AMC, Mednax, Boyne sell new junk; volatility returns; Bausch gains; cruise lines improve

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 2 – In the first session in nearly a week to see multiple deals price, three issuers priced a combined $1.5 billion of junk on Wednesday.

AMC Entertainment Holdings, Inc., Mednax, Inc. and Boyne USA, Inc. priced accelerated, oversubscribed and upsized offers, respectively.

Meanwhile, volatility returned to the secondary space with the market opening the day strong but fading as the session progressed.

While the market opened with a ¼ point gain, it closed the day down about 1/8 point, sources said.

However, despite the weakness at the close, buyers were returning with several Offers-Wanted-In-Competition lists circulating the market, a source said.

Bausch Health Cos. Inc.’s 6 1/8% senior secured notes due 2027 (Ba3/BB/BB) continued their upward momentum on Wednesday with the notes breaking above 101 in intraday activity.

AMC Entertainment Holdings, Inc.’s junk bonds were active following the company’s latest offering.

The junk bonds of cruise line operators saw a fresh round of trading with Carnival Corp.’s junk bonds and Royal Caribbean Cruises Ltd.’s 5½% senior notes due 2028 on the rise.

Multi-issuer Wednesday

AMC Entertainment Holdings, Inc. showed up Wednesday morning with a $500 million secured issue that was slated to remain in the market until Thursday.

However, when the dust settled Wednesday afternoon the Kansas-based movie exhibitor had upsized the issue to $950 million, and priced the seven-year first-lien notes (Caa1/B-) at par to yield 7½%, at the tight end of talk.

Demand for the deal was $1.2 billion to $1.3 billion and building, around lunchtime Wednesday, a trader said.

The new AMC Entertainment 7½% notes due February 2029 were going out at 99¾ bid, par ¼ offered, the source added.

Mednax, Inc. priced a $400 million issue of eight-year senior notes (Ba3/B+) at par to yield 5 3/8%, in the middle of talk.

The deal was playing to around $1.3 billion of orders at 1 p.m. ET Wednesday.

And Boyne USA, Inc. priced an upsized $150 million add-on to its 4¾% senior notes due May 15, 2029 (B1/B) at par to yield 4.748% in a drive-by.

The issue size increased from $100 million.

The issue price came at the rich end of price talk.

Big Thursday expected

A big Thursday session is on tap.

Two of the week's megadeals are slated to price.

Both underwent revisions on Wednesday.

Condor Merger Sub, Inc. withdrew a $1 billion offering of senior secured notes from the bond deal backing the buyout of McAfee Corp., and shifted those proceeds to the concurrent bank loans.

The remaining bond deal, downsized from $3.32 billion, features a $2.32 billion tranche of eight-year senior unsecured notes (Caa2/CCC+) with initial guidance in the low-7% area.

Condor/McAfee books were at $2 billion on Wednesday afternoon, a trader said.

And Prince International Corp. downsized its offering of high-yield notes to $756 million from $1.256 billion with the elimination of a $500 million tranche of secured notes and a shift of those proceeds to the concurrent term loan.

The remaining $756 million tranche of eight-year senior unsecured notes (Caa2/CCC+) is talked to yield 8¾% to 9%, well wide of initial guidance in the low-8% area.

Bausch gains

Bausch Health’s 6 1/8% senior secured notes due 2027 continued their upward momentum as the secondary space continued to improve.

The notes traded as high as 101 3/8 in intraday activity. However, the majority of trades were in the par ¾ to 101¼ context, a source said.

There was more than $36 million in reported volume.

The 6 1/8% notes saw a rocky start in the aftermarket after the company priced a $1 billion issue of the 6 1/8% notes at par on Jan. 27.

The notes fell flat on the break with the market heavy but have steadily improved as the market rallied.

AMC active

AMC Entertainment’s junk bonds were active following news of the company’s latest offering.

The company’s 10% senior secured second-lien notes due 2026 (Ca/CCC-) were little changed after jumping 2 points the previous session.

They remained on a 96-handle and stood poised to close the day at 96 3/8.

There was $46 million in reported volume.

AMC’s 10½% first-lien senior notes due 2025 rose 5/8 point and stood poised to close the day at 106 7/8.

There was $17 million in reported volume.

The notes were on the rise after the company announced a new offering of seven-year first-lien notes (Caa1/B-) with proceeds to be used to refinance the 10½% notes.

Cruise lines gain

Cruise line operators were gaining strength alongside the broader market after taking a hit in January as investors de-risked themselves.

Royal Caribbean’s 5½% senior notes due 2026 (B2/B) were up about ½ point with the notes returning to a 99-handle, according to a market source.

They were changing hands in the 99 1/8 to 99 3/8 context during Wednesday’s session.

There was $18 million in reported volume, according to a market source.

The notes shaved off about 5 points over the past two and a half weeks as selling pressure took hold of the market.

They closed Monday’s session wrapped around 98 5/8.

Carnival’s 7 5/8% senior notes due 2026 (B2/B) and 6% senior notes due 2029 (B2/B) were up about ½ point.

The 7 5/8% notes stood poised to close the day at 104 with $25 million in reported volume. The notes carried a yield of about 6 1/8%.

The 6% senior notes due 2029 traded up to 98 with the yield now 6 3/8%. There was $22 million in reported volume.

The 6% notes were wrapped around par as recently as Jan. 20. However, they plummeted to a 96-handle amid the sell-off in the secondary.

$363 million Tuesday outflows

The dedicated high-yield bond funds sustained $363 million of net daily outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed funds saw $275 million of outflows on the day.

High-yield ETFs sustained $88 million of outflows on Tuesday, the source said.

Indexes

The KDP High Yield Daily index rose 20 points to close Wednesday at 63.98 with the yield now 4.68%.

The index was up 19 points on Tuesday after shaving off 4 points on Monday.

The CDX High Yield 30 index was down 19 basis points on Wednesday.

The index rose 37 bps on Tuesday and 20 bps on Monday.

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