Norwegian, Nine Energy price; Genesis holds gains; other junk bond names off

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 19 – Norwegian Cruise Line brought a drive-by junk bond deal to market on Thursday and Nine Energy Service, Inc. moved a smaller $300 million offering off of the calendar.

Meanwhile, investor sentiment continued to sour on Thursday as the United States hit its debt limit, raising the specter of a potential default.

While selling in the market was orderly with the high-yield market continuing to hold up well compared to equities, the cash bond market fell ¼ to ½ point, sources said.

New paper remained in focus with many notes continuing to give back the gains made from a strong break.

Genesis Energy, LP/Genesis Energy Finance Corp.’s 8 7/8% senior notes due 2030 (B2/B) closed Thursday off their highs, although the notes were able to maintain a healthy premium despite the heaviness in the market.

However, Bombardier Inc.’s 7½% senior notes due 2029 (B3/B-) fell about ¾ point with the notes now trading with only a nominal premium to their issue price.

DISH Network Corp.’s 11¾% senior secured notes due 2027 (Ba3/B+) also dropped about ¾ point with the notes closing the day on a 102-handle.

Crestwood Midstream Partners LP and Crestwood Midstream Finance Corp.’s 7 3/8% senior secured notes due 2031 (Ba3/BB) gave back all gains since breaking for trade with the notes closing Thursday wrapped around par.

Thursday deals

Norwegian Cruise Line priced an upsized $600 million issue (from $500 million) of NCL Corp. Ltd. five-year senior secured notes (B1/BB-) at par to yield 8 3/8% in a Thursday drive-by.

The yield printed inside of the 8½% to 8¾% yield talk. Initial guidance was in the 9% area.

The deal rode into the market on reverse inquiry well in excess of its original size, sources said.

As price talk descended from early whispers of 9% investors started dropping out, according to a sellside source.

As the deal broke for trading, late Thursday afternoon, the bonds were wrapped around par, the source added.

Also on Thursday, Nine Energy Service, Inc. priced a $300 million issue of 13% five-year senior secured notes (Caa2/CCC) at 95, with the coupon and price coming on top of talk (initial price guidance was approximately 93.14).

The notes are packaged into 300,000 units, each of which is comprised of a $1,000 par amount of notes with attached penny warrants for five shares of the company's common stock.

Orders amounted to twice the size of the deal, early Thursday afternoon, according to a bond trader who added that there appeared to be a decent amount of “roll” into the new issue, among holders of the company's existing notes.

The deal was not a blowout, the trader remarked.

Away from NCL and Nine Energy the only deal remaining in the market is the Rayonier A.M. Products Inc. $325 million offering of five-year senior secured notes (B3/B).

It was scheduled to be in roadshow mode through Thursday, but has hit headwinds, according to market sources.

The Rayonier offer was heard to be playing to a $135 million book at midmorning on Thursday.

Pending official price talk initial guidance has the notes coming to yield in the high-9% to 10% area, sources say.

Genesis holds

Genesis’ 8 7/8% senior notes due 2030 held onto some of the strong gains made since breaking for trade, although the notes closed Thursday well off their highs.

The 8 7/8% notes were marked at par ½ bid, 101 offered on Thursday and stood poised to close the day wrapped around par 7/8.

The notes closed Wednesday wrapped around 101.

The deal played to heavy demand and priced wide to the B index, sources said.

Genesis priced an upsized $500 million, from $400 million, issue of the 8 7/8% notes at par in a Wednesday drive-by.

The yield printed in the middle of yield talk in the 8 7/8% area.

Bombardier falls back

Bombardier’s 7½% senior notes due 2029 fell back to a par handle amid the heaviness in the market on Thursday.

The notes were off about ¾ point to trade in the par 1/8 to par 3/8 context heading into the market close.

The notes had a strong break alongside the other deals to price in Tuesday’s deluge in the primary market.

The notes traded as high as 101½ on Wednesday but closed the previous session wrapped around 101.

Bombardier priced a $750 million issue of the 7½% notes at par on Tuesday.

DISH gives back

DISH’s 11¾% senior secured notes due 2027 continued to weaken on Thursday after jumping 2 points above the reoffer price of its recently priced add-on the previous session.

The 11¾% notes dropped another ¾ point on Thursday to return to a 102-handle.

The notes were changing hands in the 102 5/8 to 102 7/8 context heading into the market close.

The notes shot as high as 104 on Wednesday but were dragged lower to close the day in the 103 3/8 to 103 5/8 context.

DISH priced a $1.5 billion add-on to the 11¾% notes at 102 to yield 11.079% in a Tuesday drive-by.

Crestwood flat

Crestwood’s 7 3/8% senior secured notes due 2031 gave back all gains since breaking for trade with the notes among the worst performers of recent deals.

The 7 3/8% notes shaved off ¼ point to close Thursday in the 99 7/8 to par 1/8 context.

The notes were weak out of the gate but managed to eke out a nominal premium with the notes closing the previous session in the par to par ¼ context.

The midstream company priced a $600 million issue of the 7 3/8% notes at par on Tuesday.

Indexes

The KDP High Yield Daily index fell 27 points to close Thursday at 53.35 with the yield now 6.88%.

The index gained 19 points on Wednesday after shaving off 1 point on Tuesday.

The ICE BofAML US High Yield index fell 61.4 bps with the year-to-date return now 3.73%.

The index gained 36.8 bps on Wednesday and 7.1 bps on Tuesday.

The CDX High Yield 30 index fell 58 bps to close Thursday at 101.62.

The index was down 44 bps on Wednesday and 36 bps on Tuesday.

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