Two junk bond issuers bring $925 million; secondary sours; Worldpay notes decline

By Paul A. Harris and Cristal Cody

Portland, Ore., Sept. 26 – A pair of drive-by issuers, each bringing a single tranche of junk-rated, dollar-denominated notes, raised a total of $925 million on Tuesday.

In secondary trading, junk paper was widely lower in some of the most active issues by the close, including new issues, sources reported.

“The market sucks,” a source noted of the drop in the CDX High Yield 30 index and other indices. “The market was down 3/8 to ½ point.”

The S&P 500 index closed down 1.47%, with the iShares iBoxx High Yield Corporate Bond ETF dropping 32 cents, or 0.43%, to $73.58.

The CBOE Volatility Index jumped 12.07% to 18.94 in its highest close since May 25.

NCR Atleos Escrow Corp.’s 9½% senior secured notes due 2029 (B2/B+/BB-) gave back more than ½ point on $22 million of paper changing hands.

GTCR W-2 Merger Sub LLC’s 7½% senior secured notes due 2031 (Ba3/BB/BBB-) backing the buyout of Worldpay also lost nearly ½ point as one the more actively traded junk bonds.

Primary

Both Tuesday issuers upsized their deals in brisk executions which had both coming at the tight ends of talk.

Sitio Royalties Corp. priced an upsized $600 million issue (from $500 million) of five-year senior notes (B3/B/BB-) at par to yield 7 7/8%.

There was $1.6 billion of demand for the notes at price talk, a trader said, adding that reverse inquiry nearly amounted to the original $500 million deal size.

Timing was accelerated. When the offering was announced early Tuesday it was slated as Wednesday business.

And Transocean Aquila Ltd. priced an upsized $325 million issue (from $300 million) of five-year senior secured first-lien notes (B2/B) at par to yield 8%.

Shortly after the deal was announced to the market order books ballooned to $1 billion-plus, according to a bond trader who said that the entire issue was covered in reverse inquiry.

Meanwhile the active forward calendar grew with Tuesday announcements of brief roadshows, with deals from Acushnet Holdings Corp., AmeriTex Pipe & Products and Mineral Resources Ltd. all expected to price before the end of the week.

NCR notes dip

NCR Atleos Escrow’s 9½% senior secured notes due 2029 (B2/B+/BB-) softened over ½ point Tuesday to a print of 97.69 on $22 million of secondary trading, a source said.

The bonds have drifted lower over the past two sessions since the issuer priced the bonds on Friday.

On Monday, the issue went out at 98 3/8, down less than 1/8 point in heavier trading volume that totaled $52.8 million.

NCR Atleos sold an upsized and restructured $1.35 billion of the notes at 98¾ to yield 9.798%.

Worldpay declines

GTCR W-Merger Sub’s 7½% senior secured notes due 2031 (Ba3/BB/BBB-) backing the buyout of Worldpay lost nearly ½ point to head out at 100 3/8, a source said.

Trading was heavy on about $18.5 million of reported volume.

The notes traded Friday in the par ¾ to 101 context.

GTCR priced a $2.18 billion tranche of the notes at par on Wednesday in a leveraged buyout deal supporting GTCR’s acquisition of a 55% stake in Worldpay.

Fund flows

The dedicated high-yield bond funds sustained $474 million of net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $451 million of outflows on the day.

Actively managed high-yield funds sustained $23 million of outflows on Monday, the source said.

The combined funds are tracking $913 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 declined Tuesday to 49.49 and a 7.9% yield versus 49.69 and a 7.82% yield on Monday.

The index posted a cumulative loss of 43 basis points in the prior week.

The CDX High Yield 30 index dropped to 101.62 on Tuesday from 101.98 in the previous session.

The CDX index posted a cumulative loss of 82 bps last week.

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