Junk bond new deal market revives; sell-off keeps up as Hilcorp, Sealed Air, Hess hold par

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 6 – A reactivated high-yield new issue market saw a second consecutive multiple-deal day, on Wednesday, as three issuers priced a total of four tranches for a combined face amount of $2.26 billion.

The new paper comes amid volatile market conditions with the secondary space down another ¾ to 1 point on Thursday with the minute notes from the Federal Reserve’s March meeting further fueling selling pressure.

The minute notes signaled support for more than one 50 bps rate hike in the coming year and increased its balance sheet runoff to $95 billion a month from the previously expected $50 billion a month.

“That was a little surprising,” a source said.

While the high-yield market took it in stride with selling in the space remaining orderly, sources were apprehensive about whether the market has fully priced in the risks posed by more aggressive monetary tightening.

Further bloodletting may be in store, a source said.

However, the paper to price during Tuesday’s session was holding up well given the market conditions.

While down from the peaks reached on the break, Hilcorp Energy I, LP and Hilcorp Energy Finance Co.’s two tranches of senior notes (Ba3/BB+), Sealed Air Corp.’s 5% senior notes due 2029 (Ba2/BB+) and Hess Midstream Partners LP’s 5½% senior notes due 2030 (Ba2/BB+/BB+) were holding onto par during Wednesday’s session.

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