Shadow calendar eyed; Clear Channel above par; Howmet active; CDK gives back gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 31 – The primary market remained quiet on Thursday and is not expected to reactivate until Tuesday at the conclusion of the extended Labor Day holiday weekend.

However, September promises to be a busy month, market sources said.

The consensus seems to be that the month ahead could see issuance in the context of $20 billion, a syndicate banker said on Thursday, adding that the post-Labor Day week might see as much as $2 billion to $3 billion of new issue volume.

A shadow calendar of deals expected to come continues to take shape with prospective offerings from Syneos Health Inc., NCR Corp., Uber Technologies, Inc., Worldpay and Bausch + Lomb Corp. eyed, sources said.

Meanwhile, the secondary space remained relatively active on Thursday with end-of-month clean-up and some volatility surrounding the latest piece of inflationary data sparking trading activity.

While the market again saw a strong start in response to the latest Personal Consumption Expenditure report, which came largely in line with expectations, it lost strength heading into the close, a source said.

While the PCE report offered few surprises, it still reflected an uptick in inflation, which was the wrong direction, a source said.

The cash bond market launched the day with a ¼ point gain, although that gain was eroded to about a 1/8 point by the session’s end.

Activity was spread across a wide range of issues with no clear themes as portfolio adjustments took place.

Clear Channel Outdoor Holdings, Inc.’s 9% senior secured notes due 2028 (B1/B) continued their uptrend in heavy volume with the notes now trading on a par handle for the first time since early August.

Howmet Aerospace Inc.’s senior notes (Ba2/BB+/BBB-) were active, although with little movement in price with the market expecting the company to reach rising star status.

CDK Global’s 8% first-lien senior notes due 2029 (B2/B+) also saw a flurry of activity with the notes giving back their gains from the previous session and returning to their previous levels.

Shadow calendar eyed

A shadow calendar of deals expected to come as September/fourth-quarter business continues to take shape, sources said.

Names include Syneos Health with an expected $1.7 billion of high-yield notes to support the buyout by Elliott Investment Management, Patient Square Capital and Veritas Capital. The deal was pre-marketed by Goldman Sachs in mid-August. Pricing discussions took place in the 9% area.

NCR is expected to come with new debt financing to support the spinoffs of its ATM and digital commerce businesses, expected to close during the fourth quarter.

Uber is expected to tap the debt capital markets for funds to refinance $1 billion of its 7½% senior notes due May 2025, presently callable at 101.875.

Worldpay could show up with junk bonds backing GTCR’s buyout of a majority stake in the company from Fidelity National Information Services Inc. Debt financing includes $8.4 billion of funded debt and a $1 billion revolver. JPMorgan, Goldman Sachs, Citigroup, Wells Fargo, Deutsche Bank and UBS are the committed banks.

And Bausch + Lomb could come with $1.75 billion of new debt financing to support its acquisitions of Xiidra, libvatrep and AcuStream from Novartis. The debt commitment is from JPMorgan.

Clear Channel’s uptrend

Clear Channel’s 9% senior secured notes due 2028 continued their uptrend in active trade on Thursday with the notes now firmly on a par-handle.

The 9% notes climbed ½ point to trade in the par ¼ to par ¾ context, a source said.

The yield narrowed to 8 7/8%.

There was $16 million in reported volume.

Thursday marked the highest level for the notes since the $750 million issue priced at par on Aug. 8.

While the notes made nominal gains on the break, they were trading on a 98-handle as recently as last week.

However, the notes have rallied alongside the broader market over the past week and a half.

Howmet active

Howmet’s senior notes were active, although with little movement in price on Thursday.

The aerospace company’s 3% senior notes due 2029 continued to trade in the 86 to 86½ context with the yield about 6%, according to a market source.

There was $14 million in reported volume.

Howmet’s 5.9% senior notes due 2027 were also unchanged with the notes closing the day at 99½.

The yield was also about 6%.

There was also about $14 million in reported volume.

Howmet is a strong credit with the market widely expecting the company to reach investment-grade status.

Its senior notes are already trading in line with the BBB index, a source said.

CDK comes in

CDK’s 8% first-lien senior notes due 2029 gave back their gains from the previous session with the notes now largely unchanged on the week.

The 8% notes launched the day strong on a 101-handle.

However, they leaked as the session progressed and closed the day down about ½ point.

The notes were trading in the par 7/8 to 101 3/8 context heading into the market close, a source said.

There was $15 million in reported volume.

The notes popped as high as 101¾ the previous session in the market’s data-driven rally.

Wednesday fund flows

High-yield ETFs saw $311 million of daily cash inflows on Wednesday, their fourth consecutive strong daily inflow, according to a market source.

To recap, the junk ETFs saw $650 million of inflows on Tuesday, $135 million on Monday and $502 million last Friday.

Actively managed high-yield funds saw $70 million of inflows on Wednesday, the market source said.

Indexes

The KDP High Yield Daily index rose 6 basis points to close Thursday at 50.56 with the yield now 7.43%.

The index gained 15 bps on Wednesday, 20 bps on Tuesday and 8 bps on Monday.

The ICE BofAML US High Yield index added 12.3 bps with the year-to-date return now 7.221%.

The index gained 26.6 bps on Wednesday, 40.1 bps on Tuesday and 28.6 bps on Monday.

The CDX High Yield 30 index shed 17 bps to close Thursday at 102.83.

The index gained 10 bps on Wednesday, 29 bps on Tuesday and 27 bps on Monday.

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