Domestic junk market prices $1 billion; Medline joins calendar, existing notes rise

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 19 – In the dollar-denominated junk bond market on Tuesday two issuers priced deals, raising a combined total of $1 billion.

Medline Industries, LP, looking ahead, is expected to price on Wednesday.

Meanwhile, it was another quiet day in the secondary space with the cash bond market either side of unchanged as the Federal Open Market Committee convened.

While the market had a soft open, it pared its losses later in the session and closed with a firm tone, a source said.

With market players awaiting the new deals in the pipeline to break for trade and waiting on the Fed’s Wednesday announcement for greater clarity on rate cuts, trading volumes remained thin, the source said.

News of Medline’s latest offering kickstarted activity in the company’s outstanding notes, which were firmer in active trade.

Recent issues also continued to change hands with Vital Energy Inc.’s 7 7/8% senior notes due 2032 (B2/B) holding strong gains in active trade and Baytex Energy Corp.’s 7 3/8% senior notes due 2032 (B1/BB-/BB-) continuing to inch higher.

Primary market

Primary market news volume intensified on Tuesday, with high-yield and crossover deals pricing in several markets.

There were also announcements regarding the active calendar.

And a shadow calendar continued to take shape.

In the dollar-denominated junk market two issuers priced deals, raising a combined total of $1 billion.

Executions appeared sharp, as both issues came at the tight ends of talk.

Crescent Energy Co. priced a $700 million issue of Crescent Energy Finance LLC eight-year senior notes (B1/BB-/BB-) at par to yield 7 5/8% in a drive-by.

One trader professed an awareness of dropouts at 7¾% (talk was in the 7¾% area, initial guidance was in the 8% to 8¼% area).

Elsewhere Landsea Homes Corp. priced a $300 million issue of five-year senior notes (B/B+) off the calendar.

The deal came at par to yield 8 7/8%.

Demand was two-times deal size on Tuesday afternoon, according to a trader who remarked that it was a decent book that contained some real-money accounts

Meantime Medline Industries, LP kicked off a $1 billion offering of Medline Borrower, LP five-year senior secured notes (B1/B+/BB-) with initial guidance in the mid-6% area, and set to price Wednesday.

Late Tuesday demand for the Medline deal was heard to be a cool $2.25 billion, a trader said.

Looking to the shadow calendar, Miter Brands is expected to bring a $500 million offering of senior secured notes, via RBC, into the primary market during the near term.

And in an expected dollar-denominated Nordic execution Floatel International Ltd. is heard to be staging to bring a $350 million offering of five-year non-call-two senior secured notes.

The deal was shopped during investor meetings hosted last week by DNB Markets and Pareto Securities.

Medline firmer

The announcement of Medline’s latest offering kickstarted activity in the company’s outstanding notes which were firmer on Tuesday.

The 3 7/8% senior secured notes due April 1, 2029 (B1/B+) gained ¼ to 3/8 point to close the day on a 90-handle.

They were trading in the 90 to 90 3/8 context heading into the market close, a source said.

The yield was about 6 1/8%.

The 5¼% senior notes due Oct. 1, 2029 (Caa1/B-) were also up about ¼ to 3/8 point with the notes closing the day on a 93-handle.

They were trading in the 93 to 93 3/8 context heading into the market close.

The yield was 6¾%.

Recent issues

Recent issues continued to change hands on a slow day in the secondary space on Tuesday.

Vital Energy’s 7 7/8% senior notes due 2032 continued to trade actively although with little movement in price.

The notes remained on a 101-handle after a ½ point gain the previous session.

They continued to trade in the 101¼ to 101½ context, a source said.

Baytex Energy’s 7 3/8% senior notes due 2032 were also inching higher above their discounted issue price.

The notes added ¼ point over the past two session to trade on a par-handle.

They were changing hands in the par 1/8 to par 3/8 context heading into the market close, a source said.

Baytex Energy priced the $575 million issue at 99.266 to yield 7½% on March 14.

Indexes

The KDP High Yield Daily index was up 12 basis points to close Tuesday at 50.68 with the yield now 6.87%.

The index inched up 1 bp on Monday.

The ICE BofAML US High Yield index added 19.5 bps with the year-to-date return now 1.078%.

The index added 10.2 bps on Monday.

The CDX High Yield 30 index added 21 bps to close Tuesday at 106.86.

The index added 13 bps on Monday.

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