk cleared the market on Friday, it was a big enough day at $2.5 billion.

It extended the torrid Aug. 10 week's total issuance to $22.5 billion in 33 tranches (the most tranches of any week, year to date).

In terms of dollar amount of issuance, it was less than $1 billion shy of 2020's biggest week, the week of June 15, which had $23.4 billion.

Against a backdrop of flat equities, and headline news that continued to drone the global pandemic and the intensifying political uncertainty that has taken hold in the United States, Friday's executions appeared solid, with some deals upsizing and all pricing tight and rich to talk.

At the conclusion of its roadshow LogMeIn, Inc. priced an upsized $950 million (from $750 million) issue of 5½% seven-year senior secured notes (B1/B-/BB-) at the tight end of talk.

The notes skyrocketed in the aftermarket. After hitting as high as 103, they settled between 102½ to 102¾, a source said.

The rest of Friday's action cruised past the high-yield drive-through window.

Carnival Corp. came with a $900 million issue of 9 7/8% seven-year senior secured second-priority notes (Ba1/BB+) that came at the tight end of talk.

The deal was heard to be playing to $2 billion of orders, a trader said.

It was the third time that the Miami-based cruise line docked at the new issue market since the beginning of April. Over the course of those three passes the company has now put in place $5.68 billion and €425 million of fresh bond debt.

Graphic Packaging International priced a $350 million issue of 3½% 8.5-year senior bullet notes (Ba2/BB+) at the tight end talk.

And Comstock Resources priced an upsized $300 million add-on to its 9¾% senior notes due Aug. 15, 2026 at 100.5, at the rich end of talk (see related stories in this issue).

Friday's action cleared the active new issue calendar.

However, the market is expected to remain active in the week ahead, sources say.

BofA Securities is believed to be poised to bring two drive-bys, while Morgan Stanley is understood to have three deals on tap for the Aug. 17 week.

ANGI lags

ANGI Homeservices’s 3 7/8% senior notes due 2028 were lagging their issue price in high-volume activity on Friday.

The 3 7/8% notes were trading on a 99-handle with most prints between 99½ to 99 5/8, a source said.

More than $44 million of the bonds were on the tape by the late afternoon.

The level of the 3 7/8% notes was not surprising.

However, the coupon the deal priced with was incomprehensible, a source said.

The digital marketplace for home services priced a $500 million issue of the 3 7/8% notes at par on Thursday following a roadshow.

Pricing came at the tight end of yield talk in the 4% area.

QVC below par

QVC’s 4 3/8% senior secured notes due 2028 were lagging their issue price on Friday.

The notes traded in a range of 99¾ to par 1/8 during Friday’s session with most prints between 99¾ and 99 7/8 heading into the late afternoon, a source said.

The notes had more than $17 million in reported volume by the late afternoon.

QVC priced a $500 million issue of the 4 3/8% notes at par.

Pricing came at the wide end of the 4¼% to 4 3/8% yield talk.

Veritas at a premium

Veritas’s new 7½% senior notes due 2025 continued to gain on Friday.

The notes were up another 3/8 point on Friday. They were changing hands in the par 5/8 to 101 context in the late afternoon, a source said.

However, trading of the large issue was relatively light with $17 million on the tape.

The notes were active after breaking for trade and were marked at par ¼ bid, par ½ offered.

Veritas priced an upsized $1 billion of the 7½% notes at par on Thursday.

Pricing came at the tight end of yield talk and initial guidance of 7½% to 7¾%.

The deal was heard to have played to $2 billion of demand.

The initial size of the offering was $600 million but $400 million of proceeds was shifted from a concurrent term loan.

$84 million Thursday inflows

The dedicated high-yield bond funds had $84 million of net inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw a solid $120 million of inflows on the day.

However, high-yield ETFs were negative on Thursday, sustaining $36 million of outflows on the day, the source said.

News of Thursday's daily cash flows follows a Thursday report that the combined funds had $1.542 billion of net inflows in the week to the Wednesday, Aug. 12 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

It was the sixth consecutive weekly inflow, the market source said.

Net inflows since the week to March 25 now stand at $62.7 billion, the source added, noting that seven of the eight largest weekly inflows on record came since the March 25 week.

Index down

Indexes were again soft on Friday with all posting cumulative losses on the week.

The KDP High Yield Daily index dropped 16 basis points to close Friday at 66.84 with the yield now 5.57%.

The index was down 6 bps on Thursday, was flat on Wednesday, gained 1 bp on Tuesday and shaved off 1 bp on Monday.

The index posted a cumulative loss of 22 bps on the week.

The ICE BofAML US High Yield index sank bank into negative territory on Friday.

The index was down 11.2 bps with the year-to-date return now negative 0.175%.

The index dropped 21.5 bps on Thursday and 18.2 bps on Wednesday after gaining 9 bps on Tuesday and 2.1 bps on Monday.

The index posted a cumulative loss of 39.8 bps.

The CDX High Yield 30 index dropped 25 bps to close Friday at 104.

The index was down 47 bps on Thursday, rose 40 bps on Wednesday, dropped 34 bps on Tuesday and was down 17 bps on Monday.

The index posted a cumulative loss of 83 bps on the week.

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