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Morning Commentary: Junk secondary adds; Knife River outperforms; Cleveland-Cliffs lags
By Abigail W. Adams
Portland, Me., April 12 – The high-yield primary market was quiet on Wednesday after the flood of issuance the previous session.
While the calendar is empty, more deals may be on the horizon with the market tone continuing to improve after the latest Consumer Price Index report.
The secondary space saw a strong start to the day with the market adding ¼ to ½ point after the March CPI print, a source said.
New paper was in focus in the secondary space with three out of the four deals to price during Tuesday’s session trading at a premium to their issue price.
Knife River Holding Co.’s 7¼% senior notes due 2031 (Ba3/BB) outperformed with the notes continuing to add after a strong break.
The notes were changing hands at 101¼ bid, 101¾ offered early in the session.
The $425 million issue priced at par on Tuesday.
Macquarie AirFinance Holdings Ltd.’s 8 3/8% senior notes due 2028 (/BB+/BB) were also putting in a strong performance with the notes marked at par ¾ bid, 101¼ offered.
In a heavily oversubscribed offering, Macquarie AirFinance priced a $500 million issue of the 8 3/8% notes at par on Tuesday.
Pricing came tighter than talk for a yield of 8½% to 8¾%.
Churchill Downs Inc.’s 6¾% senior notes due 2031 (B1/B+) were holding onto a nominal premium in the aftermarket with the notes marked at par 1/8 bid, par 3/8 offered.
The $600 million issue priced at par in a Tuesday drive-by.
Cleveland-Cliffs Inc.’s 6¾% senior guaranteed notes due 2030 (Ba3/BB-/BB-) were the only laggards of the recent deals.
The notes broke below par early Wednesday.
“They traded poorly out of the gate,” a source said. “They’re being offered below par.”
The $750 million issue priced at par in a Tuesday drive-by.
The yield printed in the middle of the 6 5/8% to 6 7/8% of yield talk.
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