Armor clears junk bond market; CA Magnum holds higher; Medline soft; front-end paper sought

By Cristal Cody

Tupelo, Miss., Oct. 29 – The Friday junk bond market definitely cleared the Armor Holdco, Inc. deal for $350 million of eight-year senior notes off of the calendar.

However, a couple of other deals were still lingering, including final word on an offer from Petrofac Ltd. for $500 million of five-year senior secure notes, with a coupon that was climbing as the deal was circulating the market.

At last sighting, the coupon was moving into the 10% to 10¼% space from earlier guidance in the 10% area.

As the calendar page turns over the weekend, market sources anticipate a jump in new issuance in November with about $40 billion of junk supply expected.

“Our market is flat, no real significant calendar,” a source noted Thursday. “There’s been a couple of deals the last couple of days but it seems like we’re just trying to get though the month end without much fanfare. In November, we should see a pop in new issues. But the positive cash flows have kept things, for the moment at least, pretty stable.”

Reported on Friday morning, the past two weeks have seen $3.5 billion of inflows in high-yield ETFs, according to a market source.

Recent issues

Secondary action has been mostly concentrated in new high-yield issues.

“There’s a few things trading out there with guys looking for specific issues across the front end,” one source noted Thursday. “Five-year, four-year type paper– it’s easy to find buyers of that stuff. There’s a tremendous amount of cash out there and guys would put it to work, particularly in the front end if it was available.”

CA Magnum Holdings’ 5 3/8% senior secured notes due 2026 (B1//BB-) were quoted going out slightly down over the afternoon Friday but remained strong in a second day of trading following issuance.

CA Magnum priced $1.01 billion of the senior notes at par on Wednesday in a leveraged buyout financing transaction, a trend seen in the high-yield primary market over the past month.

Medline Industries, LP’s two tranches of senior notes priced on Sept. 30, the largest LBO financing deal since the global financial crisis, were modestly softer on the day.

CA Magnum strong

CA Magnum’s 5 3/8% senior secured notes due 2026 (B1//BB-) were quoted going out slightly down over the afternoon Friday at 102 3/8 bid, a source said.

The 5 3/8% notes were mostly unchanged over the morning after trading about ½ point better Thursday at 102½ bid, 103 offered.

CA Magnum priced $1.01 billion of the senior notes at par on Wednesday with the notes hitting 102 soon after breaking for trade.

The yield printed tighter than the 5½% to 5¾% yield talk.

The deal is backing the buyout of India-based Hexaware Technologies by the Carlyle Group.

Medline lower

Medline’s 3 7/8% senior secured notes due 2029 (B1/B+/BB-) fell about ¼ point to the 99½ bid area Friday, a source said.

The company’s 5¼% senior notes due 2029 (Caa1/B-/B-) also were modestly weaker Friday near the 101¾ bid area.

The Northfield, Ill.-based health care company sold $4.5 billion of the 3 7/8% notes and $2.5 billion of the 5¼% notes at par on Sept. 30 in the largest LBO financing deal since the global financial crisis.

The 3 7/8% notes priced at the tight end of the 3 7/8% to 4% yield talk, while the 5¼% notes priced at the tight end of the 5¼% to 5½% talk.

Indexes soften

The iShares iBoxx High Yield Corporate Bond ETF fell 23 cents to $86.93 by the close.

The CDX High Yield 30 index declined to 108.87 from 109.16 on Thursday.

The index gained 12 bps on Thursday after dropping 17 bps Wednesday following a rise of 14 bps on Tuesday and 2 bps on Monday.

The KDP High Yield Daily index ended Friday at 69.64 with a yield of 3.91%, compared to 69.66 and a 3.9% yield on Thursday.

The KDP index rose 4 points on Thursday and 2 points on Wednesday after softening 1 point on Tuesday and 5 points on Monday.

Paul A. Harris contributed to this article.

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