Clear Channel drives by; Cushman joins junk calendar; ATI, Greystar improve; DISH jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 8 – The junk bond new issue market had a pair of single-tranche issuers raise a total of $1.05 billion on Tuesday.

In a drive-by, Clear Channel Outdoor Holdings, Inc. priced an upsized $750 million issue (from $500 million) of five-year secured notes (B1/B) at par to yield 9%, the tight end of talk.

Meanwhile the active new issue calendar grew as Cushman & Wakefield started a roadshow for a $500 million eight-year secured deal, in the market with initial guidance in the 9¾% area, and expected to price Friday.

Meanwhile, a soft open gave way to a flat close in the secondary space with Moody’s Investors Service’s downgrade of 10 small and midsize banks spooking the market early in the session.

However, buyers emerged as the session progressed and lifted the market into the close.

While the cash bond market was off about 1/8 point early in the session, it closed the day largely unchanged, a source said.

However, new paper was the focus with the deals to clear the primary during Monday’s session continuing to improve in active trade.

ATI Inc.’s new 7¼% senior notes due 2030 (B2/B+) and Greystar Real Estate Partners, LLC’s 7¾% senior secured notes due 2030 added to the gains made after strong breaks in heavy volume.

Valaris Ltd.’s 8 3/8% senior secured second-lien notes due 2030 (B2/BB) were marked with heavy volume with the notes trading at a premium to their add-on price but below their previous trading level.

While new paper dominated the tape, topical news once again pushed DISH Network Corp.’s senior notes into the spotlight.

News DISH would merge with EchoStar in an all-stock transaction launched a buying frenzy for DISH bonds which jumped 2 to 5 points during Tuesday’s session.

ATI climbs

ATI’s 7¼% senior notes due 2030 continued to climb after a strong break with the demand for the notes seen during bookbuilding following them into the secondary space.

The 7¼% notes opened the day at par ¼ bid, par ¾ offered and continued to climb as the market tone improved.

There were lifted to par ½ bid, 101 offered as the session progressed with the last prints around par 7/8, sources said.

In a heavily oversubscribed offering, ATI priced an upsized $425 million, from $400 million, issue of the 7¼% notes at par in a Monday drive-by.

Pricing came at the tight end of the 7¼% to 7½% yield talk.

The deal was a blowout and played to $1.9 billion in demand, a source said.

Greystar improves

Greystar’s 7¾% senior secured notes due 2030 made strong gains after a solid break in active trade on Tuesday.

The notes rose ¼ point at the open to par ½ bid, 101 offered and continued to rise as the session progressed.

They were trading in the par 7/8 to 101 1/8 context heading into the market close, according to a market source.

The notes went out the previous session at par ¼ bid, par ¾ offered.

Greystar Real Estate Partners, LLC priced a $400 million issue of the 7¾% notes at par on Monday.

Pricing came at the tight end of the 7¾% to 8% yield talk.

Valaris active

Valaris’ 8 3/8% senior secured second-lien notes due 2030 were traded in heavy volume after an add-on priced in the previous session with the notes trading at a premium to their add-on price but below previous trading levels.

The 8 3/8% notes were changing hands in the par 7/8 to 101¼ context heading into the market close Tuesday, according to a market source.

While up about ¼ point from their add-on price, the notes were down 1 point from their previous trading level of 102, a source said.

Valaris priced an upsized $400 million, from $350 million, add-on to the 8 3/8% notes at 100.75 to yield 8.173% in a Monday drive-by.

Pricing came at the rich end of the 100.25 to 100.75 price talk.

DISH jumps

DISH’s capital structure jumped on Tuesday with its senior notes adding 2 to 5 points following news that DISH and EchoStar would merge in an all-stock transaction.

DISH’s soon-to-mature 5 7/8% senior notes due Nov. 15, 2024 (Caa2/B-) jumped 3 points to a 95-handle, a source said.

The notes closed the session wrapped around 95½ with the yield 9¾%.

The 5¼% senior notes due 2026 also jumped about 3 points.

The notes were trading in the 84¾ to 85¼ context heading into the market close with the yield about 10¾%.

DISH’s 11¾% senior secured notes due 2027 (B2/B) bounced 2 points with the notes trading up to a 101-handle, their highest level since March.

The notes were changing hands in the 101 to 101 3/8 context heading into the market close with the yield about 11¼%.

The 7 3/8% senior notes due 2028 jumped more than 4 points to trade on a 62-handle with the yield about 19 3/8%.

DISH popped on Tuesday after news broke that the company would merge with EchoStar.

According to the terms of the deal, EchoStar shareholders will receive 2.85 shares of DISH class A common stock for each share of EchoStar class A, C or D common stock and 2.85 shares of DISH class B common stock for each share of EchoStar class B common stock.

Charlie Ergen is co-founder and co-chair of both EchoStar and DISH and the controlling shareholder of both companies.

The news was a welcome relief for investors that have been questioning DISH’s future viability with refinancing risks for the company high as its 2024 maturities loom.

The merger will increase the company’s equity cushion and give it more room to run as it works to address a heavy debt burden.

“But they have a lot of work to do,” a source said.

Fund flows

High-yield ETFs sustained $313 million of daily cash outflows 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 $23 million of inflows on the day.

The combined funds are tracking $614 million of net outflows for the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index added 5 basis points to close the day at 50.46 with the yield now 7.44%.

The index inched up 2 bps on Monday.

The ICE BofAML US High Yield index added 5.5 bps with the year-to-date return now 6.492%.

The index was up 17.2 bps on Monday.

The CDX High Yield 30 index fell 23 bps to close Tuesday at 102.51.

The index added 26 bps on Monday.

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