Sylvamo clears HY primary, but wide; Pilgrim’s Pride in the 101s; MultiPlan regains footing

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 20 – The domestic high-yield primary market continued to slow its pace with one downsized deal clearing the market.

Sylvamo Corp. priced Friday's only junk bond deal, a downsized $450 million issue of eight-year senior notes (B1/BB).

Meanwhile, it was another quiet day in the secondary space.

While the market stood poised for another weak session at the open, it closed the day with gains as the tone improved alongside equities.

However, volume remained light.

“Everything is new-issue related,” a source said.

Pilgrim's Pride Corp.’s 3½% senior notes due 2032 (B1/BB+/BBB-) were in focus with the notes trading up to a 101-handle.

The company’s 4¼% senior notes due 2031 were active on the heels of the new offering although the notes were largely unchanged.

MultiPlan Corp.’s 5½% senior secured notes due 2028 (Ba3/B+) regained their footing amid improved market conditions with the notes recouping much of their losses.

Sylvamo

Sylvamo priced Friday's only junk bond deal, a downsized $450 million issue (from $500 million) of 7% senior notes due September 2029 that priced at par.

The order book was slow to build, and the uncoated paper producer, which is being spun off from International Paper Co., ended up being a price taker, sources said.

The yield printed at the wide end of the 6¾% to 7% yield talk, and well wide of early guidance in the high 5% area.

The deal also underwent covenant changes.

Sylvamo cleared the active forward calendar.

Looking ahead

High-yield ETFs sustained $183 million of outflows on Thursday, according to a bond trader.

New issue activity is expected to thin, if not dry up altogether in the fortnight remaining until the Labor Day holiday weekend, the traditional summer-fall divide in the bond market, sources say.

Many of the market's senior participants are taking vacations, they add.

It is possible that new issue activity could resume in the European new issue market during the August 30 week, a London-based sellside source said.

However that might play out, new issue activity is expected to ramp up when the market re-opens after the Labor Day holiday weekend, with some participants watching for as much as $60 billion during the holiday-foreshortened month ahead.

Pilgrim’s Pride on a 101-handle

Pilgrim’s Pride’s 3½% senior notes due 2032 were in focus on Friday with the notes holding on to the large gains made after breaking for trade.

The 3½% notes jumped to a 101-handle shortly after breaking for trade on Thursday.

They continued to trade with a 101-handle throughout Thursday’s session.

The notes were marked at 101 3/8 bid, 101 7/8 offered and were changing hands in the 101½ to 101¾ context heading into the market close, a source said.

There was more than $35 million in reported volume.

The poultry producer priced an upsized $900 million, from $750 million issue, of the 3½% notes at par on Thursday.

The yield printed in the middle of yield talk in the 3½% area.

The deal was heard to be 2x oversubscribed.

While Pilgrim’s Pride’s latest issue was in focus, the company’s 4¼% senior notes due 2031 were also active with the notes off about ¼ point.

The 4¼% senior notes were changing hands in the 107 3/8 to 107½ context throughout Friday’s session.

There was $11 million in reported volume.

The 4¼% notes currently trade with a 2.9% yield.

The company priced a $1 billion issue of the 4¼% notes at 98.994 in March.

MultiPlan recovers

MultiPlan’s 5½% senior secured notes due 2028 recovered much of their losses from the previous session on Friday.

The notes were up ½ point to change hands in the par 5/8 to par 7/8 context heading into the close.

After a strong break that saw the notes trade as high as 101, they dropped down to trade in the par to par ¼ context on Thursday amid weak market conditions.

MultiPlan priced a $1.05 billion issue of the 5½% senior notes at par on Aug. 17.

Indexes

The KDP High Yield Daily index gained 1 basis point to close Friday at 69.76 with the yield now 3.82%.

The index fell 6 bps on Thursday, 1 bp on Wednesday, 1 bp on Tuesday and 1 bp on Monday.

The index was down 8 bps on the week.

The CDX High Yield 30 index gained 23 bps to close Friday at 109.08.

The index dropped 10 bps on Thursday, 12 bps on Wednesday, 30 bps on Tuesday and 12 bps on Monday.

The index was down 41 bps on the week.

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