Primary sells $2.9 billion; Hunt lags; Arcosa, Meritage at a premium; Goodyear, Vine flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 1 – The domestic high-yield primary market cranked out three deals totaling $2.9 billion on Thursday.

The new deal activity included Ingram Micro Inc.’s $2 billion issue of eight-year senior secured notes (B1/BB-/BB), which had a solid break.

The activity comes on the first day of the second-quarter following a record-setting first quarter for new issuance.

Meanwhile, the secondary space started the second-quarter on firm footing although volume was relatively light heading into the holiday weekend.

New paper remained in focus following the flurry of primary market activity although several recent deals had different trajectories in the secondary space.

Arcosa, Inc.’s 4 3/8% senior notes due 2029 (Ba2/BB) and Meritage Homes Corp.’s 3 7/8% senior notes due 2029 (Ba1/BB+/BB+) were putting in strong performances in the aftermarket with both notes trading at a solid premium to their issue prices.

However, Vine Energy Holdings LLC’s 6¾% senior notes due 2029 (B3/B-/B) were growing weak in the aftermarket after trading with a premium on the break.

Goodyear Tire & Rubber Co.’s two tranches of senior notes (B2/B+) also saw a lackluster reception in the secondary space with both tranches wrapped around par heading into the close.

Hunt Cos., Inc.’s 5¼% senior secured notes due 2029 (B2/BB-) continued to trend lower after a weak break.

Thursday’s primary

The new issue market cranked out three deals on Thursday, with issuers raising a combined $2.9 billion.

All three issuers had been in the market at least overnight.

Executions were solid, with one issuer pricing inside of talk, and the other two coming in the middle of talk.

The day's biggest sale came from Ingram Micro Inc. which priced a $2 billion issue of eight-year senior secured notes at par to yield 4¾%, in the middle of talk.

The notes were trading at par ½ bid, 101 offered, and pretty well bid, indicating that the deal saw decent or better demand, a trader said late Thursday afternoon.

Massive March concludes record first quarter

The month of March came to a close Wednesday having booked $60.87 billion of issuance in 88 junk-rated, dollar-denominated tranches, far outdistancing the previous March record, $43.13 billion set in 2017, according to Prospect News data.

March 2021 saw a greater amount of issuance than the previous three Marches, combined.

Average March issuance is $46.41 billion going back to 2010. During that span of time March was the biggest month in the respective first quarters in all but three years.

The least amount of March issuance, unsurprisingly, came last year. March 2020 saw just $4.24 billion of issuance in five tranches as civilization came to grips with the implications of the global coronavirus pandemic, all but shuttering the world's capital markets.

March 2021's $60.87 billion capped the record-setting first quarter which put up $152.99 billion in 231 tranches, an amount that is more than 10% greater than the preceding two first quarters combined.

The previous highest first quarter total was 2012's $91.93 billion.

Average first quarter issuance is $79.73 billion going back to 2010.

During that time span the lowest amount of first quarter issuance, by far, was that of 2016 which saw just $36.16 billion, as economic growth slowed in China, crude oil prices dropped 30%, and the central bank began voicing restiveness over a prolonged period of ultra-low rates.

The next-to-lowest first quarter was 2010 which saw $62.31 billion.

Deal volume in the first quarter of 2021 was a record 231 tranches, 20% more than that of the previous two years, combined. The next highest first-quarter deal volume was the 181 tranches seen in 2011.

At a premium

Arcosa’s 4 3/8% senior notes due 2029 and Meritage Homes’ 3 7/8% senior notes due 2029 were putting in solid performances in the secondary space.

Arcosa’s 4 3/8% notes traded up to a 101-handle.

They were changing hands in the 101½ to 101 7/8 context throughout Thursday’s session.

There was more than $13 million in reported volume.

Arcosa priced a $400 million issue of the 4 3/8% notes at par on Wednesday.

Pricing came tighter than initial talk for a yield of 4½% to 4¾%.

The deal was heavily oversubscribed and was heard to be playing to $1.85 billion of orders.

Meritage Homes’ 3 7/8% senior notes due 2029 were also trading with a healthy premium in the aftermarket.

The notes were wrapped around 101 in active trading.

They stood poised to close the day at par 7/8 to 101 1/8, a source said.

There was more than $25 million in reported volume.

Meritage priced an upsized $450 million, from $400 million, issue of the 3 7/8% notes at par on Wednesday.

The yield printed on top of yield talk.

Vine Energy comes in

Vine Energy’s 6¾% senior notes due 2029 were growing weaker in the secondary space after trading with a slight premium on the break.

While volume was light, the notes were trading in the 99 7/8 to par ¼ context on Thursday.

There were lots of offers in the market at par 1/8, a source said.

However, there was only about $8.5 million in reported volume at the market close.

The 6¾% notes were trading with a premium after breaking for trade on Wednesday and were marked at par ¼ bid, par ½ offered heading into the close.

Vine Energy priced a $950 million issue of the 6¾% notes at par on Wednesday.

The yield printed in the middle of yield talk in the 6¾% area.

Goodyear’s two tranches

Goodyear’s two tranches had a lackluster reception in the secondary space with both wrapped around par heading into the close after dipping below in intraday activity.

Goodyear’s 5¼% senior notes due 2031 traded in a range of 99½ to par ¼ during Thursday’s session.

They were marked at par bid, par ¼ offered heading into the close, a source said.

There was about $34 billion in reported volume.

While less active, Goodyear’s 5 5/8% senior notes due 2033 also lagged their issue price in intraday activity but closed the day wrapped around par.

The 5 5/8% notes traded in a range of 99¾ to par throughout the session. They were also marked at par bid, par ¼ offered heading into the close.

Goodyear priced a $550 million issue of the 5¼% notes and a $450 million issue of the 5 5/8% notes at par on Wednesday.

The 5¼% notes priced in the middle of yield talk in the 5¼% area.

The 5 5/8% notes priced in the middle of talk in the 5 5/8% area.

Hunt lags

Hunt’s 5¼% senior secured notes due 2029 continued to trend lower on Thursday after dropping below par on the break.

The notes were marked at 98¾ bid, 99 offered at the market close.

They were active with more than $34 million in reported volume.

The deal was “supposedly done largely on reverse,” with books heard to be as much as 1.5x oversubscribed, sources said.

However, they immediately dropped below par after breaking for trade, sources said.

Hunt Cos. priced a $635 million issue of the 5¼% notes at par on Wednesday.

The yield printed on top of yield talk. Initial guidance was in the low 5% area.

Indexes gain

Indexes continued to gain on Thursday, launching the second quarter on firm footing.

The KDP High Yield Daily index rose 10 points to close Thursday at 69.29 with the yield now 4.11%.

The index was up 9 points on Wednesday, slid 1 point on Tuesday after gaining 3 points on Monday.

The CDX High Yield 30 index again rose 43 bps to close Thursday at 109.35.

The index was up 43 bps on Wednesday after dropping 12 bps on Tuesday and 30 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.