Morning Commentary: Alliant Holdings brings tap; oversubscribed DirecTV offering on deck

By Paul A. Harris

Portland, Ore., Jan. 12 – The junk new issue market, which has cranked out a respectable $5 billion of week-to-date issuance, is set to continue cranking on Friday.

Alliant Holdings Intermediate, LLC and Alliant Holdings Co-Issuer, Inc. announced a $600 million add-on to their 7% senior secured notes due Jan. 15, 2031 (B2/B), which is set to price in Friday drive-by.

Initial talk is in the 102 area.

DirecTV Financing, LLC is also on deck with a $750 million offering of six-year senior secured notes (Ba3/BB/BBB-) talked to yield in the 9% area and set to price shortly.

Although the deal is three-times to four-times oversubscribed, a trader does not anticipate an upsize.

And despite the strong demand, pricing should come in line with talk, although there has been some speculation that it could tighten to 8 7/8% or even 8¾%, the trader said.

Among deals that priced earlier in the week, the Chobani, LLC/Chobani Finance Corp., Inc. 7 5/8% senior notes due July 1, 2029 (Caa1/CCC+) changed hands Friday morning at 101 3/8, the trader said.

The $500 million issue priced at par on Thursday.

Although the index suggests a modicum of risk aversion in the new year (triple-Cs are negative 0.74% year to date, whereas double-Bs have returned negative 0.2% since the start of the year) investors don’t really view the New York-based food company as a typical triple-hooks credit, the trader asserted.

“They like the company, and they like that it has been deleveraging,” the trader remarked.

Meantime both tranches of the new Global Auto Holdings Ltd. senior notes (B2/B+) were trading well below issue prices on Friday morning.

The 8 3/8% notes due January 2029 were 99½ bid, 99¾ offered. The $525 million tranche priced at par on Thursday.

The Global Auto Holdings 8¾% notes due January 2032 were off more at 99 bid, 99¼ offered on Friday morning after pricing at par in a $525 million tranche on Thursday.

The privately held debut issuer’s sizable deal ($1.05 billion across both tranches) crawled across the finish line, sources say.

Fund flows

The dedicated high-yield bond funds saw $171 million of net daily cash inflows on Thursday, according to a market source.

High-yield ETFs saw $126 million of inflows on the day.

Actively managed high-yield funds saw $45 million of inflows on Thursday, the source said.

News of Thursday’s daily flows follows a Thursday afternoon report that the combined funds saw $523 million of net inflows in the week to Wednesday’s close, according to the market source, who added that those were the ninth positive weekly flows in the past 10 weeks, an interval during which the funds saw $15.5 billion of net inflows.

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