Howmet prices; MultiPlan new HY bonds at a premium, existing notes down; Rayonier softer

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 18 – One deal cleared the high-yield domestic primary market on Wednesday, from Howmet Aerospace Inc.

While the secondary space was flat for the majority of the session, it was soft heading into the market close as the release of the Federal Reserve minute notes sparked a sell-off in risk assets.

There has been widespread speculation among market participants about the timing of the Federal Reserve’s tapering of bond purchases.

The minute notes from the latest meeting revealed a general consensus that the tapering could begin in the next few months.

While the market closed the day on soft footing, the lack of liquidity in the space prevented any significant price swings, which has been a theme over the past few weeks.

New and recent issues continued to dominate the tape.

MultiPlan Corp.’s new 5½% senior secured notes due 2028 (Ba3/B+) were in focus with the notes trading with a healthy premium.

However, the company’s existing 5¾% senior notes due 2028 (B3/B-) continued to move lower in active trading.

American Axle & Manufacturing, Inc.’s 5% senior notes due 2029 (B2/B+) and Southwestern Energy Co.’s 5 3/8% senior notes due 2030 (Ba3/BB-/BB) remained active although with little movement in price.

Outside of recent issues, Rayonier A.M. Products Inc.’s 5½% senior notes due 2024 were lower in active trading.

Primary

Howmet Aerospace Inc. priced Wednesday's sole deal, a $700 million issue of 3% long seven-year senior bullet notes (Ba2/BB+/BBB-) which came at par, at the tight end of talk.

The deal was priced on the investment grade desk due to the fact that Howmet Aerospace, which became a fallen angel credit in the teeth of the coronavirus pandemic, is familiar to syndicate workers on that desk, a syndicate source said.

The deal is being traded on the high-yield desk, the source added.

Elsewhere sources roundabout the market were pronouncing the Cooke Aquaculture $580 million unsecured notes offer (Caa1/CCC+) and $480 million term loan dead, on Wednesday, however there was no official word from the company.

The bonds, which came into the market with guidance in the high 5% to 6% area, had been navigating troubled waters since the beginning of the week, traders said.

Pending official word on Cooke, only one deal remains on the active forward calendar.

Sylvamo Corp., which is being spun off from International Paper, is scheduled to wrap up a roadshow for its $500 million offering of eight-year senior notes (B1/BB) on Thursday.

That deal had been in the market with initial guidance in the high 5% area.

However, talk has widened, according to a bond trader who added that there is demand for the deal at 6½%.

MultiPlan at a premium

MultiPlan’s new 5½% senior secured notes due 2028 were in focus on Wednesday with the notes trading with a large premium.

The notes traded in a range of par 1/8 to 101 during Wednesday’s session with the notes changing hands in the par 5/8 to 101 context heading into the close, a source said.

There was more than $138 million in reported volume.

MultiPlan priced an upsized $1.05 billion, from $775 million, issue of the 5½% notes at par on Tuesday.

The yield printed in the middle of yield talk in the 5½% area.

While MultiPlan’s newly priced secured notes were trading with a premium, the health care cost management solutions company’s 5¾% senior notes due 2028 continued to trend lower.

The 5¾% notes were changing hands in the 94½ to 95 context during Wednesday’s session and stood poised to close the day at 94¾.

The notes have shaved off more than 2 points since MultiPlan announced its new offering with the yield on the notes now 6 5/8%.

The secured notes pushed the unsecured notes further down the capital structure, a source said.

Range bound

American Axle’s 5% senior notes due 2029 and Southwestern Energy’s 5 3/8% senior notes due 2030 remained active on Wednesday although with little movement in price.

American Axle’s 5% notes continued to struggle below par with the notes range bound between 99¼ and 99¾, a source said.

There was more than $19 million on the tape.

Southwestern’s 5 3/8% senior notes due 2030 continued to hold their premium despite a rough day for crude oil.

The 5 3/8% notes were changing hands in the par 3/8 to par ¾ context heading into the market close, a slight improvement over Tuesday’s level of par ¼ to par ½.

There was $17 million in reported volume.

While Southwestern continued to trade with a premium, crude oil futures were under pressure on Wednesday.

WTI crude oil futures settled at $65.46, a decrease of $1.13 or 1.7%.

Rayonier softer

Rayonier’s 5½% senior notes due 2024 were softer in active trading on Wednesday.

The notes shaved off about 1½ points. They traded down to a 94-handle on Wednesday and stood poised to close the day at 94½.

The notes, which rarely trade, were active with $19 million on the tape.

They were on a 96-handle in July.

There did not appear to be any news connected to the trading activity.

While the notes are a riskier credit, they are offering an appealing yield of about 7¾% at their current level, a source said.

Indexes

The KDP High Yield Daily index was down another 1 basis point to 69.81 with the yield now 3.81%. The index shaved off 1 bp on Tuesday and 1 bp on Monday.

The CDX High Yield 30 index fell 12 bps to close Wednesday at 108.95.

The index fell 30 bps on Tuesday and 12 bps on Monday.

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