Altice USA gains continue; Sirius XM active; Montage Resources trades up; U.S. Steel gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 3 – The domestic high-yield primary market remained dormant on Wednesday, which is how it is expected to remain until the July 8 week.

However, the European market did see one large junk deal price.

Commerzbank AG priced $1 billion of 7% perpetual junior subordinated fixed-rate Tier 1 paper (expected ratings Ba3/BB) in an oversubscribed offering, sources said.

Meanwhile, the secondary space was equally quiet during Wednesday’s truncated session with volume extremely light as many began the July 4th holiday early.

However, the secondary space closed out the session on strong footing as equity indexes broached new heights and crude oil futures recovered from Tuesday’s drop.

Altice USA, Inc. subsidiary CSC Holdings, LLC’s recently priced 5¾% senior due 2030 (B3/B) remained in focus with the notes continuing their upward momentum.

While many of the recent deals were tucked away and slow to trade, Sirius XM Radio Inc.’s 5½% senior notes due 2029 (Ba3/BB) saw a fresh round of activity with the notes climbing about ½ point.

Montage Resources Corp.’s 8 7/8% senior notes due 2023 were among the major gainers of Wednesday’s session with the notes up more than 2 points.

United States Steel Corp.’s junk bonds were active and also posting gains following news the U.S. would impose duties on steel imported from Vietnam.

Quiet pre-holiday primary

As expected, the new issue market remained quiet on Wednesday and is apt to remain shuttered into the early-to-mid part of the July 8 week, sources say.

One deal, a holdover from mid-June, is believed to remain in the market, sources say.

Although it has been radio silence for over a week, Canada's Alpha Auto Group is a work in progress, according to an investor who believes that the Toronto-based automotive group is still intent on raising cash by selling high-yield bonds.

The company roadshowed $225 million of five-year notes during the June 17 week. Initial talk had that offer coming at 8% to 8¼%.

Late in the June 24 week a trader reported hearing word of a revived Alpha Auto deal at 11%.

Big book for bank capital deal

In Europe, a big junk-rated Tier 1 bank capital deal played to a massive book, sources say.

Commerzbank priced $1 billion of 7% perpetual junior subordinated fixed-rate Tier 1 paper (expected ratings Ba3/BB).

The coupon came tight to final talk in the 7 1/8% area.

However, demand for the paper in excess of $11 billion drove pricing far below initial guidance of 7½% to 7¾%, a source said.

Altice USA gains continue

The strong upward momentum of Altice USA’s newly priced 5¾% senior notes due 2030 continued on Wednesday. The notes continued to post gains in active trading.

The notes rose to a 101 handle on Wednesday with the notes closing the day at 101¼, a market source said.

The notes saw more than $15 million in reported volume during Wednesday’s abbreviated session, making it the most actively traded issue in the secondary space.

Altice USA’s 5¾% notes have made steady gains since breaking for trade on Monday. The notes were up ½ point out of the gate and closed Tuesday at par 5/8.

The cable television provider priced a $1 billion issue of the 5¾% notes at par in a Monday drive-by.

Sirius XM active

SiriusXM’s recently priced 5½% senior notes due 2029 saw a fresh round of trading activity on an otherwise quiet day in the secondary space.

The 5½% notes were up about ½ point in active trading. They were seen at 102 5/8 bid, 103 1/8 offered early in the session and closed the day at 103, a market source said.

More than $10 million of the bonds were on the tape by the late afternoon.

The New York-based audio entertainment company priced a $1.25 billion issue at par in early June.

Montage Resources gains

Montage Resources’ 8 7/8% senior notes due 2023 were among the major gainers during Wednesday’s session.

The 8 7/8% notes rose 2¼ points to close the day at 77¼, according to a market source.

The bonds saw about $10 million in reported volume.

Montage Resources was formed in March from the merger between Blue Ridge Mountain Resources and Eclipse Resources.

U.S. Steel rises

U.S. Steel’s junk bonds were on the rise in active trading after news broke the U.S. would slap hefty duties on steel imported from Vietnam.

The 6 7/8% senior notes due 2025 rose ¾ point to close the day at 96.

U.S. Steel’s 6¼% senior notes due 2026 were up ½ point to close the day at 89½, according to a market source.

The bonds saw more than $9 million in reported volume during Wednesday’s session.

U.S. Steel’s junk bonds have largely moved in tandem with tariff news, sources said.

The notes were on the rise on Wednesday on news the U.S. would collect duties of up to 456.23% on imports of steel products from Vietnam.

The duties were in response to businesses allegedly importing steel through Vietnam to circumvent tariffs, Bloomberg reported.

Indexes gain

While some of the gains were nominal, indexes rose during Wednesday’s truncated session.

The KDP High Yield Daily index was up 1 basis point to close Wednesday at 70.91 with the yield now 5.42%.

The index was up 3 bps on Tuesday and 8 bps on Monday.

The ICE BofAML US High Yield index gained 9.1 bps with the year-to-date return now 10.405%.

The index shaved off 3.9 bps on Tuesday after rising 23.5 bps on Monday.

The index popped back above 10% returns on June 28 after sinking below it on June 26.

The index initially shot past 10% returns on June 20.

The CDX High Yield 30 index jumped 23 bps to close Wednesday at 107.99. The index gained 7 bps on Tuesday and 10 bps on Monday.

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