Junk bond primary market stalls as deals awaited; Venture Global’s new notes ‘busy’

By Paul A. Harris and Cristal Cody

Portland, Ore., May 30 – The high-yield bond primary market failed to reactivate on Tuesday, trailing the extended Memorial Day holiday weekend in the United States.

Two deals remain on the active forward calendar, carried over from the pre-Memorial Day week.

In the secondary market, Venture Global LNG Inc.’s reopened 8 1/8% senior secured notes due June 2028 (B1/BB/BB-) were quoted going out ¼ point better on the day.

“That one’s busy,” a trader said.

The notes were seen trading in the par 7/8 to 101 1/8 context.

Another high-yield name that continued to grab secondary focus was Icahn Enterprises LP with the company’s senior notes (Ba3/BB) trading modestly better to about 2 points higher on the day.

The 6¼% senior notes due 2026 added 2 points on $13.5 million of volume in the company’s most active issue.

“The high-yield market was better bid,” a trader said Tuesday, attributing the gains to the debt ceiling agreement announcement over the holiday weekend.

The iShares iBoxx High Yield Corporate Bond ETF added 32 cents, or 0.43%, to $74.34.

In other junk trading, Viking Cruises Ltd.’s 5 7/8% senior notes due 2027 (Caa2/B-) were down about ½ point as one of the most heavily traded junk issues moving in the secondary market Tuesday, a source said.

In the offing

In the primary market, Mobius Merger Sub, Inc. continues to market a $400 million offering of seven-year senior secured notes (B2/B/B+) backing the buyout of MoneyGram International Inc. by Madison Dearborn Partners.

Early guidance on the deal was 10½% to 11%.

Document changes surfaced late last week, which should be enough to get the deal done, a trader said on Tuesday.

Meanwhile jailhouse telecom Aventiv Technologies LLC continues its attempt to place $400 million of four-year first-lien senior secured notes (B3/B).

That bond sale has now run for virtually the entire month of May.

Away from those two deals the new issue market is expected to see at least a modest reactivation later in the holiday-abbreviated May-June crossover week, sources say.

Enthusiasm for a calendar may have dampened somewhat owing to the fact that some issues which came in May failed to hold at or above their issue prices, in secondary trading, sources say.

For example, the Olympus Water US Holding Corp. (Solenis) 9¾% senior secured notes due November 2028 (B3/B-), which came at par in a $1.7 billion tranche on May 24, were trading a little below that issue price on Tuesday afternoon, a trader said.

The good news is that deals are getting done, said the source, but added that a lot of recent bonds, once priced, have “treaded water.”

Venture Global active

Venture Global’s reopened 8 1/8% senior secured notes due June 2028 (B1/BB/BB-) were quoted going out ¼ point better on the day at 100 7/8, a source said.

Trading was steady with more than $15 million of paper changing hands.

The issue was flat from where it was quoted ¼ point better in early trading.

Venture Global priced the add-on to the issue on May 24 at par in a $250 million offering.

Icahn improves

Icahn’s notes were trading modestly better to about 2 points higher Tuesday.

The 6¼% senior notes due 2026 added 2 points on $13.5 million of trading in the company’s most active issue during the session, a source said.

The bonds went out at 87¾.

The issue was quoted Friday flat at 84¼ bid, 85¼ offered.

Icahn’s bonds traded in the same session a week ago at 89½ bid, 90½ offered.

The company’s tranche of 4 3/8% senior notes due 2029 were trading at 77½ by the close. The notes were up 1 3/8 points on $6.5 million of activity.

Icahn’s paper has been on the downswing in May since short seller Hindenburg Research released a highly critical report against the issuer.

Viking gains slowed

In other junk trading, Viking Cruises’ 5 7/8% senior notes due 2027 (Caa2/B-) declined about ½ point to 88 bid as one of the most active junk issues in the secondary market Tuesday, a source said.

The bonds traded on $25.5 million of volume.

Fund flows

High-yield ETFs had a solid $342 million of daily cash inflows on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds, however, sustained $153 million of outflows on the day, the source added.

The combined funds are tracking $1.06 billion of net outflows on the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily was at 50.2 and a yield of 7.49% on Tuesday after hitting a new 52-week low Thursday and staying flat Friday at 49.98 with a yield of 7.59%.

The index has a 52-week high of 58.27 and a 52-week low of 49.98.

The CDX High Yield 30 index jumped to 101.29 on Tuesday.

The index was up 56 bps on Friday at 100.96.

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