Junk primary sells $3.56 billion; Vistra, Allied Universal gain; Quicken Loans drops

By Abigail W. Adams

Portland, Me., May 6 – Five issuers crossed the finish line with single-tranche, dollar-denominated deals on a big Thursday in the new issue market.

The day's grand total: $3.56 billion.

Meanwhile, the secondary space was almost flat on Thursday with new paper and earnings the focus of trading activity.

Allied Universal’s three tranches of senior notes remained active with both the secured and unsecured tranches gaining steam.

Vistra Operations Co. LLC’s 4 3/8% senior notes due 2029 (Ba2/BB/BB+) also gained strength in high-volume activity.

Outside of recent issues, Quicken Loans LLC’s 3 7/8% senior notes due 2031 (Ba1/BB) were moving lower in active trading after disappointing earnings.

Meanwhile, high-yield mutual and exchange-traded funds continued to have outflows with $1.387 billion leaving the space through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Thursday primary and ahead

The Thursday session produced a sole green deal that came upsized and inside of talk, playing to a big order book.

Renewable Energy Group Inc. priced an upsized $550 million issue (from $500 million) of 5 7/8% seven-year senior secured green notes (B2/BB) at par 12.5 bps inside of the 6% to 6¼% yield talk.

The Renewable Energy green deal went very well, playing to a whopping $4.5 billion of orders, according to a bond trader who had the notes trading at a handsome premium-to-new issue price at Thursday's close: 103 bid, 104 offered.

At least three dollar-denominated issuers are expected to clear the market ahead of the coming weekend.

Univision Communications Inc. is shaping up to be a blowout, a trader said.

The Spanish language media company talked its $1.05 billion offering of eight-year senior secured notes (B1/B+) to yield in the 4¾% area, on Thursday, inside of initial guidance in the 5% area.

The deal, on deck for Friday, is heard to be playing to $4.1 billion of orders across 132 accounts, the trader said (see related stories in this issue).

Allied Universal gains

Allied Universal’s three tranches (two secured tranches similar, but different sizes and difference in issuing entities) of senior notes continued to improve in active trading on Thursday.

Both tranches of the 4 5/8% senior secured notes due 2028 (B2/B) were up about ¼ point to close the day at par ½ bid, a source said.

The 6% senior notes due 2029 (Caa1/CCC+) were also up about ¼ point to close the day at 101 7/8 bid.

While the secured tranches had a lackluster break that saw them close the previous session at par bid, par ¼ offered, the unsecured tranche quickly hit a 101-handle.

Allied Universal priced an upsized $1.225 billion, from $900 million, tranche and a $775 million tranche of the 4 5/8% senior secured notes and then a downsized $960 million, from $1.285 billion, tranche of the 6% senior notes at par on Wednesday.

The secured tranches priced on top of final price talk and tight to early talk in the 4¾% area.

The unsecured tranche priced on top of final talk and tighter than early talk of 6¼% to 6½%.

The deal is backing Allied Universal's acquisition of London-based security services provider G4S.

Vistra gains

Vistra’s 4 3/8% senior notes due 2029 were also gaining strength in active trading.

The notes were up about ¾ point to close the day at par 7/8 bid, a source said.

They were active with more than $120 million in reported volume.

Vistra priced a $1.25 billion issue of the 4 3/8% notes at par on Wednesday.

The yield printed at the tight end of yield talk in the 4½% area.

The deal was heard to have played to $2.9 billion of orders.

Quicken Loans down

Quicken Loans’ 3 7/8% senior notes due 2031 were down in active trading following the mortgage lending company’s earnings report.

The notes dropped about 1½ points to close Thursday at 97¼, according to a market source.

The off-the-run name which rarely trades saw more than $13 million in reported volume.

The 3 7/8% notes have traded below par since March when skyrocketing 10-year Treasury yields drove down low-coupon, longer-duration junk bonds.

Quicken Loans’ capital structure was under pressure after the mortgage lender, which also does business as Rocket Mortgage, reported earnings.

While the company beat analyst expectations with revenue of $4 billion versus expectations for revenue of $3.97 billion, forward guidance was weak.

Indexes mixed

Indexes were again mixed on Thursday.

The KDP High Yield Daily index rose 2 points to close the day at 69.72 with the yield now 3.84%.

The index rose 4 points on Wednesday, 1 point on Tuesday and 3 points on Monday.

The ICE BofAML US High Yield index was up 3.4 bps with the year-to-date return now 2.193%.

The index was up 11 bps on Wednesday, down 5.8 bps on Tuesday and up 9.6 bps on Monday.

The CDX High Yield 30 index dropped 2 bps to close Wednesday at 109.75.

The index was down 15 bps on Tuesday after gaining 5 bps on Monday.

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