Primary prices another $3.6 billion; Nielsen, Switch trade up; PDC Energy trades off

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 11 – The domestic high-yield primary market continued to churn out new deals at a blistering pace on Friday with four issuers selling another $3.6 billion of high-yield notes in five tranches.

The post-Labor Day primary market, to the end of the first holiday-abbreviated week, set a blistering $4 billion per day pace, with $16.1 billion clearing the market in 24 junk-rated, dollar-denominated tranches, to Friday's close.

New paper remained in focus in the secondary space with the majority of deals performing well.

Nielsen Holdings plc’s two tranches of senior notes (B2/BB-), Cornerstone Building Brands, Inc.’s 6 1/8% senior notes due 2029 (Caa1/B-), and Switch Telecommunication Co.’s 3¾% senior notes due 2028 (B1/BB) were all trading with large premiums in high-volume activity.

However, PDC Energy, Inc.’s 5¾% senior notes due 2026 (Ba3/BB) were trading off following Thursday’s add-on.

While new paper continued to dominate the tape, the overall cash bond market was largely unchanged on Friday after a volatile week.

While the secondary space was soft in the face of the sell-off in equities and the influx of new paper, it held up fairly well, sources said.

A blistering week

Four issuers sold another $3.6 billion of high yield notes in a combined five tranches on Friday.

Heading into the Sept. 14 week there is a comparatively modest active calendar: two issuers with a combined three tranches for a total of $1.42 billion.

The primary market is expected to remain busy, though.

Dealers forecast that, given a reasonably supportive backdrop in the broader capital markets and not too many new crescendos in the headline news, September could see as much as $50 billion of new issue business, sources say.

Nielsen gains

Nielsen Holdings’ two tranches of senior notes were on the rise in active trading on Friday.

The 5 5/8% senior notes due 2028 rose to a 101-handle heading into the market close, a source said.

The notes started the day around par ½ but pushed up to 101 bid, 101¼ offered as the session progressed.

Nielsen’s 5 7/8% notes due 2030 also rose to a 101-handle and stood poised to close the day at 101 bid, 101 3/8 offered, a source said.

The notes were active with each tranche having more than $50 million in reported volume during the session.

Nielsen priced an upsized $1 billion tranche, from $500 million, of the 5 5/8% notes due 2028 and an upsized $750 million tranche, from $500 million, of the 5 7/8% notes due 2030 at par on Thursday.

Pricing of the 5 5/8% notes came at the tight end of yield talk in the 5¾% area.

The 5 7/8% notes came at the tight end of yield talk in the 6% area.

Cornerstone in focus

Cornerstone Building Brands’ 6 1/8% senior notes due 2029 were in focus on Friday with the notes trading at a healthy premium.

The notes traded in a range of par 5/8 to 101¾ during Friday’s session.

They were poised to close the day on a 101-handle with the final prints in the 101 1/8 to 101½ context, a source said.

The notes were among the most actively traded during Friday’s session with $113 million on the tape heading into the market close.

Cornerstone became the latest CCC-credit to tap the primary market.

Cornerstone Building priced an upsized $500 million, from $400 million, issue of the 6 1/8% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 6¼% area.

Big River floats above 101

Big River Steel LLC’s 6 5/8% senior secured notes due 2029 (Caa1/B), which priced at par on Wednesday, were also performing well in the aftermarket with the notes closing Friday at 101½, a source said.

While CCC-credits were notably absent from the torrent of new issuance in August, sources expect to see an uptick of new deal activity from the credit tier.

Switch on a 101-handle

Switch’s 3¾% senior notes due 2028 held on to their large premium in active trading on Friday.

The notes were largely wrapped around 101 during Friday’s session, a source said.

There was more than $38 million of the bonds on the tape.

While the notes “didn’t have a lot of juice in them,” due to their tight pricing, they still saw a strong break and closed the previous session at 101 bid, 101¼ offered, a source said.

Switch priced an upsized $600 million, from $500 million, issue of the 3¾% notes at par on Thursday.

The yield printed at the tight end of the 3¾% to 4% yield talk.

PDC trades off

PDC Energy’s 5¾% senior notes due 2026 were losing ground after the company priced an add-on the previous session.

The 5¾% notes were down 2½ points from the previous level and ½ point from the reoffer price of their add-on in active trading on Friday, sources said.

While the notes were trading at a slight premium to their reoffer price early in the session, they lost steam headed into the afternoon.

The notes stood poised to close the day at 98½.

PDC priced a $150 million add-on to the 5¾% notes at 99 to yield 5.959% on Thursday.

Pricing came at the cheap end of talk for a reoffer price of 99 to 99.5.

$130 million Thursday inflows

The dedicated high-yield bond funds had $130 million of net inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $125 million of inflows on the day.

Actively managed high-yield funds were essentially flat, with $5 million of inflows on Thursday, the source said.

News of Thursday's daily cash flows followed a Thursday report that the combined funds saw $769 million of net outflows during the holiday-shortened week to the Wednesday, Sept. 9 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

It was only the second outflow in the past 10 weeks, according to the market source who added that there have been 20 weekly inflows in the past 24 weeks – an interval which saw seven of the eight largest weekly inflows on record – totaling $56 billion.

Year-to-date inflows now stand at $42.9 billion, according to the market source.

Indexes mixed

Indexes were mixed on Friday with some largely flat and others seeing large gains.

The KDP High Yield Daily index rose 1 basis point to close Friday at 66.93 with the yield now 5.39%.

The index was down 8 bps on Thursday, 6 bps on Wednesday and 23 bps on Tuesday.

The index posted a cumulative loss of 36 bps on the week.

The ICE BofAML US High Yield index shaved off 12.3 bps with the year-to-date return now 0.351%.

The index gained 3.8 bps on Thursday and 14.4 bps on Wednesday after sinking 28.5 bps on Tuesday.

The index was down 22.6 bps on the week.

The CDX High Yield 30 index rose 83 bps to close Friday at 106.06.

The index was down 27 bps on Thursday, rose 61 bps on Wednesday, and sank 80 bps on Tuesday.

The index was up 37 bps on the week.

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