Pilgrim’s Pride, Sylvamo better than issuance; Rite Aid higher; primary quiet

By Cristal Cody and Paul A. Harris

Tupelo, Miss., Aug. 23 – The high-yield primary market failed to generate news on Monday, with market sources conceding that the Dog Days of August are upon the new-issue bourse.

However sources are declining to entirely rule out new-issue business in the run-up to Labor Day, although no one was volunteering any possible names or industry sectors on Monday.

Also it is possible that European new-issue activity will resume in the pre-Labor Day week, a London-based sellside source told Prospect News.

Trading in the high yield market stayed light as the week kicked off.

“It’s a quiet summer Monday,” one source said. “Today overall in the market, it definitely felt like risk on. Energy was up, so a firmer tone but just a pathetic amount of volume in high-yield.”

The iShares iBoxx High Yield Corporate Bond ETF closed up 27 cents, or 0.31%, to $87.56.

Oil prices settled up $3.50.

Pilgrim's Pride Corp.’s new 3½% senior notes due March 2032 (B1/BB+/BBB-) traded ¼ point better on the day and 2 points higher than pricing in thin secondary volume.

Sylvamo Corp.’s 7% senior notes due September 2029 (B1/BB) saw more action during the session with the new issue trading in a “decent amount” at 101¼ bid by late afternoon, a market source said.

In other junk-bond trading, Rite Aid Corp.’s bonds were nearly 2 points better after the drugstore chain reported it successfully extended the maturities on its credit agreement.

The company’s 8% senior secured due November 2026 (Caa1/CCC) traded 1¼ points higher by the close.

Indexes were mostly stronger.

The KDP High Yield Daily index ended Monday at 69.8 with a yield of 3.8%, compared to 69.76 and a 3.82% yield on Friday.

The CDX High Yield 30 index rose to 109.4 over the day from 109.08 ahead of the weekend.

The ICE BofAML US High Yield index posted a year-to-date return of 3.83% on Monday.

Junk ETFs see $288 million Friday inflows

The high-yield ETFs saw $288 million of daily 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 sustained a low-to-moderate $18 million of outflows on the day, the source added.

The macro retail cash flow picture shows strong and steady (but moderating) outflows thus far in 2021.

Cash flows in the third quarter were negative-$666 million, the source said.

That follows negative-$3.3 billion in the second quarter, and negative-$10.6 billion in the first quarter, the source said.

Pilgrim’s Pride at 102 bid

Pilgrim's Pride’s 3½% senior notes due March 2032 (B1/BB+/BBB-) traded up ¼ point to 102 bid by the market close, a source said Monday.

Trading was light as the poultry producer held onto gains made since pricing a $900 million offering, upsized from $750 million, of the notes on Thursday at par.

The bonds were seen at 101 5/8 bid mid-morning.

“It traded five or six times, but that’s not a whole lot for a high yield issuer that just priced late last week,” the source said. “It’s an indication of how slow it is.”

Sylvamo improves

Sylvamo’s new 7% senior notes due September 2029 (B1/BB) were quoted at 101¼ bid by late afternoon, a market source said.

The bonds were seen at par 3/8 bid, par 7/8 offered in thin mid-morning trading.

“It’s trading pretty well,” a source said.

Sylvamo, a Memphis-based commercial paper business being spun off by International Paper Co., priced $450 million of the bonds at par on Friday. The issue was downsized from $500 million and priced wider to early guidance in the high 5% area.

Rite Aid better

In other junk bond-issues, Rite Aid’s 8% senior secured due November 2026 (Caa1/CCC) rose about 1¼ points to 102 ¼ bid after the drugstore chain reported it successfully extended the maturities on its credit agreement, a source reported.

“Those bonds were up, but not a whole lot was trading,” the source said. “The stock was up 4%.”

The Camp Hill, Pa.-based drugstore company said Monday it entered into an amendment to its senior secured credit agreement that extends it debt maturity profile to August 2026 and provides improved pricing on its senior secured term loan.

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