Junk secondary strengthens; Navacord tucked away; Frontier lifted; Teva moves higher

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 3 – The domestic high-yield primary market was quiet on Friday after an active week when $5.75 billion priced in nine tranches.

While the forward calendar was empty heading into the weekend, Altice may tap the market in the coming week in a refinancing deal.

Meanwhile, it was risk-on in the secondary space on Friday with the cash bond market rising another ½ to ¾ point to wipe out weekly losses and close with gains.

Buyers were returning to the space amid alleviated rate-hike concerns, a source said.

New issuance continued to dominate the tape with several recent deals rising alongside the broader market.

Jones DesLauriers Insurance Management Inc.’s, a broker partner of Navacord Inc., 8½% senior secured notes due 2030 (B2/B-/B+) made large gains in the aftermarket.

However, volume in the name was light with the notes tucked away, sources said.

Frontier Communications Holdings, LLC’s 8 5/8% first-lien senior secured notes due 2031 (B3/B/BB+) were lifted after a weak break with the notes closing Friday with a healthy premium.

Frontier’s older tranches were also on the rise in active trade as the telecommunications sector recovered from a heavy month.

Alteryx, Inc.’s 8¾% senior notes due 2028 (B3/B-) also made nominal gains in active trading.

Teva Pharmaceutical Finance Netherlands III BV’s dollar-denominated tranches (Ba2/BB-/BB-) shot higher with both tranches breaking above a 101-handle during Friday’s session.

After a period of lackluster performance, the deals to price in the latter part of the week were making gains in aftermarket activity.

While the secondary market performance of recent issues has largely been a product of market sentiment, sources noted how robust the calendar has been over the past week despite historic outflows hitting the space.

However, the cash intake in the market has been strong despite ETF outflows with dealer net buying, calls/maturities and rising stars, according to a BofA Global Research report.

The cash intake has been more than enough to offset the calendar with the high-yield cash balance increasing despite the outflows in exchange-traded funds, according to the report.

Altice eyed

The primary market remained dormant on Friday.

The Navacord– Jones DesLauriers Insurance Management Inc. deal for $500 million 8½% senior secured notes due March 2030 (B2/B-/B+) - which priced Thursday and traded well left the active calendar vacant.

Navacord capped off a respectable week in the new issue market: $5.75 billion in nine junk-rated, dollar-denominated tranches.

The February-March crossover week followed two weeks of near dormancy in the new issue market during which issuance volume ran at an anemic deal-a-week pace. The total dollar amount of issuance during that entire fortnight was a minuscule $1.49 billion.

As to the week ahead there was not a lot of color to be had on Friday.

Altice could show up, looking to refinance Cablevision Holdings debt, sources say.

There has been interest in the CSC Holdings, LLC (Cablevision Systems Corp.) 5¼% senior notes due June 2024, a trader said Friday.

Altice, which acquired Cablevision in 2016, has said they will be opportunistic, another trader related, adding that the company recently extended much of its near-at-hand term loan maturities and has $1.2 billion of available revolver capacity, and so does not need to be in a rush to come.

With rates on the march, issuers with available revolver capacity are in no hurry to set out on voyages of price discovery in the high-yield primary market, a syndicate banker remarked.

Navacord tucked away

Navacord’s 8½% senior secured notes due 2030 made large gains in the aftermarket.

However, volume in the name was light with the issue largely tucked away.

The 8½% notes were marked at 101¾ bid, 102¼ offered heading into the market close.

However, only $5 million of the bonds were on the tape.

The oversubscribed deal had some chunky orders, a source said.

Jones DesLauriers Insurance Management priced a $500 million issue of the 8½% notes at par on Thursday.

The yield printed in the middle of yield talk in the 8½% area.

Frontier lifted

After a lackluster start in the secondary space, Frontier’s 8 5/8% first-lien senior secured notes due 2031 were lifted alongside the broader market on Friday.

The 8 5/8% notes gained ½ to ¾ point in heavy volume.

They opened the day at par ¼ and continued to climb as the session progressed.

They were changing hands in the par 5/8 to par 7/8 context heading into the market close.

There was $48.5 million in reported volume.

The 8 5/8% notes struggled on the break and during Thursday’s session with the notes trading as low as 99½ but closing the previous session wrapped around par.

The notes were lifted on Friday as a risk-on sentiment returned to the market.

Frontier priced a $750 million issue of the 8 5/8% notes at par on Wednesday.

Frontier’s 6¾% second-lien secured senior notes due 2029 (Caa2/CCC+) and 5 7/8% first-lien senior secured notes due 2027 (B3/B) were also on the rise in active trade.

The 6¾% notes gained ¾ point to close the session at 83¾ with the yield now 10 3/8%, according to a market source.

There was $15 million in reported volume.

The 5 7/8% notes gained 7/8 point to close the day at 93 3/8 with the yield 7 5/8%.

There was $14 million in reported volume.

The telecommunications sector has been heavy after several earnings disappointments, a source said.

Teva shoots higher

Teva’s recently priced dollar-denominated tranches continued to shoot higher on Friday.

The 7 7/8% notes due September 2029 and 8 1/8% notes due 2031 added ¾ to 1 point during the session with the notes breaking above a 101-handle heading into the close.

Both tranches continued to trade at roughly the same levels with the notes marked at 101¾ bid, 102¼ offered at the close, according to a market source.

They closed the previous session in the par ½ to 101 context.

Both tranches priced at par on Wednesday.

Alteryx adds

Alteryx’s 8¾% senior notes due 2028 continued to add in heavy volume.

The notes were up about ¼ point, although they remained on a par-handle.

They were changing hands in the par ½ to par ¾ context heading into the market close.

There was $17 million in reported volume.

The 8¾% notes priced at par on Wednesday and closed the previous session wrapped around par 3/8.

Fund flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Thursday, according to a market source.

High-yield ETFs saw $368 million of inflows on the day.

Actively managed high-yield funds, meanwhile, sustained $258 million of outflows on Thursday, the source said.

News of Thursday's daily outflows follows a Thursday afternoon report that the combined funds sustained $2.31 billion of net outflows in the week to the Wednesday, March 1 close, according to fund tracker Refinitiv-Lipper.

The week to March 1 is the third consecutive week to see large outflows from the asset class, the market source noted, adding that the total for that period is negative $11.3 billion.

Indexes

The KDP High Yield Daily index gained 30 points to close Friday at 51.21 with the yield now 7.42%.

The index was down 13 points on Thursday and 12 points on Wednesday, inched up 2 points on Tuesday and fell 67 points on Monday.

The index posted a cumulative decline of 60 points on the week.

The ICE BofAML US High Yield index rose 71.8 basis points with the year-to-date return now 2.887%.

The index was down 17.9 bps on Thursday and 21.7 bps on Wednesday after rising 8.5 bps on Tuesday and 43.6 bps on Monday.

The index posted a cumulative gain of 84.3 bps on the week.

The CDX High Yield 30 index gained 85 bps to close Friday at 102.55.

The index gained 10 bps on Thursday and 22 bps on Wednesday, fell 19 bps on Tuesday and rose 27 bps on Monday.

The index posted a cumulative gain of 125 bps on the week.

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