Stena, Crash Champions price; junk calendar grows; Post holds gains; NOVA struggles

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 6 – Crash Champions LLC and Stena International SA each priced one-tranche junk bond offerings in the primary market on Tuesday.

Meanwhile, it was a flat day in the secondary space on Tuesday as markets continued to digest Federal Reserve chair Jerome Powell’s comments about rate cuts.

While the cash bond market was largely unchanged, the tone improved as Treasuries pared losses from the previous session.

The market remained new issue focused with new and recent deals still driving volume in the space.

However, the trend of new paper putting in strong aftermarket performances continued to show signs of waning.

While unchanged on the day, Post Holdings, Inc.’s 6¼% senior secured notes due 2032 (Ba1/BB) held on to the strong gains made on the break.

However, the NOVA Chemicals Corp. 9% senior notes due 2030 (Ba3/B+) struggled with the notes wrapped around their issue price in active trade.

Outside of new and recent deals, Charter Communications, Inc. subsidiary CCO Holdings, LLC’s senior notes (B1/BB-) were back in the spotlight with the notes paring their losses from a post-earnings sell-off the past two sessions.

Primary

In the dollar-denominated junk new issue market a pair of single-tranche issuers price a combined total of $1 billion on Tuesday.

Crash Champions LLC priced a downsized $600 million issue of five-year senior secured notes (B3/B-) at par to yield 8¾%.

The issue size decreased from $650 million, with the proceeds shifted to a concurrent bank loan.

The yield printed 12.5 basis points beneath the tight end of yield talk in the 9% area. Early guidance was in the low-to-mid 9% area.

The deal was well oversubscribed, an indication of what motivated the issuer to send price talk through the wringer, a portfolio manager said, adding that the shift of proceeds to the bank loan was likely a reflection of an intense demand for the loan paper from the CLOs.

The bonds broke to par ½ bid, 101½ offered, late Tuesday, a trader said.

Elsewhere Stena International SA priced a $400 million issue of seven-year senior secured notes (Ba3/BB+) at par to yield 7 5/8%, at the tight end of talk.

The deal was heard to be playing to $600 million of demand at the final talk.

Meanwhile Artera Services, LLC announced a Tuesday close of books, setting yield talk on its $740 million offering of seven-year senior secured first-priority notes (B3/B-) in the 8 5/8% area, with pricing set for Wednesday.

Official talk comes well inside of early guidance in the 9% area.

And the active forward calendar grew on Tuesday.

Amer Sports Co. began a roadshow for a $600 million offering of senior secured notes due 2031 (B1/BB), in the market with initial guidance in the low-to-mid 7% area, with pricing set for Thursday.

Post holds gains

Turning to the secondary market, Post Holdings’ 6¼% senior secured notes due 2032 were unchanged on the day with the notes holding on to the strong gains made on the break.

The 6¼% notes traded in a tight range of par 7/8 to 101 1/8 in heavy volume on Tuesday, a source said.

There was $51 million on the tape.

In a heavily oversubscribed offering, Post Holdings priced an upsized $1 billion, from $875 million, issue of the 6¼% notes at par in a Monday drive-by.

The yield printed at the tight end of the 6¼% to 6½% yield talk.

The deal was heard to have played to $4 billion of demand.

NOVA struggles

NOVA Chemicals’ 9% senior notes due 2030 were struggling in the aftermarket with the notes wrapped around their issue price in active trade.

The 9% notes traded in the 99¾ to par ¼ context throughout the session, a level the notes have been stuck at since breaking for trade, a source said.

They closed the day wrapped around par.

There was $75 million in reported volume.

While the notes looked optically cheap, the chemicals sector is one investors have been wary of, a source said.

NOVA Chemicals priced a $650 million issue of the 9% notes at par in a Monday drive-by.

The yield printed at the wide end of the 8¾% to 9% yield talk.

Charter pares losses

Charter subsidiary CCO Holdings’ senior notes pared losses in active trade on Tuesday after falling 2 to 4 points in a post-earnings sell-off.

The 7 3/8% senior notes due 2031 added ½ point to break above a 98-handle, which it fell to the previous session.

The notes were trading in the 98 7/8 to 99 1/8 context heading into the market close, a source said.

There was $28 million in reported volume.

The notes traded down to 98½ the previous session, a source said.

The notes traded on a 101-handle prior to the release of earnings last Friday.

CCO Holdings’ 4¼% notes due 2034 added about ¼ point to trade in the 77 to 77¼ context, a source said.

The notes traded as low as 76 3/8 the previous session.

They were wrapped around 80 heading into last Friday’s session.

The 4½% notes due 2032 were also up about ¼ point to close the day wrapped around 81½, a source said.

There was $17 million in reported volume.

The notes were on an 84-handle heading into earnings.

CCO Holdings’ longer-duration notes were all trading with a yield of about 7½%, a source said.

Charter and its subsidiary CCO Holdings have both undergone heavy selling pressure for the past two sessions after Charter released disappointing earnings with a surprise loss of 61,000 internet customers.

The subscriber loss took investors by surprise with analysts projecting a gain.

Fund flows

High-yield ETFs sustained a substantial $512 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 were positive on the day with $99 million of inflows, the source said.

The combined funds are tracking $504 million of net outflows on the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index added 21 basis points to close Tuesday at 50.56 with the yield now 6.83%.

The index was down 24 bps on Monday.

The ICE BofAML US High Yield index added 19.2 bps with the year-to-date return now negative 0.13%.

The index fell 33.6 bps on Monday.

The CDX High Yield 30 index was off 5 bps to close Tuesday at 105.67.

The index was down 22 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.