Primary prices $2.79 billion; Thiess withdraws offering; Ardagh active; Ocwen gains; NRG rebounds

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 1 – The high-yield new-issue market roared like a lion into the month of March with five issuers pricing an aggregate $2.79 billion.

Monday’s business included deals from Norwegian Cruise Line Holdings Ltd., Superior Plus LP and Superior General Partner Inc. and CPI Card Group.

However, Australian mining firm Thiess Group Holdings Pty Ltd. withdrew its $1.3 billion offering of senior secured bullet notes (Ba1/BBB-/BBB-), sources said.

Meanwhile, the secondary space pounced into March with the cash bond market up ¼ to ½ point with investors pouring back into risk assets.

“It’s like last week never happened,” a market source said.

The sell-off in risk assets that was sparked by rising Treasury yields faded into the backdrop on Monday with several names that were under pressure last week seeing a strong rebound.

NRG Energy Inc.’s junk bonds were among Monday’s biggest winners after the same bonds dropped below par last Friday.

As market players awaited the deluge of new paper in the pipeline, recent deals continued to dominate the tape.

Ardagh Metal Packaging Finance USA LLC’s dollar-denominated tranches were active although the notes were trading in a tight range around their issue price.

Ocwen Financial Corp.’s (PHH Mortgage Corp.) 7 7/8% senior secured notes due 2026 (B2/B-) were trading well above their discounted issue price.

Monday’s primary

The high-yield new-issue market roared like a lion into the month of March.

Five issuers, four of them coming with drive-by deals, priced six tranches of dollar-denominated junk bonds for a combined $2.79 billion face amount of issuance on the day.

Three of the five issuers upsized their deals.

Executions tended to be razor sharp. Four of Monday's six tranches priced through talk. One priced at the tight end and one priced at the wide end.

Monday's business included a $1.1 billion two-part senior notes deal (Caa1/B-) from Norwegian Cruise Line.

Both tranches, a tap of the NCL Corp. 5 7/8% notes due March 2026 and a new issue of 6 1/8% notes due March 2028, priced through talk, playing to $3.25 billion of overall demand, according to a market source.

Elsewhere, Superior Plus and Superior General Partner priced an upsized $600 million issue (from $500 million) of 4½% eight-year senior notes (Ba3) at par, at the tight end of talk, in a deal heard to be five-times oversubscribed.

In a notable execution, CPI Card Group priced a $310 million issue of 8 5/8% five-year senior secured notes (B3/B-) at par, 25 basis points beneath the tight end of talk.

Meanwhile on Monday Australian mining firm Thiess Group Holdings withdrew its $1.3 billion offering of senior secured bullet notes (Ba1/BBB-/BBB-) from the market, according to several sources.

The deal underwent restructuring and covenant changes. And rate talk increased substantially during the time the company was in the market, sources say.

Ardagh active

Ardagh’s newly priced dollar-denominated tranches were active on Monday with the notes trading in a tight range around their issue price.

Ardagh’s 4% senior notes due 2029 (B3/B+/BB-) traded in a range of par to par ½ during Monday’s session.

The notes stood poised to close the day at par ¼, according to a market source.

There was $28.5 million of the bonds on the tape.

Ardagh’s 3¼% senior notes due 2028 (Ba2/BB/BB+) traded in a range of par to par 3/8, a source said.

There was more than $25 million in reported volume.

In one of the largest green deals to clear the high-yield market, Ardagh priced a four-tranche $2.75 billion equivalent offering on Friday.

The deal included a $600 million tranche of the 3 ¼% notes and a $1.05 billion tranche of the 4% notes, both of which priced at par.

The 3¼% notes priced in the middle of price talk and initial guidance in the 3¼% area; the 4% notes priced in the middle of price talk and initial guidance in the 4% area.

Ocwen at a premium

Ocwen’s 7 7/8% senior secured notes due 2026 were trading well above their discounted issue price on Monday.

The 7 7/8% notes traded in a range of 101¼ to 102 during Monday’s session and stood poised to close the day at 102, according to a market source.

There was about $14 million in reported volume during the session.

Ocwen priced a $400 million issue of the 7 7/8% notes at 99.486 to yield 8% last Friday.

Pricing came in the middle of yield talk in the 8% area.

NRG rebounds

NRG’s junk bonds saw a strong rebound on Monday after several issues dropped below par last Friday.

NRG’s 3 5/8% senior notes due 2031 gained more than 5 points and were changing hands at 103 7/8 heading into the close.

The notes were in focus with more than $45 million in reported volume.

NRG’s 3 3/8% senior notes due 2029 jumped 4 5/8 points to 103 1/8 with more than $11 million in reported volume.

NRG’s 5¼% notes jumped more than 5 points to 110½.

“It’s the mirror opposite of last Friday,” a source said.

Both the 3 3/8% due 2031 and the 3 5/8% notes due 2029 sank to a 98-handle last Friday with the energy sector leading losses in a market under pressure.

However, the notes bounced back following the energy company’s fourth-quarter earnings report on Monday.

NRG reported fourth-quarter EBITDA of $330 million versus analyst expectations for EBITDA of $324 million.

The company also reported upbeat guidance for 2021 and is expecting EBITDA of $2.4 billion to $2.6 billion, according to a market source.

$149 million Friday inflows

The dedicated high-yield bond funds saw $149 million of net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw a substantial $289 million of inflows on the day.

However actively managed high-yield funds were negative on Friday, sustaining $140 million of outflows on the day, the source said.

Indexes gain

Indexes started the week firmly in the green.

The KDP High Yield Daily index was up 11 points to 69.50 with the yield now 3.99%.

The index posted a cumulative loss of 49 points on the week last week.

The ICE BofAML US High Yield index rose 26.3 bps with the year-to-date return now 0.934%.

The index posted a cumulative loss of 66.6 bps on the week last week.

The CDX High Yield 30 index gained 82 bps to close Monday at 109.03.

The index posted a cumulative loss of 79 bps on the week.

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