Junk primary busier; Vistra gains in aftermarket; DirecTV higher; WeWork notes soften

By Paul A. Harris and Cristal Cody

Tupelo, Miss., Dec. 7 – The primary junk bond market was looking alive on Tuesday with an accelerated pricing, a drive-by preferred stock deal and the beginning of new business.

In the high-yield secondary market and fresh off the presses, Vistra Corp.’s upsized $1 billion of 7% fixed-rate reset green perpetual preferred stock (Ba3/B/BB-) that priced at par during the Tuesday session climbed in aftermarket trading.

“It’s up at par and a half right now,” a source said.

Meanwhile, the 5 7/8% senior secured notes due Aug. 15, 2027 (Ba3/BB/BBB-) that DirecTV Holdings LLC and DirecTV Financing Co. Inc. reopened on Monday saw heavy secondary action Tuesday with the notes up about ½ point to ¾ point.

The issue was “fairly active,” a market source said.

WeWork Cos. LLC’s 7 7/8% senior notes due 2025 (CCC+/CC) were under pressure over the session as the New York City-based flexible office share company commenced a secondary sale of its 5% senior notes due 2025.

Market tone remained stronger Tuesday with the Nasdaq over 3% higher by the close, measured volatility down nearly 20% and oil prices adding over $5 from the first two sessions of the week.

The iShares iBoxx High Yield Corporate Bond ETF rose 47 cents to close at $86.84 after picking up 36 cents Monday.

Busier Tuesday primary

The pace of the primary market quickened on Tuesday.

Auctioneering firm Ritchie Bros. accelerated timing as it priced two upsized tranches of senior notes (Ba3/BB) in a cross-border trade that was a blowout, sources said.

Ritchie Bros. Holdings Inc. priced an upsized $600 million tranche (from $500 million) of 4¾% 10-year notes at par, while Ritchie Bros. Holdings Ltd. priced an upsized C$425 million tranche (from C$350 million) of 4.95% eight-year notes at par.

The deal had been expected to remain in the market until Wednesday.

In a drive-by preferred deal that had a high-yield following Vistra Corp. priced an upsized $1 billion issue (from $750 million) of 7% series B fixed-rate reset cumulative redeemable green perpetual preferred stock (B/BB-) at par, at the tight end of talk.

II-VI Inc. launched its $990 million offering of eight-year senior notes (B2//BB) at 5%.

The deal, which is heard to be five-times oversubscribed, launched inside of talk in the 5¼% area, and 50 basis points beneath the midpoint of initial guidance in the 5½% area.

Pricing is expected on Wednesday.

Howard Midstream Energy Partners, LLC started a roadshow for a $400 million offering of senior notes due January 2027 (B3/B).

The deal is guided to yield in the 7% area, and set to price later this week.

And dealers commenced a secondary sale of $550 million of WeWork Cos. LLC/WW Co-Obligor 5% senior notes due July 10, 2025 (existing ratings: CCC+/CCC-) on behalf of SoftBank.

Initial price talk has the notes pricing at 85.63 on the dollar, to yield 9 7/8%.

No proceeds from the notes sale will go to WeWork (see related stories in this issue).

The deal is expected to price on Thursday.

DirecTV higher

In the secondary market, DirecTV’s 5 7/8% senior secured notes due Aug. 15, 2027 (Ba3/BB/BBB-) were quoted trading higher Tuesday at 102½ bid, a source said.

The Dallas-based satellite broadcasting company priced a $1.4 billion add-on to the 5 7/8% notes in a Monday drive-by that was at least three-times oversubscribed at 101.75 to yield 5.444%.

The deal was upsized from $1 billion.

The price came at the rich end of talk in the 101.5 area and rich to initial guidance in the 101 area.

WeWork under pressure

WeWork’s 7 7/8% senior notes due 2025 (CCC+/CC) declined 1 7/8 points to 94½ bid by the end of the session, a source said.

The bonds started the year in the 69 bid range.

$1.23 billion Monday inflows

High-yield ETFs saw $1.23 billion of daily cash inflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds were negative on the day, sustaining $70 million of outflows on Monday.

The combined funds are tracking $160 million of net outflows for the week to Wednesday's close, the market source said.

Indexes

The KDP High Yield Daily index rose to 67.82 to yield 3.94% after closing Monday up 3 basis points at 67.31 with a yield of 4.19%.

The index posted a cumulative gain of 30 bps on the week last week.

The CDX High Yield 30 index climbed to 108.69 after rising 55 bps on Monday to 108.08.

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