Junk: Ford recent tranches mixed in active trade; DISH rebounds; Staples under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 16 – Friday’s sole action in high-yield bond new issuance came out of the euro-denominated market with Sweden-based Assemblin pricing a €480 million issue.

However, the week ahead promises to be active with two deals on the forward calendar and a megadeal on the shadow calendar soon to be formally announced.

Meanwhile, a strong open gave way to a soft close with the market giving back its early gains to close the day largely unchanged, a source said.

Hawkish comments from Federal Reserve officials that continued to support further rate increases sparked a risk-off sentiment midway through the session.

However, liquidity was thin heading into the holiday weekend in the United States with few making moves as the market continued to gauge the Fed’s next move.

Ford Motor Credit Co. LLC’s most recently priced tranches (Ba2/BB+/BB+) were mixed in active trade with the 7.2% senior notes due 2030 hitting new heights while its 6.95% senior notes due 2026 were flat.

DISH Network Corp.’s senior notes (B3/B-) rebounded after the most recent sell-off with the notes paring their losses on the week.

Staples Inc.’s senior notes also reversed course with the initial strength displayed after posting earnings numbers yielding to selling pressure following the company’s Friday conference call.

The calendar

Friday’s sole action in high-yield new issues came out of the euro-denominated market where Sweden-based Assemblin priced a €480 million issue of Apollo Swedish Bidco AB six-year senior secured floating-rate notes (B2/B/B) at the rich end of talk, following a roadshow.

The Euribor plus 500 basis points notes priced at 98.

There were also covenant changes.

On the active forward calendar two dollar-denominated offerings figure to wrap up marketing shortly after the conclusion of the extended Juneteenth holiday weekend.

Windsor Holdings III, LLC is on the high-yield road with a $1.8 billion offering of seven-year senior secured notes (B2//BB+) backing the buyout of Univar Solutions Inc. by Apollo.

The deal comes with initial talk in the 8½% area, having arrived in the market with $1 billion of reverse inquiry behind it, according to sources.

Orders for the Univar notes had yet to reach deal-size by Friday, a portfolio manager said.

Meanwhile HighPeak Energy Inc. is shopping a $575 million offering of five-year senior notes (B3/B+/B+). Initial talk is 11½% to 12%, including a discount.

Books were just over $100 million on Friday, according to a sellside source.

And market watchers continue to profess the belief that Viasat Inc.’s $1.6 billion offering of senior notes, coming in support of its Inmarsat acquisition, and whispered with an all-in yield of 12%, is near at hand.

The laggard pace of the primary market – $895 million in two tranches during the past week – has one bond trader bamboozled.

Given favorable market conditions and a “steady-as-she-goes” central bank, it would be reasonable to expect a more brisk new deal volume, the source said.

However, there is a shadow calendar taking shape, and deal volume should pick up in the week ahead, the trader asserted.

Ford mixed

Ford’s most recently priced tranches were mixed in active trade on Friday.

The 7.2% notes due 2030 hit their highest level since pricing at par.

The notes were changing hands in the 101¼ to 101¾ context throughout the session with the notes gaining strength into the close, a source said.

With $26 million in reported volume, the notes were the most actively traded issue in the secondary space.

Ford’s 6.95% senior notes due 2026 were also active although with little movement in price.

The notes remained on a par-handle and were changing hands in the par 3/8 to par 5/8 context heading into the market close.

There was $14 million in reported volume.

Ford priced a $900 million tranche of the 6.95% notes and an $850 million tranche of the 7.2% notes at par on June 5.

DISH rebounds

DISH’s senior notes were on the rise in heavy volume on Friday after heavy selling pressure early in the week.

The near-dated 5 7/8% senior notes due Nov. 15, 2024 (B3/B-) continued to add to the strong gains made since they were dragged to an 84-handle on Monday.

The notes added 1 point to close the day in the 87½ to 88½ context with the yield about 15¾%, according to a market source.

There was $23 million in reported volume.

The notes closed the week at their highest level of the month.

DISH’s 11¾% senior secured notes due November 2027 (Ba3/B) also added, although they failed to recoup their losses from the most recent sell-off.

The 11¾% notes were changing hands in the 97¼ to 97¾ context heading into the market close.

The yield was 12½%.

There was $12 million in reported volume.

The 11¾% notes were trading on a 98-handle before the company unveiled its wireless network plan last Friday.

The plan was a disappointment to investors with no mention of a partnership with Amazon that had spared buying interest in the struggling credit earlier in the month.

Staples reverses

Staples’ senior notes reversed course from earlier in the week with initial strong gains after earnings were posted giving way to losses following a Friday conference call.

The 7½% senior secured notes due 2026 (B3/B) fell 1½ points to close the day at 82½, according to a market source.

The yield rose to 15 3/8%.

There was $21 million in reported volume.

Staples’ 10¾% senior notes due 2027 (Caa2/CCC+) were also down 1½ points.

The notes closed the day at 62¼ with the yield rising to 27¼%.

There was $14 million in reported volume.

Staples, a private company, posted earnings earlier in the week which looked promising.

However, the company hosted a conference call on Friday and something must have been said that spooked investors, a source said.

The headlines on Friday were that CDS spreads blew out 3 points, the most in three years, a source said.

Fund flows

The daily cash flows of the dedicated high-yield bond funds were nearly flat on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $63 million of inflows on the day.

Actively managed high-yield funds, however, sustained $70 million of outflows on Thursday, the source said.

News of Thursday’s daily flows follows a Thursday afternoon report that the combined funds had $615 million of net inflows during the week to the Wednesday, June 14 close, according to fund-tracker Refinitiv Lipper.

Of those weekly inflows the junk ETFs took in $367 million, the market source said.

Year-to-date cash flows of the dedicated high-yield bond funds, to Thursday’s close, stood at negative $10.7 billion, according to the market source.

Indexes

The KDP High Yield Daily index shaved off 3 points to close Friday at 50.77 with the yield now 7.26%.

The index gained 13 points on Thursday, shaved off 1 point on Wednesday after adding 3 points on Tuesday and 3 points on Monday.

The index posted a cumulative gain of 15 points on the week.

The CDX High Yield 30 index gained 15 basis points to close Friday at 102.51.

The index gained 4 bps on Thursday, fell 15 bps on Wednesday, gained 10 bps on Tuesday and fell 7 bps on Monday.

The index posted a cumulative gain of 7 bps on the week.

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