Primary prices $2.5 billion Bombardier gains; U.S. Concrete skyrockets on buyout

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 7 – The domestic high-yield primary market saw an active start to the week with three drive-by issuers pricing a cumulative $2.5 billion.

Booz Allen, Marriott Vacations and SiriusXM cleared the primary market on Monday, which also saw a buildup in the forward calendar.

Meanwhile, it was another sideways day in the secondary space with volume outside of new and recent issues thin.

Bombardier Inc.’s recently priced 7 1/8% senior notes due 2026 (Caa2/CCC) continued to gain momentum in active trading with the notes rising to a 102-handle.

Outside of recent issues, U.S. Concrete Inc.’s 5 1/8% senior notes due 2029 skyrocketed in active trading on news it would be acquired by Vulcan Materials Co.

Friday’s primary

Three drive-by issuers – on the run high-yield names including Booz Allen, Marriott Vacations and SiriusXM – hit the high-yield drive-through window on Monday, raising a combined $2.5 billion.

Two of the three upsized their deals.

All three priced at the tight ends of talk.

And the primary market broke some new ground on Monday as MicroStrategy Inc. disclosed plans to price a $400 million offering of seven-year senior secured notes (expected ratings B2/B) on Tuesday.

They will use the proceeds to fund the acquisition of additional bitcoins, marking the first time that a prospective high-yield issuer came to the market to fund a purchase of cryptocurrency, sources say.

The deal, which is in the market with initial guidance of 6¼% to 6½%, was already two times oversubscribed late Monday afternoon, according to a bond trader who added that MicroStrategy is riding on a decent amount of reverse inquiry.

Marriott’s break

Marriott Vacations’ 4½% senior notes due 2029 (B1/B-) saw a strong break with the notes climbing to 101 bid shortly after freeing for trade, a source said.

The notes were active with more than $102 million in reported volume heading into the close.

Marriott priced an upsized $500 million, from $450 million, issue of the 4½% notes at par at the tight end of the 4½% to 4¾% yield talk. Initial guidance was in the high 4% area.

The deal was heard to have played to $1.3 billion of demand, a source said.

Bombardier gains continue

Bombardier’s 7 1/8% senior notes due 2026 continued their upward momentum in active trading on Monday.

The notes rose another 5/8 points to close out the day on a 102-handle, according to a market source.

They were changing hands in the 102 to 102¼ context heading into the market close.

The 7 1/8% notes remained active with more than $53 million in reported volume.

The latest issue from the Montreal-based business jet manufacturer have steadily climbed since hitting the secondary space.

Bombardier priced a $1.2 billion issue of the 7 1/8% notes at par on June 3.

U.S. Concrete’s buyout

U.S. Concrete’s 5 1/8% senior notes due 2029 skyrocketed in active trading following news it would be acquired by Vulcan Materials.

The 5 1/8% senior notes, an illiquid issue that rarely trades, jumped 4 points in high-volume activity.

They were changing hands at 109 5/8 heading into the market close, according to a market source.

There was more than $30 million of the bonds on the tape.

News broke on Monday that Vulcan Materials would acquire U.S. Concrete for $74 per share, including debt, for a total enterprise value of $2.1 billion.

The 5 1/8% notes will be redeemed in the acquisition, which is expected to close in the second-half of 2021.

Sizable Friday outflows

The dedicated high-yield bond funds saw a sizable $1.06 billion of net outflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $996 million of outflows on the day.

Actively managed high-yield funds saw $60 million of outflows on Friday, the source said.

Indexes mixed

Indexes were mixed at the start of the week.

The KDP High Yield Daily index rose 6 points to close Monday at 69.73 with the yield now 3.81%.

The index was up 14 points on the week last week.

The CDX High Yield 30 index shaved off 1 bps to close Monday at 109.87.

The index was up 24 bps on the week last week.

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