NorthRiver prices at a discount; Alliant, MGM flat; Gray, Peninsula Pacific at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 9 – The domestic high-yield primary market rounded out the week with one deal pricing.

NorthRiver Midstream Finance LP priced a $525 million issue of 5 5/8% senior secured notes.

There is an active forward calendar heading into the holiday-shortened week.

Ahead DB Holdings is in the market with a $375 million offering of seven-year first-lien senior secured notes and Rolls-Royce plc is marketing a £1 billion equivalent minimum of senior notes (Ba3), which may include a dollar-denominated tranche.

While the deals are rumored to be facing some pushback, Ligado Networks LLC is still attempting to place two tranches of PIK notes and DNEG plc (Prime Focus World NV) is heard to still be in the market with a $375 million offering of secured notes (B2//BB).

Meanwhile, the secondary space rounded out a strong week on firm footing.

The market tightened 60 basis points through Wednesday’s close with CCC credits leading the gains, according to a BofA Global Research report.

New paper continued to dominate the tape albeit with mixed performances.

Peninsula Pacific Entertainment LLC’s 8½% senior notes due November 2027 (Caa1/CCC+) were among the outperformers of recent deals with the notes trading well above their issue price.

Gray Television, Inc.’s 4¾% senior notes due October 2030 (B3/B+/BB-) were also trading with a healthy premium in the aftermarket.

However, the MGM Resorts International 4¾% senior notes due October 2028 (Ba3/BB-) and Alliant Holdings Co-Issuer and Alliant Holdings Intermediate LLC’s 4¼% senior secured notes due 2027 (B2/B) fell flat in active trading.

The calendar

Trailing a blaze of Thursday issuance, NorthRiver Midstream priced Friday's sole deal – a $525 million issue of 5 5/8% senior secured notes due Feb. 15, 2026 (Ba3/BB) that came discounted, at the wide end of talk (see related story in this issue).

The holiday-shortened week ahead is set to get underway to an active new issue calendar.

Ahead DB Holdings plans to run a Tuesday-Wednesday roadshow for its $375 million offering of seven-year first-lien senior secured notes (existing first-lien ratings B1/B). Initial talk is in the 6¼% area.

Rolls-Royce is marketing £1 billion equivalent minimum of senior notes (Ba3) in euros, British pounds and/or dollars, targeting long five-year and straight seven-year maturities.

A possible dollar-denominated tranche has been under discussion in the high 5% area to 6% context, a trader said.

Rolls-Royce follows British carmaker Jaguar Land Rover Automotive plc which managed to price an upsized $700 million issue (from $500 million) of 7¾% senior guaranteed notes tight to talk, during the past week, after agreeing to a springing lien provision sought by investors who were concerned about finding themselves subordinated, or “primed,” by subsequent debt issues.

There is also some overhang on the active new deal calendar, sources say, referring to a couple of offerings heard to be facing headwinds.

Ligado Networks is attempting to place two tranches of PIK notes, including three-year first-lien bullets with initial guidance of 13% (9% PIK, 4% cash), at OID 96 and four-year PIK second-lien bullets with initial guidance that would set the coupon 300 basis points behind the first-lien notes, meaning that the second-lien notes would bear interest at an all-in rate of 16%, also at OID 96.

The books for the first-lien tranche are a work in progress, according to a bond trader who said that the word in the market is that the deal hinges on the degree to which an existing first-lien creditor is willing to roll into the new paper.

And DNEG plc (Prime Focus World NV) is heard to still be in the market with a $375 million offering of secured notes (B2//BB), a deal that kicked off near the end of September.

In the meantime, it has been radio silence, sources say.

The last word on possible pricing was 8¼% to 8½%, a trader recounted.

Peninsula Pacific trades up

Peninsula Pacific Entertainment’s 8½% senior notes due 2027 (Caa1/CCC+) rose steeply in the aftermarket with the notes trading well above their issue price.

The notes were marked at 101½ bid, 102½ offered early Friday.

The 8½% notes were performing well with CCC-credits, in general, leading returns over the past week.

CCC-rated credits tightened 55 bps in the past two weeks, outperforming B and BB credits, according to the BofA Global Research Report.

The gaming and racing facility operator priced an upsized $475 million, from $450 million, issue of the 8½% notes on Thursday.

While the notes were performing well in the secondary space, they saw some pushback during bookbuilding with the notes pricing wide to initial talk in the low 8% area.

The deal also underwent covenant changes.

Gray Television gains

Gray Television’s 4¾% senior notes due 2030 were making gains in active trading on Friday.

The 4¾% notes were marked at par 5/8 bid, par 7/8 offered early in the session.

They climbed to a 101-handle as the session progressed, a source said.

Gray Television priced an upsized $800 million, from $550 million, issue of the 4¾% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 4 7/8% area.

Flat

While the majority of new deals performed well throughout the week, Alliant’s 4¼% senior notes due 2027 and MGM Resorts’ 4¾% senior notes due 2028 fell flat in the aftermarket.

Alliant’s 4¼% notes were wrapped around par in active trading.

They were changing hands in the 99 7/8 to par 1/8 context, a source said.

While Alliant’s 4¼% notes were wrapped around par, the insurance brokerage company’s 6¾% senior notes due 2027 (Caa2/CCC+) were trading above their reoffer price following an add-on.

The 6¾% notes were changing hands in the 103 3/8 to 103 5/8 context heading into the market close.

Alliant priced an upsized $875 million two-tranche offering on Thursday.

The deal included an upsized $525 million, from $425 million, tranche of the 4¼% notes, which priced at par.

Pricing came on top of final talk and tight to earlier talk for a yield of 4¼% to 4½%.

Alliant’s deal also included a $350 million add-on to the 6¾% notes, which priced at 103.

The third tranche, MGM Resorts’ 4¾% senior notes due 2028 were also wrapped around par in the aftermarket.

MGM priced an upsized $750 million, from $500 million, tranche of the 4¾% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 4 7/8% area.

Thursday inflows: $505 million

The dedicated high-yield bond funds had $505 million of daily net inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds had $315 million of inflows on the day.

High-yield ETFs saw $190 million of inflows on Thursday.

News of Thursday's daily flows trails a Thursday report that the dedicated high-yield bond funds saw a whopping $4.014 billion of net inflows in the week to the Wednesday, Oct. 7 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

That's the 11th biggest inflow on record, according to the market source who added that nine of the 12 largest weekly inflows on record have occurred since late March.

Indexes gain

Indexes closed Friday and the week with gains.

The KDP High Yield Daily index rose 13 basis points to close Friday at 66.72 with the yield now 5.46%.

The index was up 4 bps on Thursday, 13 bps on Wednesday, 15 bps on Tuesday and 12 bps on Monday.

The index posted cumulative gains of 57 bps on the week.

The ICE BofAML US High Yield index shot past the 1% threshold on Friday.

The index gained 15.4 bps with the year-to-date return now 1.062%.

The index was up 24.2 bps on Thursday, 5 bps on Wednesday, 37.7 bps on Tuesday and 45.9 bps on Monday.

The index posted a cumulative gain of 128.2 bps on the week.

The CDX High Yield 30 index rose 54 bps to close Friday at 106.29.

The index gained 35 bps on Thursday, 74 bps on Wednesday, sank 44 bps on Tuesday, and gained 79 bps on Monday.

The index posted cumulative gains of 198 bps on the week.

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