Trio of drive-by issuers price new junk; Smyrna flat in secondary; Outfront Media rises

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 8 – The junk bond primary market moved nearly $2 billion of new paper from three separate issuers through pricing on Wednesday.

Meanwhile, it was another flat day in the secondary space with the cash bond market firm at the open but leaking into the close, sources said.

As the broader market awaited the next major catalyst for movement, new issues were once again the driving force of activity with the primary market spitting out deals as issuers took advantage of improved market conditions.

Smyrna Ready Mix Concrete, LLC’s 8 7/8% senior secured notes due 2031 (Ba3/BB-/BB-) were flat in heavy volume with the notes trading in a tight range around their issue price.

While Smyrna’s new issue was flat, its outstanding 6% senior secured notes due 2028 moved lower with the latest offering sparking a repricing of the notes.

Outfront Media, Inc.’s 7 3/8% senior secured notes due 2031 (Ba1/BB) added to the strong gains made on the break with the notes closing the day on a 101-handle.

Service Properties Trust’s refinancing deal also sparked activity in the company’s 4.35% senior notes due Oct. 1, 2024 (B2/B+) with the notes making large gains as they traded up to their takeout price.

Busy primary

A reinvigorated high-yield primary market had a trio of drive-by issuers price a $1.93 billion face amount of new junk on Wednesday.

All three deals came in tight-to-talk executions.

Service Properties Trust (SVC) was the session’s biggest issuer, pricing an upsized $1 billion face amount (from $800 million) of 8 5/8% eight-year secured notes (B1/BB) at 98.59 to yield 8 7/8%.

Timing was accelerated. When announced on Wednesday morning the deal was scheduled to remain in the market until Thursday.

In the wake of Wednesday’s action, the active forward calendar features another $3.5 billion set to price ahead of Friday’s close, with most if not all of it expected to price Thursday, sources say.

Smyrna flat

Moving to recently priced paper in the secondary, Smyrna’s new 8 7/8% senior secured notes due 2031 fell flat in the aftermarket with the notes trading in a tight range around their issue price.

While the notes traded as high as par 3/8 with the market firm early in the session, they settled into the 99 7/8 to par 1/8 context with the notes ending the day wrapped around par, a source said.

There was $92 million in reported volume.

While the new 8 7/8% notes failed to move in the aftermarket, the company’s 6% senior secured notes due 2028 moved lower.

The latest offering caused a repricing in the issue, a source said.

The 6% notes were down about 1 point to trade in the 91½ to 92½ context with the yield rising to about 8%.

There was $15 million in reported volume.

Smyrna priced the $1.1 billion issue of the 8 7/8% notes at par on Tuesday.

The yield printed at the wide end of yield talk in the 8¾% area.

Outfront adds

In another recent issue, Outfront Media’s 7 3/8% senior secured notes due 2031 added to the strong gains made on the break in active trade.

The 7 3/8% notes added ¼ to 3/8 point to close the day on a 101-handle.

They were changing hands in the 101 to 101 3/8 context heading into the market close, a source said.

There was $53 million in reported volume.

Outfront Media priced an upsized $450 million, from $400 million, issue of the 7 3/8% notes in a Tuesday drive-by.

The yield printed at the tight end of yield talk in the 7½% area.

Service Properties gains

Service Properties’ 4.35% senior notes due Oct. 1, 2024 made large gains on Wednesday with the notes trading up to their takeout price on the heels of the new offering.

The 4.35% notes jumped 3 points to a 99-handle.

They were wrapped around 99 5/8 heading into the market close, a source said.

There was $12 million in reported volume.

The company’s 4.65% senior notes due March 15, 2024 were also stronger in lighter volume.

The notes added about ½ point to close the day at 99¾%.

The 2024 notes were making large gains as the company prepped its latest offering with proceeds to be used to redeem them in full at par.

$6 billion weekly inflows!

The dedicated high-yield bond funds are tracking a gargantuan $6 billion of net inflows on the week to Wednesday’s close, according to a market source.

Should inflows of that magnitude materialize when fund-tracker Refinitiv Lipper makes its weekly report on the cash flows of the various asset classes, expected Thursday afternoon, it will be the fourth-largest weekly inflow on record, the source said.

The funds had $1.044 billion of daily net inflows on Tuesday, the most recent session for which data was available at press time.

High-yield ETFs had $719 million of inflows on the day.

Actively managed high-yield funds had $325 million of inflows on Tuesday, according to the market source.

Indexes

The ICE BofAML US High Yield index added 7 basis points with the year-to-date return now 7.076%.

The index was off 13.1 bps on Tuesday and 3.2 bps on Monday.

The CDX High Yield 30 index closed Wednesday at 101.29.

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