European junk primary active; Charter, Citrix weaker; Altice France under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 5 – The action was in Europe on Wednesday for junk bond investors as Americans returned from a Tuesday holiday.

Meanwhile, it was a soft day in the secondary space with the release of the Federal Open Market Committee minute notes increasing the likelihood of a July rate increase.

While soft, the space was largely quiet with the market gingerly returning from what was for some an extended holiday weekend.

However, ETFs were active and circulating offers-wanted-in-competition lists prior to the release of the Fed minute notes, a source said.

While ETFs launched the day as buyers, they were circulating bids-wanted-in-competition lists into the close.

The cash bond market closed the day down about ¼ point, a source said.

Several names were lower alongside the broader market.

Charter Communications, Inc. subsidiary CCO Holdings, LLC’s senior notes (B1/BB-) were weaker after a strong end to June.

Cloud Software Group Holdings Inc.’s (Citrix) 9% second-lien notes due 2029 (Caa2/B-) were also down alongside the broader market.

Altice France SA’s senior notes (B2/B-) were under pressure with the notes off 1½ to 3 points in light volume.

Euro market

The euro-denominated new issue market generated a steady stream of news on Wednesday, as two familiar issuers, Cirsa Finance International Sarl and Avis Budget Finance plc, came with big-ish deals, while a pair of less well-known companies, Amara Nzero (a green deal) and Profine, brought more modestly sized offerings.

Profine, a Germany-based producer of PVC window profiles, is in the market with a €380 million offering of HT Troplast GmbH five-year senior secured notes (B2/B), initial talk in the mid-to-high 9% area.

A portion of the Profine proceeds (€20 million) is earmarked to fund a shareholder dividend.

Coming less than a week after Italy-based specialty chemical producer Polynt Group priced a €300 million issue of SCIL IV LLC/SCIL USA Holdings LLC 9½% secured notes (B1/BB-), with all proceeds going to fund a dividend, euro-denominated fixed-income investors are once again challenged to weigh one of the market’s most aggressive uses of proceeds. the dividend deal, sources say.

Bond deals funding shareholder dividends are typically perceived as hot-market deals.

Meantime the dollar-denominated new issue market failed to reactivate Wednesday, on the heels of the Independence Day holiday.

Charter weaker

In the domestic secondary market, Charter subsidiary CCO Holdings’ senior notes were weaker in active trade after a strong close to the second quarter.

CCO’s 7 3/8% senior notes due 2031 were down ½ point.

The notes closed the day wrapped around 97 with the yield now 7 7/8%.

There was $14 million in reported volume.

The notes were subject to strong buying interest in the final week of June after the Biden administration unveiled its $42.5 billion ‘Internet for All’ initiative.

The notes closed the second quarter on a 97-handle.

Citrix weaker

Citrix’s 9% second-lien notes due 2029 were weaker alongside the broader market on Wednesday.

The notes shaved off 3/8 point.

They were trading in the 87¼ to 87½ context heading into the market close, a source said.

The yield was about 11.9%.

There was $13 million in reported volume.

Citrix’s 9% notes are a high-beta name and were trading in line with the broader market, a source said.

While down on Wednesday, the notes rank as the best performing deal of 2023.

The $3.84 billion issue priced at 79 to yield 14.047% in early April with dealers clearing some of the hung debt from Vista Equity Partners and Evergreen Coast Capital Corp.’s buyout of Citrix.

Altice France under pressure

Altice France’s senior notes were among the largest losers of Wednesday’s session with the notes dragged down 1½ to 3 points.

The 5 1/8% notes fell almost 2 7/8 points to close the day at 70 with the yield about 12 7/8%, according to a market source.

The 5½% senior notes due 2029 fell 2 points to close the day at 70½ with the yield about 12 3/8%.

The tranche was the most actively traded with $6 million in reported volume.

Altice France’s 5½% senior notes due 2028 were down 1½ points.

The notes closed the day at 75½ with the yield now 12 7/8%.

Fund flows

The dedicated high-yield bond funds had $170 million of net daily cash inflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds had $130 million of inflows on the day.

High-yield ETFs had $40 million of inflows on Monday, the source said.

Indexes

The KDP High Yield Daily index was down 9 points to close Wednesday at 50.49 with the yield now 7.39%.

The index shaved off 2 points on Monday.

The CDX High Yield 30 index was off 30 basis points to close Wednesday at 102.28.

The index was down 19 bps on Monday.

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