Junk: DirecTV, Alliant add-on price; Chobani outperforms; Global Auto lags; Antero higher

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 12 – DirecTV and Alliant were the focus of activity in the junk bond primary space on Friday.

Meanwhile, the secondary market closed the week on firm footing as the short end of the Treasury curve continued to rally in the wake of the latest inflationary data.

The Producer Price Index report reflected a faster-than-anticipated reduction in wholesale prices, further validating the market’s expectations for rate cuts.

However, the optimism in the market was cautious as market players turn their attention to earnings to gauge the state of the economy with recession risk in mind, a source said.

The cash bond market notched an 1/8 to ¼ point gain with year-to-date returns approaching flat after a rough start to the year.

New issues were in focus after an influx of paper the previous session.

The majority of new issues continued to perform well.

Chobani, LLC/Chobani Finance Corp., Inc.’s 7 5/8% senior notes due 2029 (Caa1/CCC+) outperformed in the aftermarket with the notes continuing to add to the strong gains made on the break.

Antero Midstream Partners LP/Antero Midstream Finance Corp.’s 6 5/8% senior notes due 2032 (Ba3/BB) also continued to trade at solid premium to their issue price.

However, Global Auto Holdings Ltd.’s two tranches of senior notes (B2/B+) struggled in the aftermarket with both issues closing the day below par.

Outside of new paper, DISH Network Corp.’s senior notes remained in focus with selling pressure subsiding as creditors explore legal options to the asset transfer that sparked a fire-sale in the notes.

Primary

DirecTV Financing, LLC priced a $750 million issue of six-year senior secured notes (Ba3/BB/BBB-) at par to yield 8 7/8% on Friday, at the tight end of talk.

The deal was between three-times and four-times oversubscribed heading into midday on Friday, a trader said.

Meantime in drive-by action Alliant Holdings Intermediate, LLC and Alliant Holdings Co-Issuer, Inc. priced an upsized $700 million add-on (from $600 million) to their 7% senior secured notes due Jan. 15, 2031 (B2/B) at 102.25, resulting in a 6.461% yield to worst.

The issue price came in the middle of price talk in the 102.25 area.

Friday’s action took the week’s total issuance to $6.9 billion, the largest weekly issue amount since that of the Nov. 13 week, which had $10.6 billion.

The holiday-abbreviated Jan. 15 week is set to get underway with an empty active new issue calendar.

However, the unannounced pipeline has at least two deals that have been telegraphed to the market, and are expected come in the week ahead, sources say.

Caliber Collision (Wand NewCo 3 Inc.) is expected to launch a $1.25 billion offering of senior secured notes in the week ahead.

The Lewisville, Tex.-based collision repair company kicked off a $2.525 billion term loan B last Monday.

Proceeds will be used to refinance debt and to fund a distribution to shareholders.

And NGL Energy Partners LP is expected to show up in the primary market during the week ahead with a $2.5 billion offering of high-yield notes in five-year and seven-year tranches.

Pro forma on the deal is in the 8½% area, a trader said.

BofA Securities, Inc. is expected to lead.

Yogurt outperforms

Chobani’s 7 5/8% senior notes due 2029 outperformed in the aftermarket with the notes continuing to add to a strong break.

The 7 5/8% notes rose about 3/8 point to close the day on a 101-handle.

They were trading in the 101 1/8 to 101 3/8 context heading into the market close.

The notes made large gains despite their tight pricing with the notes coming well inside of the CCC index.

However, the market widely anticipates the company will be upgraded soon with the notes pricing more in line with the B index, a source said.

Chobani priced a $500 million issue of the 7 5/8% notes at par in a Thursday drive-by.

The yield printed at the tight end of yield talk in the 7¾% area.

Antero at a premium

Antero’s new 6 5/8% senior notes due 2032 were putting in a solid performance in the aftermarket.

The notes were trading in a tight range of par ¼ to par ½ throughout the session and closed the day wrapped around par 3/8, a source said.

There was $54 million in reported volume.

Antero priced an upsized $600 million, from $500 million, issue of the 6 5/8% notes at par on Thursday.

