Kinetik sustainability-linked notes better than issuance; United States Steel climbs

By Cristal Cody

Tupelo, Miss., Dec. 18 – Kinetik Holdings LP’s $300 million add-on to its 6 5/8% senior sustainability-linked notes due Dec. 15, 2028 (Ba1/BB+/BB+) brought in a Friday drive-by edged lower Monday but remained better than issuance as one of the day’s most active high-yield names.

Also on Monday, United States Steel Corp.’s junk paper was seen more than 1 point better by the close after the morning’s merger announcement with Nippon Steel Corp.

The company’s 6 7/8% notes due 2029 (B1/BB-) went out more than 1¼ points higher.

Kinetik modestly lower

Kinetik Holdings’ reopened 6 5/8% senior sustainability-linked notes due Dec. 15, 2028 (Ba1/BB+/BB+) traded mostly flat to modestly lower Monday but remained better than issuance in strong volume that totaled nearly $14 million, a source said.

The bonds were quoted at a print of 100.688 to yield 6.425%.

Kinetik priced a $300 million add-on to the bonds on Friday at 100.5 to yield 6.479% in an offering upsized from $200 million.

The price came at the rich end of the 100.25 to 100.5 price talk, while early guidance was in the 100.25 area. The total outstanding in the issue now is $800 million.

U.S. Steel moves up

United States Steel’s 6.65% notes due 2037 (B1/BB-) traded at a print of 102.78 on $9.5 million of volume by the close Monday after the morning’s merger announcement, a source reported.

The company’s 6 7/8% notes due 2029 (B1/BB-) also added more than 1¼ point to hit 102 on $6.8 million of secondary action over the session.

Japan’s largest steelmaker Nippon Steel and Pittsburgh-based United States Steel announced Monday that Nippon will acquire the issuer in a cash and debt deal valued at $14.9 billion.

Shareholders will receive $55 per share in cash with the transaction expected to close in the second or third quarter of 2024. Nippon said it plans to fund the acquisition through proceeds mainly from borrowings from certain Japanese banks and has already secured financing commitments.

Indexes

The KDP High Yield Daily index declined to 50.56 with a yield of 6.84% on Monday.

The index closed Friday down 5 basis points at 50.64 with the yield at 6.8%.

The index added 109 bps in the prior week.

The CDX High Yield 30 index finished Monday up 1 bp at 105.39.

The index declined 12 bps on Friday to 105.38 and posted a cumulative gain of 144 bps on the week.

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