Junk: Enerflex prices; Venator plunges; Twitter down; cruise names CDS spreads widen

By Paul A. Harris and Cristal Cody

Tupelo, Miss., Oct. 6 – In the junk bond primary market on Thursday, Enerflex Ltd. priced a $625 million issue of 9% five-year senior secured notes (B2/BB-/BB-) at 90.676 to yield 11½%.

Venator Materials plc’s bonds traded off 20 points Thursday on the back of pre-released third-quarter numbers that took everyone by surprise, a trader said.

The company’s 5¾% senior notes due 2025 (Caa1/CCC+), issued by Venator Materials LLC, were offered at 49, and it feels like they will continue to slide lower, the trader said.

Venator announced Thursday it expects third-quarter product sales volume in the European and Asian regions to be about 25% weaker than in the second quarter.

The chemical manufacturer will report-third quarter results on Nov. 14.

Twitter Inc.’s 5% notes due 2030 (Ba2/BB+) were down 1 point-plus Thursday on news reports that Apollo and Sixth Street were no longer in talks to provide financing for the buyout, a source said.

The bonds went out the door at 98½.

There were a couple of trades Wednesday at par, with the issue being seen late in the day down more than 1 point at 99 bid on $17 million-plus of volume, sources said.

Twitter’s bonds had rallied Tuesday on reports of the revived $44 billion takeover offer for the company from Elon Musk.

The notes traded Tuesday as high as 101¼.

In other junk issues, Anywhere Real Estate Group LLC’s 5¾% senior notes due 2029 (B2/B+) held onto gains in the secondary market Thursday after staying in the limelight over most of the week, according to market sources.

The notes were trading about ¼ point higher on the day and nearly 4 points better so far this week.

Market tone remained weak during the session ahead of September employment data due Friday.

The S&P 500 index closed 1.02% lower.

The iShares iBoxx High Yield Corporate Bond ETF fell 22 cents, or 0.3%, to $73.01.

The cruise line space also continued to see heavy pressure this week.

Carnival Corp.’s paper softened Thursday, while its credit default swaps spreads widened more than 550 basis points for the week.

Carnival’s 6% notes due 2029 (B3/B) fell about 2¼ points.

Royal Caribbean Group’s new 9¼% senior notes due 2029 (B3/B+) also weakened along with its CDS spreads.

New bonds

In the domestic junk bond primary market, Enerflex’s new notes’ yield printed 25 bps inside of the 11¾% to 12% yield talk.

The coupon came on top of coupon talk.

The only dollar-denominated deal to price Thursday, Enerflex ended up three-times to four-times oversubscribed, according to a sellside source who added that the notes broke sharply higher, heading out the door at 93¾, up 2½ points.

The Enerflex bond offer played to a quality book containing orders from more than 100 accounts, the source added.

In the wake of Enerflex, Chile-based Latam Airlines Group SA remains in the market with its $1.5 billion two-part offering of senior secured notes related to its emergence from Chapter 11 bankruptcy, last summer.

There was no news on the deal during Thursday's session, according to a sellside source.

The order book, across both tranches, is heard to be at approximately deal size, the source added.

Recent pricing discussions have the five-year tranche coming to yield 15%, and the seven-year at 15¼%, a portfolio manager said.

The deal, from an emerging markets corporate issuer, is being tracked on both emerging markets and high-yield desks, sources say.

U.S. high-yield accounts that were active in the Latam Airlines debtor-in-possession (DIP) loan comprise a captive audience for the deal, according to market sources.

Anywhere Real Estate stronger

Anywhere Real Estate’s 5¾% senior notes due 2029 (B2/B+) were trading Thursday about ¼ point higher on the day in the 76 bid range in thin volume, a source said.

The notes have rallied over the week and were trading about 3 7/8 points higher month to date.

Carnival paper, CDS spreads off

Carnival’s 6% notes due 2029 (B3/B) gave back about 2¼ points Thursday to head out at 66¼ bid, a market source said.

The bonds had dropped more than ½ point in heavy trading Wednesday.

The cruise operator’s CDS spreads also widened more than 550 bps for the past week ended Wednesday to 1,654 bps, a Moody’s Investors Service report showed.

Royal Caribbean down

Royal Caribbean’s 9¼% senior notes due January 2029 (B3/B+) went out softer at 101 bid after bouncing around the 101½ 101¾ range over the day, a source said.

The notes were quoted in thin trading Wednesday at 101 1/8, 101 5/8.

Royal Caribbean sold the new issue in a $1 billion offering at par on Sept. 22.

The company’s CDS spreads also eased 137 bps to 1,057 bps for the past week ended Wednesday, according to the Moody’s report.

Funds: $1.87 billion inflows

The dedicated high-yield bond funds saw $1.872 billion of net inflows in the week to Wednesday's close, according to information posted on the Internet by Refinitiv Lipper.

It follows the previous week's $3 billion of net outflows.

It also follows a six-week period in which the combined funds sustained $15.8 billion of net outflows, according to a market source.

The inflow that Lipper reported Thursday benefited from $241 million of net daily inflows on Wednesday, the final session of the reporting period, the source said.

Actively managed high-yield funds saw $125 million of inflows on the day.

High-yield ETFs saw $116 million of inflows on Wednesday, according to the market source.

Indexes

The KDP High Yield Daily index rose to 52.01 and a yield of 7.69% on Thursday.

The index ended Wednesday at 51.9 and a yield of 7.74%, compared to 52.52 and a yield of 7.65% on Tuesday and 51.84 and a yield of 7.95% on Monday.

The index posted a cumulative loss of 106 points in the previous week.

The CDX High Yield 30 index declined 31 bps Thursday to 97.48.

The issue finished Wednesday at 97.79, Tuesday at 97.73 and up 54 bps Monday to 96.35.

The index posted a cumulative loss of 197 bps over the prior week.

© 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.