United in focus; CoreLogic flat; primary expects three more deals; funds lose $132 million

By Paul A. Harris and Abigail W. Adams

Portland, Ore., April 15 – There was no evidence of fatigue on Thursday in the high-yield market after the thrust of energy in the space around the $4 billion downsized United Airlines issue which priced on Wednesday.

As it shifted into secondary territory, the United two-part deal maintained an intensity of attention.

The notes continued to trade at massive premiums to their issue price in high-volume activity.

Generally, it was a strong day in the secondary space as equity markets broached fresh heights and the 10-year Treasury yield saw its largest single-day decline since last November on the heels of positive earnings.

Several other deals besides United were putting in admirable performances in the aftermarket.

BroadStreet Partners Inc.’s 5 7/8% senior notes due 2029 (Caa1/CCC+) and R.R. Donnelley & Sons Co.’s 6 1/8% senior secured notes due 2026 (B1/B+) were trading 1 to 2 points above their issue prices.

However, CoreLogic Inc.’s 4½% senior secured first-lien notes due 2028 (expected ratings B1/B) fell flat.

Back to the primary space, Boyne USA, Inc. and GMS Inc. priced deals during the session with more business expected to conclude by the weekend.

Meanwhile, outflows resumed for high-yield mutual and exchange-traded funds, which lost $132 million in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Primary on Thursday

Boyne USA, Inc. priced a $540 million issue of 4¾% eight-year senior notes (B1/B) at par in a Thursday drive-by.

The deal played to $3.5 billion of demand, according to a bond trader who added that 75% of it was done in reverse inquiry.

Elsewhere, at the conclusion of a roadshow GMS Inc. priced an upsized $350 million issue (from $300 million) of eight-year senior notes (B2/B) at par, inside of talk.

Prior to upsizing GMS demand was heard to be 10-times deal size, a trader said.

The active calendar features a trio of deals set to price Friday.

SCIH Salt Holdings, Inc. talked its $1.8 billion two-part offering on Thursday.

A $1.1 billion tranche of seven-year senior secured notes (B3/B) is talked to yield 5% to 5¼%, tight to initial talk in the low 5% area.

A $700 million tranche of eight-year senior unsecured notes (Caa2/CCC+) is talked to yield 6½% to 6¾%, tight to initial talk in the high 6% area.

The secured tranche is heard to be doing fine, a trader said.

In a deal announced Thursday morning, Coty Inc. talked its $750 million offering of five-year senior notes (B3/B) to yield 4¾% to 5%.

And HighTower Holding LLC talked its $300 million offering of eight-year senior notes (Caa2/CCC) to yield 6¾% to 7%, tight to initial talk in the low 7% area.

Demand was already three-times the size of the offer late Thursday, a trader said.

United Airlines in focus

United Airlines’ two tranches of senior secured bullet notes (Ba1/BB-/BB) were in focus on Thursday with both tranches maintaining the eye-popping premiums reached after breaking for trade.

The 4 5/8% notes due 2029 traded to a low of 103 during Thursday’s session.

However, the majority of prints were on a 104-handle with the notes changing hands in the 104½ to 104 7/8 context heading into the close.

There was more than $175 million in reported volume.

The upward momentum of the notes is expected to continue on Friday with sources anticipating the notes to broach 105.

The 4 3/8% notes due 2026 traded to a high of 104 5/8 and a low of 102½.

However, most prints were on a 103-handle. The notes were trading in the 103 3/8 to 103½ context heading into the market close, a source said.

The bonds had more than $236 million in reported volume.

United Airlines priced a $2 billion tranche of the 4 5/8% notes and a $2 billion tranche of the 4 3/8% notes at par on Wednesday.

Pricing of the 4 5/8% notes came tighter than talk for a yield of 4 7/8% to 5%; pricing of the 4 3/8% notes came tighter than talk for a yield of 4 5/8% to 4¾%.

The deal was a “blowout,” sources said, and played to $26 billion in demand across both tranches.

At a premium

While United Airlines outperformed, several other recent deals were putting in strong performances in the secondary space.

R.R. Donnelley & Sons’ 6 1/8% senior secured notes due 2026 traded as high as 103½ during Thursday’s session.

However, they dropped back down to a 102-handle and were trading in the 102½ to 102 7/8 context heading into the close.

There was $20 million on the tape during Thursday’s session.

R.R. Donnelley priced an upsized $400 million, from $350 million, issue of the 6 1/8% notes on Wednesday.

Pricing came at the tight end of yield talk in the 6¼% area.

The deal was heard to be as much as 2x oversubscribed.

BroadStreet Partners’ 5 7/8% senior notes due 2029 gained steam during Thursday’s session.

While the notes opened the day at par, they traded as high as 102 in intraday activity before dropping down to a 101-handle.

The 5 7/8% notes were changing hands in the 101 3/8 to 101¾ context heading into the close, according to a market source.

There was more than $48 million on the tape.

BroadStreet priced an upsized $400 million, from $325 million, issue of the 5 7/8% notes at par on Wednesday.

The yield printed at the tight end of talk in the 6% area.

The deal was also heavily oversubscribed and was heard to have played to $1.2 billion of demand.

Flat

While the majority of deals to price during Wednesday’s session traded with steep premiums in the aftermarket, CoreLogic’s 4½% senior secured first-lien notes due 2028 fell flat.

The notes were trading in a tight range around par during Thursday’s session, a source said.

There was more than $22 million in reported volume.

CoreLogic priced $750 million of the 4½% notes at par on Wednesday.

Pricing came in the middle of yield talk in the 4½% area.

Indexes gain

Indexes were on the rise on Wednesday.

The KDP High Yield Daily index rose 4 points to close the day at 69.56 with the yield now 3.88%.

The index was up 1 point on Wednesday after shaving off 3 points on Tuesday and 6 points on Monday.

The ICE BofAML US High Yield index gained 21.9 bps with the year-to-date return now 1.804%.

The index was up 10.4 bps on Wednesday after falling 8.4 bps on Tuesday and 6.3 bps on Monday.

The CDX High Yield 30 index gained 32 bps to close Thursday at 109.94. The index inched up 3 bps on Wednesday and 7 bps on Tuesday after falling 12 bps on Monday.

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