Junk: Outfront Media, Smyrna price; Bombardier lags; Atlas Air, Air Transport under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 7 – The high-yield bond primary market had an active session with two single-tranche issuers raising a combined total of $1.55 billion.

Smyrna Ready Mix Concrete, LLC priced a $1.1 billion issue of eight-year senior secured notes (Ba3/BB-/BB-) and Outfront Media, Inc. priced an upsized $450 million issue of 7.25-year senior secured notes (Ba1/BB).

The activity is expected to continue with offerings from Ineos Quattro Finance 2 plc, EG Global Finance plc, and InfraBuild Australia Pty Ltd. expected to clear over the next two sessions.

Meanwhile, it was another flat day in the secondary space with the cash bond market either side of unchanged as it continued to rest from the spectacular gains of late last week.

With the rate volatility of the past month settling, market players turned their attention to new deal activity and earnings.

Bombardier Inc.’s newly priced 8¾% senior notes due 2030 (B2/B) were weaker in active volume on Tuesday with the notes giving back gains made on the break and closing the session below par.

Venture Global LNG Inc.’s 9½% notes due 2029 and 9 7/8% notes due 2032 (B1/BB/BB) were active after the company priced an add-on the previous session, marking a fourth pass at the junk market in 2023.

Rand Parent, LLC’s 8½% first-lien senior secured notes due 2030 (Ba1/BB/BB+), backing the buyout of Atlas Air, were under pressure in substantial volume.

The notes underwent heavy selling after industry peer Air Transport Services Group, Inc. posted a large earnings miss.

Air Transport’s 4¾% senior notes due 2028 (Ba2/BB) suffered large losses during Tuesday’s session.

Active primary

Two single-tranche issuers raised a combined total of $1.55 billion in a pair of Tuesday deals.

Smyrna Ready Mix Concrete priced a $1.1 billion issue of eight-year senior secured notes at par to yield 8 7/8%, at the wide end of yield talk and early guidance, both of which had been set in the 8¾% area.

The deal played to $1.7 billion of demand, according to a trader.

And Outfront Media priced an upsized $450 million issue (from $400 million) of Outfront Media Capital LLC and Outfront Media Capital Corp. 7.25-year senior secured notes at par to yield 7 3/8%, at the tight end of talk.

The dollar-denominated primary market figures to be active on Wednesday, with a pair of prospective junk issuers poised to end roadshows and/or price deals.

Ineos Quattro is in the market with €800 million equivalent notes in dollars and euros, with the dollar notes whispered in the high 9% area (tranche sizes to be determined). The roadshow was scheduled to wrap up Tuesday.

EG Global Finance is shopping $1.6 billion equivalent in dollars and euros, with the dollar notes whispered in the 11½% area (again, tranche sizes to be determined). The roadshow is scheduled to run through Wednesday.

Also, InfraBuild Australia Pty is marketing a $350 million offering, initial talk 14¾% to 15%. Pricing is expected Thursday.

Bombardier lags

Bombardier’s newly priced 8¾% senior notes due 2030 gave back the nominal gains made on the break and slid below par in active trade on Tuesday.

The 8¾% notes were down ½ to ¾ point.

They were trading in the 99½ to par context heading into the market close, a source said.

There was $156 million in reported volume.

Bombardier priced an upsized $750 million, from $500 million, issue of the 8¾% notes at par in a Monday drive-by.

The yield printed in the middle of yield talk in the 8¾% area.

Bombardier’s 7½% senior notes due 2029 continued to move lower on the heels of the refinancing deal with the new offering sparking a repricing of the notes, a source said.

The 7½% notes traded down another ½ point after a ¾ point loss the previous session.

They were wrapped around 96¾ heading into the market close with the yield about 8¼%.

There was $15 million in reported volume.

Venture Global adds, again

Venture Global’s 9½% notes due 2029 and 9 7/8% notes due February 2032 were active after the company priced a $500 million add-on to each tranche the previous session.

The 9½% senior notes due 2029 were trading at a healthy premium to the add-on’s reoffer price.

They were changing hands in the 101½ to 102 context heading into the market close, a source said.

There was $28 million in reported volume.

The notes have traded in the 101½ to 102 context since late October.

However, they were lifted to their highest level since the initial issue priced in the rally late last week with the tranche closing last Friday in the 102½ to 103 context.

Venture Global’s 9 7/8% notes due 2032 were largely flat to the add-on’s reoffer price.

The 9 7/8% notes were trading in the 101 to 101¼ context heading into the market close, a source said.

There was $31 million in reported volume.

In their fourth pass at the junk market in 2023, Venture Global priced a $500 million add-on to the 9½% notes and a $500 million add-on to the 9 7/8% notes at 101 on Monday.

Venture Global initially priced a $2.5 billion tranche of the 9½% notes at par and a $1.5 billion tranche of the 9 7/8% notes at 99.214 to yield 10% on Oct. 19.

In May, the liquefied natural gas producer priced a $2 billion tranche of 8 1/8% senior secured notes due 2028 and a $2 billion tranche of 8 3/8% senior secured notes due 2031 at par.

Venture Global returned to the market later in May to price a $250 million tap of the 8 1/8% notes and a $250 million tap of the 8 3/8% notes at par.

Atlas Air under pressure

Atlas Air’s 8½% first-lien senior secured notes due 2030 were under pressure in heavy volume on Tuesday with Air Transport Services Group’s earnings dragging down the sector.

The 8½% notes fell 2 to 2½ points.

They were trading in the 90½ to 91 context heading into the market close, a source said.

The yield was about 10½%.

There was $38 million in reported volume.

The notes were pressured after Air Transport Group posted a large earnings miss, a source said.

Air Transport Group’s 4¾% senior notes due 2028 were also under pressure with the notes falling 2½ points.

The 4¾% notes closed the day at 86½ with the yield 8 5/8%.

There was $6 million in reported volume.

Big inflows

The dedicated high-yield bond funds had a whopping $2.088 billion of net daily cash inflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $1.44 billion of inflows on the day.

Actively managed high-yield funds had $648 million of inflows on Monday, the source said.

The combined funds are tracking massive net inflows of $5 billion on the week that is set to conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index shaved off 1 basis point to close Tuesday at 48.82 with the yield 7.83%.

The index inched up 1 bp on Monday.

The ICE BofAML US High Yield index was off 13.1 bps with the year-to-date return now 7.006%.

The index shed 3.2 bps on Monday.

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