Maxim Crane prices; Syneos pre-markets offering; Tenneco lower; funds lose $1.09 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 17 – Maxim Crane Works, LP priced a $500 million issue of Maxim Crane Works Holdings Capital, LLC 11½% five-year second-priority senior secured notes (Caa1/B-) at 98.158 to yield 12%, Thursday’s sole issue in the junk primary market.

The yield printed at the wide end of yield talk. The issue price came in line with price talk.

The deal was heard to be playing to $780 million of demand from more than 22 accounts on Thursday morning.

JPMorgan was left books.

Word has been circulating the market that Maxim Crane will be JPMorgan’s final deal before Labor Day, over two week’s hence.

Although issuance may be sparse in the run-up to Labor Day, the traditional summer-fall terminus in the bond market, the primary is expected to remain at least somewhat active, sources said.

On Thursday Goldman Sachs was heard to be pre-marketing $1.7 billion of high-yield bonds backing the buyout of Syneos Health Inc. by Elliott Investment Management, Patient Square Capital and Veritas Capital.

Initial conversations are taking place in the context of 9%, sources said.

Buyout financing is also expected to include a $2 billion bank loan, they added.

Although pre-Labor Day activity in the primary market is expected to be light, opportunistic deals could easily surface during that interval, a trader said on Thursday

More heaviness in secondary

Meanwhile, it was another heavy day in the secondary space with a flat open giving way to selling as the market reassessed the Federal Reserve’s next move.

With the European Central Bank hiking rates on Thursday and unemployment claims continuing to fall, bets were increasing for future rate hikes, a source said.

The cash bond market was off 3/8 to ½ point at the close with some pockets of the market weaker, a source said.

While there was some selling in the market with real money accounts and exchange-traded funds circulating bids-wanted-in-competition lists, activity remained muted with new and recent issues driving activity in the space.

The response to the deals that have cleared the primary market in recent months have been credit specific with some names still commanding attractive pricing, while others have not come cheap enough, a source said.

Several recent deals that saw a weak break continued to move lower under Thursday’s market conditions.

Tenneco Inc.’s 8% senior secured notes due 2028 (B1/B) continued their downfall with the notes closing the day on an 81-handle.

RingCentral Inc.’s 8½% senior notes due 2030 (B1/BB/BB) also moved lower with the notes now on a 96-handle.

Clear Channel Outdoor Holdings, Inc.’s 9% senior secured notes due 2028 (B1/B) returned to focus with the notes sinking further under water in heavy volume.

Outside of recent issues, Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured notes due 2029 (B2/B) and Cloud Software Group Holdings Inc.’s (Citrix) 9% second-lien notes due 2029 (Caa2/B-) were taking a hit on Thursday following news of a hacking vulnerability in their software.

Meanwhile, it was another week of outflows for high-yield mutual funds and ETFs with $1.09 billion leaving the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Tenneco weakens

Tenneco’s 8% senior secured notes due 2028 remained under pressure on Thursday with negative sentiment about the credit and heavy market conditions pushing the notes lower.

The 8% notes were marked at 81 5/8 bid, 82 1/8 offered midway through the session and continued to fall as the session progressed.

They ended the day down ¾ to 1 point with the notes trading in the 81¼ to 81½ context heading into the market close, a source said.

The yield was brushing up against 13%.

There was $43 million in reported volume.

Tenneco priced a $1.9 billion issue of the 8% senior secured notes at 85 to yield 11.933% on Tuesday.

However, the pricing did not come cheap enough with investors wary of the Apollo leveraged buyout deal, a source said.

RingCentral’s 8½% senior notes due 2030 also continued their downtrend with the notes falling to a 96-handle.

The notes fell ¼ to ½ point to close Thursday in the 96½ to 96¾ context with the yield about 9 1/8%.

RingCentral priced a $400 million issue of the 8½% notes at par on Aug. 11.

The notes broke below par and have steadily declined since.

There is concern that the company may be generating negative EBITDA, a source said.

Clear Channel’s 9% senior secured notes due 2028 returned to focus with the notes again seeing heavy selling.

The 9% notes fell ½ to ¾ point to trade in the 98 1/8 to 98 3/8 context heading into the close.

There was $28 million in reported volume.

Clear Channel’s 9% notes have struggled since the $750 million issue, which priced at par on Aug. 8, hit the aftermarket.

While the notes held at par in their initial days in the aftermarket, they have leaked throughout the week.

The notes closed the previous session on a 99-handle before heavy selling drove them to a fresh low.

The performance of the deals to clear the primary market in recent weeks have become credit specific with some names in high demand and soaring on debut while others have been met with tepid demand and collapsed in the aftermarket.

Citrix takes hit from hacks

Citrix’s senior secured notes were taking a hit on Thursday following news of a vulnerability in the company’s software that hackers were exploiting.

Citrix’s 6½% senior secured notes due 2029 sank ¾ point to close the day at 87½ with the yield about 9 3/8%, a source said.

There was $15 million in reported volume.

The 9% second-lien notes due 2029 fell 1¾ points to close the day at 87 3/8 with the yield just shy of 12%.

There was $11 million in reported volume.

While the large, liquid issues are high beta and tend to fall with the broader market, topical news sparked selling in the name.

News recently broke that hackers exploited a vulnerability in the company’s software that has left thousands of servers compromised.

Indexes

The KDP High Yield Daily index was down 23 basis points to close Thursday at 49.75 with the yield now 7.77%.

The index was down 10 bps on Wednesday, 14 bps on Tuesday and 1 bp on Monday.

The ICE BofAML US High Yield index fell 46.9 bps with the year-to-date return now 5.877%.

The index was down 3.8 bps on Wednesday, 17.8 bps on Tuesday and 44 bps on Monday.

The CDX High Yield 30 index was down 35 bps to close Thursday at 101.71.

The index was off 32 bps on Wednesday and 39 bps on Tuesday after adding 9 bps on Monday.

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