The yield printed in the middle of yield talk in the 6 5/8% area.

Global Auto struggles

While the majority of deals to price in the new year have put in solid aftermarket performances, Global Auto Holdings’ two tranches of senior notes were not among them.

The automobile manufacturer’s 8¾% senior notes due 2032 and 8 3/8% senior notes due 2029 sank to a 99-handle.

The 8¾% senior notes due 2032 closed the day at 99¼; the 8 3/8% senior notes due 2029 closed the day at 99¾.

There was $56 million and $42 million in reported volume respectively.

Global Auto priced a $525 million tranche of the 8¾% notes and a $525 million tranche of the 8 3/8% notes at par on Thursday.

Both tranches priced at the wide end of talk.

DISH in focus

DISH’s senior notes remained in focus on Friday although selling pressure seemed to subside as creditors explore legal options to oppose an asset transfer that lowered the recovery prospects of the notes.

While DISH DBS paper continued to move lower, DISH Network’s 11¾% senior secured notes due 2027 (B2/B) logged strong gains.

The 11¾% notes were up 1½ to 2 points with the notes now trading at their highest level of the year, a source said.

They were changing hands in the 104¾ to 105 context heading into the market close with a yield of about 9¾%.

There was $62 million in reported volume.

The 11¾% notes are secured and were issued by DISH Network, a source said.

The destruction in DISH’s capital structure occurred in the notes issued by DISH DBS with the asset transfer moving assets out of the reach of DISH DBS creditors.

While DISH DBS notes were again lower on Friday, selling pressure seemed diminished.

DISH’s 7¾% senior notes due 2026 were off about ½ point to close the day wrapped around 58 with the yield about 34 3/8%.

The notes sank 11 points over the past 3 sessions.

DISH’s soon-to-mature 5 7/8% senior notes due Nov. 15, 2024 were also lower in heavy volume.

The notes sank to a 91-handle and closed the day wrapped around 91¼ with the yield about 17 5/8%.

They were among the most actively traded issues in the market on Friday with $70 million in reported volume.

The notes were spared the destruction seen in its other notes with the market still anticipating the notes will be covered upon their quickly approaching maturity.

DISH’s senior notes were destroyed after the company announced that it was moving its unencumbered wireless spectrum licenses to the newly formed subsidiary EchoStar Wireless Holding LLC.

The move pushed the assets outside of the reach of the heavily indebted DISH DBS with the company appearing to saddle the weaker portion of its capital structure with debt.

S&P Global Ratings lowered the company’s unsecured debt to CCC+ from B- with the asset shuffle lowering the recovery prospects of the notes.

However, the heavy selling on Wednesday and Thursday tempered on Friday as news circulated that creditors were exploring legal options, including labeling the asset transfer a technical default.

Fund flows

The dedicated high-yield bond funds had $171 million of net daily cash inflows on Thursday, according to a market source.

High-yield ETFs had $126 million of inflows on the day.

Actively managed high-yield funds had $45 million of inflows on Thursday, the source said.

News of Thursday’s daily flows follows a Thursday afternoon report that the combined funds had $523 million of net inflows in the week to Wednesday’s close, according to the market source who added that those were the ninth positive weekly flows in the past ten weeks, an interval during which the funds had $15.5 billion of net inflows.

Indexes

The KDP High Yield Daily index gained 14 basis points to close Friday at 50.87 with the yield 6.72%.

The index inched up 1 basis point on Thursday, 14 bps on Wednesday, 10 bps on Tuesday and 11 bps on Monday.

The index gained 50 bps on the week.

The ICE BofAML US High Yield index gained 21.1 bps with the year-to-date return now negative 0.138%.

The index added 7.8 bps on Thursday, 22.6 bps on Wednesday, 14.5 bps on Tuesday and 31 bps on Monday.

The index was up 97 bps.

The CDX High Yield 30 index shaved off 9 bps to close Friday at 105.93.

The index gained 11 bps on Thursday, 24 bps on Wednesday, 24 bps on Tuesday and 51 bps on Monday.

The index was up 101 bps on the week.

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