Four junk issuers sell $3 billion; MidCap breaks 103, Primo Water on a par-handle

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 22 – Amid a steady news flow in the high-yield primary market on Wednesday four issuers raised a combined $3 billion, each one pricing a single dollar-denominated tranche of junk bonds.

Meanwhile, it was a dull day in the secondary space with little activity outside of new issues, a source said.

While the secondary space opened the day unchanged, it softened as risk assets sold off following President Biden’s announced plan to nearly double the capital gains tax.

The deals to price during Wednesday’s session had mixed performances in the secondary space.

Primo Water Holdings Inc.’s 4 3/8% senior notes due 2029 (B1/B) had a lackluster reception in the secondary space.

While they were trading with a slight premium to their issue price, they remained on a par handle, a source said.

MidCap Financial, LLC’s 6½% senior notes due 2028 (Ba3/B+/BB) continued to gain after a strong break with the notes breaking past 103 in active trading.

Meanwhile, high-yield mutual and exchange-traded funds continued to experience outflows with $1.33 billion leaving the space through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Jazz, and all that...

Jazz Pharmaceuticals plc came with the session's biggest deal, a downsized $1.5 billion issue (from $2.7 billion) of 4 3/8% eight-year senior secured notes (Ba2/BB-/BB+) that priced at par, 12.5 basis points inside of talk.

The downsizing had nothing to do with demand, which was heard to be north of $7 billion, according to a bond trader who had the new Jazz Pharmaceuticals 4 3/8% notes due 2029 at 102¼ bid, 102¾ offered.

What figures to be a big Friday session is set to get underway with five issuers teed up to clear the market ahead of the coming weekend.

Dealers began setting the stage for some of those trades on Thursday (see related stories in this issue).

Some of Friday's offerings are heard to be going well, while others appear to be works in progress, sources say.

One of them is coming from Denver-based wheel and tire distributor Wheel Pros Inc.

Pending official talk, the $365 million offering of eight-year senior notes (Caa2/CCC) has initial guidance of 6¾% to 7%, according to a bond trader.

Primo Water floats

Primo Water’s 4 3/8% senior notes due 2029 saw a lackluster reception in the secondary space.

While the notes were trading with a slight premium to their issue price, they remained on a par handle.

The notes were marked at par 1/8 bid, par ½ offered heading into the market close, a source said.

Primo Water priced a $750 million issue of the 4 3/8% notes at par on Wednesday.

The yield printed on top of yield talk.

MidCap breaks 103

MidCap Financial’s 6½% senior notes due 2028 continued their upward momentum on Thursday with the notes breaking through 103.

The 6½% notes were marked at 102 7/8 bid, 103 3/8 offered heading into the market close.

The notes hit a 101-handle shortly after pricing on Wednesday and continued to tick higher, closing out the previous session at 102½ bid.

However, there were few prints on the tape at the level with the offer price too high.

Sources questioned whether 103 would be the tipping point that would drive up the level of the notes, which it did during Thursday’s session.

MidCap Financial priced an upsized $875 million, from $825 million, issue of the 6½% notes on Wednesday.

The yield printed at the tight end of the 6½% to 6¾% yield talk.

The deal was heard to have played to $2.4 billion of orders, including $600 million of reverse inquiry.

Indexes mixed

Indexes were mixed on Thursday.

The KDP High Yield Daily index added 5 points to close the day at 69.52 with the yield 3.9%.

The index was down 8 points on Wednesday and 10 points on Tuesday after gaining 2 points on Monday.

The ICE BofAML US High Yield index gained 8 bps with the year-to-date return now 1.72%.

The index was up 0.6 bps on Wednesday after dropping 17.4 bps on Tuesday and 5.6 bps on Monday.

The CDX High Yield 30 index shaved off 8 bps to close Thursday at 109.42.

The index gained 10 bps on Wednesday after dropping 29 bps on Tuesday and 25 bps on Monday.

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