Junk: Advanced Drainage prices; Ardagh outperforms; Builders, Tenet, Kinetik up slightly

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 2 – The domestic high-yield primary market saw one drive-by deal clear during Thursday’s session.

In a heavily oversubscribed offering, Advanced Drainage Systems priced a $500 million issue of eight-year senior notes (Ba2/B+).

Meanwhile, the secondary space was flat on Thursday on the heels of a minor pullback the previous session from last week’s strong rally.

New issues dominated the tape. While all deals to price during Wednesday’s session were holding slight premiums in high-volume activity, Ardagh Metal Packaging’s 6% senior secured green notes due 2027 (Ba2/BB/BB) were the only notes to break above a par-handle.

Tenet Healthcare Corp.’s 6 1/8% senior secured notes due 2030 (B1/BB-/BB-), Kinetik Holdings LP’s 5 7/8% sustainability-linked senior notes due 2030 (Ba1/BB+/BB+), and Builders FirstSource, Inc.’s 6 3/8% senior notes due 2032 (Ba2/BB-) were trading with slight premiums to their issue prices.

Meanwhile, inflows were strong over the past week with exchange-traded and mutual funds adding $4.77 billion in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flows report.

Advanced Drainage drives-by

Advanced Drainage Systems completed Thursday's sole dollar-denominated deal, a $500 million issue of eight-year senior notes (Ba2/B+) that priced at par to yield 6 3/8% in a drive-by.

It was heard to be more than four-times oversubscribed, and priced at the tight end of yield talk in the 6½% area. Initial guidance was in the high 6% area.

The bonds broke sharply higher into the secondary market, and were trading at 101 7/8 bid, 102 3/8 offered heading into the Thursday close, a sellside source said.

The active forward calendar features just one deal on offer.

Maxar Technologies Inc. was scheduled to kick off its $500 million offering of five-year senior secured notes (B2/B) on a Thursday investor call.

The deal is set to run a Monday-to-Wednesday roadshow in the week ahead.

Ardagh outperforms

From Wednesday’s slew of new issues, Ardagh’s 6% senior secured green notes due 2027 were the outperformers with the notes the only one of the four deals to price the previous session to break above a par-handle.

The 6% notes traded as low as par ¼ early Thursday but gained steam as the session progressed and closed the day on a 101-handle.

The notes were changing hands in the 101 to 101¼ context heading into the close, a source said.

There was $84 million in reported volume.

Ardagh priced a $600 million issue of the 6% notes at par in a Wednesday drive-by.

The yield printed in the middle of yield talk in the 6% area. Initial guidance was in the 6¼% area.

The deal was heard to be four-times oversubscribed.

Tenet dominates

Tenet Healthcare’s new 6 1/8% senior notes due 2030 dominated the tape on Thursday with the notes trading at a slight premium to their issue price.

The 6 1/8% notes traded in a range of par 1/8 to par 5/8 during the session with final prints in the par ¼ to par ½ context, a source said.

There was $108 million in reported volume.

Tenet priced an upsized $2 billion, from $1.8 billion, issue of the 6 1/8% notes at par in a Wednesday drive-by.

The yield printed at the tight end of yield talk in the 6¼% area.

The deal was heard to have played to $5 billion of demand.

Kinetik above issue price

Kinetik Holdings’ 5 7/8% senior notes due 2030 maintained a slight premium to their discounted issue price in high-volume activity on Thursday.

The 5 7/8% notes traded as high as par 1/8 during Thursday’s session; however, the majority of prints were on a 99-handle.

The 5 7/8% notes were changing hands in the 99 5/8 to 99 7/8 context heading into the market close.

There was $92 million in reported volume.

Kinetik Holdings priced a $1 billion issue of the 5 7/8% notes at 99.588 to yield 5.94% in a Wednesday drive-by.

While the deal was heard to be 2.5x oversubscribed, some felt the pricing was tight.

The yield printed tighter than the 6% to 6¼% yield talk. Initial guidance was in the low-to-mid 6% area.

The orders were heard to be 2.5-times deal size early Wednesday afternoon, a sellside source said.

Builders improves

Builders’ 6 3/8% senior notes due 2032 improved in active trading on Thursday after falling flat on the break.

The 6 3/8% notes were up about ¼ point in high-volume activity.

The notes traded as high as par ½ but came in to the par 1/8 to par 3/8 context heading into the market close, according to a market source.

There was $81 million in reported volume.

Builders FirstSource priced an upsized $700 million, from $600 million, issue of the 6 3/8% notes at par on Wednesday.

The yield printed at the wide end of yield talk in the 6¼% area.

Indexes

The KDP High Yield Daily index again shaved off 2 points to close Thursday at 58.11 with the yield now 6.27%.

The index was down 2 points on Wednesday and 1 point on Tuesday.

The ICE BofAML US High Yield index shaved off 2.9 basis points with the year-to-date return now 7.796%.

The index fell 25 bps on Wednesday and 1.6 bps on Tuesday.

The CDX High Yield 30 index rose 18 bps to close Thursday at 101.61.

The index was down 16 bps on Wednesday and 17 bps on Tuesday.

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