Bausch + Lomb, Freedom Mortgage price; Greenfire outperforms; funds gain $81 million

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 14 – The Thursday primary market session saw two issuers price a $2.7 billion face amount of junk in a combined three tranches.

With the Friday session remaining to play out, the Sept. 11 week – now totaling $9.5 billion – becomes the biggest thus far in 2023, eclipsing the $8.5 billion that priced during the week of Feb. 6.

In Thursday’s action, Bausch + Lomb Corp. priced a $1.4 billion issue of Bausch + Lomb Escrow Corp. five-year senior secured notes (B1/B-/BB) at par to yield 8 3/8%, at the tight end of talk.

The deal ended up playing to $3.5 billion of demand across 115 accounts, according to a sellside source.

Elsewhere, in a massively upsized and rejiggered deal, Freedom Mortgage Corp. priced $1.3 billion of senior notes (B2/B/B+) in two tranches.

It included an upsized $800 million tranche of 12% five-year notes that priced at 98 to yield 12.549%. The tranche upsized from $600 million, which was the overall size of the company’s planned issuance when the deal was announced earlier in the week. The coupon printed at the tight end of 12% to 12¼% coupon talk. The issue price came on top of price talk. The yield came toward the tight end of the 12½% to 12.8% yield talk.

In an added tranche Freedom Mortgage also priced $500 million of 12¼% seven-year notes at 98 to yield 12.689%, with the coupon, price and yield coming virtually on top of talk, the sellside source said.

The five-year notes were approximately 2.5-times oversubscribed, while the added seven-year notes were approximately two-times oversubscribed, the sellsider said.

Friday’s session could add to the total, sources said.

International Petroleum Corp. has been shopping a $200 million add-on of 7¼% senior notes due 2027, with guidance of 94.5 to 95.5.

That deal could price Friday, according to the sellside source.

Firm day in secondary

Meanwhile, it was a firm day in the secondary space with the cash bond market adding 1/8 to ¼ point.

While markets were undecided following the Wednesday release of the Consumer Price Index report, risk appetite returned after the European Central Bank signaled it was done hiking rates after its 25 bps increase on Thursday, a source said.

With the market up across the board, the onslaught of new paper in the secondary space was putting in solid aftermarket performances.

The majority of deals to price in the new issue frenzy over the past week have hovered slightly above issue price.

However, the market has been wide open for a wide range of credits, and the deals to price have held at or above issue price – both good signs for the market, a source said.

“There’s not a lot of juice in these deals, but the fact that they’re holding water is good,” the source said.

Greenfire Resources Ltd.’s 12% senior secured notes due 2028 (B3/B+) were the outperformers of recent deals with the notes trading 1½ points above their discounted issue price.

While Banijay Entertainment SAS’ 8 1/8% senior secured notes due 2029 (B1/B+/BB-) came down from the heights reached on the break, the notes held a strong premium during Thursday’s session.

Sunoco LP’s 7% senior notes due 2028 (B1/BB-) and Citgo Petroleum Corp.’s 8 3/8% senior secured notes due 2029 (B3/B+) also maintained nominal premiums in heavy volume with Citgo improving on Thursday.

Meanwhile, high-yield mutual funds and exchange-traded funds saw another week of modest inflows with $81 million entering the space in the week through Wednesday’s close, according to the Refinitiv Lipper Fund Flow report.

Greenfire outperforms

Greenfire’s 12% senior secured notes due 2028 were the outperformers of recent deals with the hefty yield and limited supply lifting them in the aftermarket.

The 12% notes climbed 1½ points above their discounted issue price to close the day wrapped around 99½, a source said.

The notes priced cheaply with the deal coming at a discount for a hefty yield.

And “guys only played them if they really wanted to,” a source said. “There was limited supply.”

The successful offering from an off-the-run issuer was a good sign for the market, which was signaling it was wide open.

Greenfire priced a $300 million issue of the 12% senior notes at 98 to yield 12.545% on Wednesday.

The coupon and offer price came on top of talk.

Banijay at a premium

While Banijay’s 8 1/8% senior secured notes due 2029 were coming in from the heights reached on the break, the notes maintained a healthy premium during Thursday’s session.

The 8 1/8% notes were off ¼ point to trade in the par ½ to par 5/8 context heading into the market close.

There was $18 million in reported volume.

The notes closed the previous session in the par ¾ to 101 context.

Banijay priced a $400 million tranche of the 8 1/8% notes at par on Wednesday as part of a dual-currency offering.

The dollar-denominated notes priced at the tight end of yield talk in the 8¼% area.

The offering also included a €540 million tranche of notes that priced at par to yield 7%.

Sunoco up modestly

Sunoco’s 7% senior notes due 2028 held on to a nominal premium in heavy volume on Thursday.

The notes were trading in the par 1/8 to par 3/8 context heading into the market close.

There was $34 million in reported volume.

While the notes were only up modestly with the tight pricing leaving little room for movement, they were above water, which was a good sign for the market, sources said.

Sunoco priced a $500 million issue of the 7% notes at par in a Wednesday drive-by.

The yield came at the wide end of the 6 7/8% to 7% yield talk.

Citgo improves

Citgo’s 8 3/8% senior secured notes due 2029 improved in heavy volume on Thursday after a relatively flat break the previous session.

The 8 3/8% notes rose about ½ point to close the day in the par ½ to par ¾ context, a source said.

There was $92 million in reported volume.

Citgo priced a $1.1 billion issue of the 8 3/8% notes at par on Wednesday.

The yield printed in the middle of yield talk in the 8 3/8% area.

Indexes

The KDP High Yield Daily index added 6 bps to close Thursday at 50.33 with the yield 7.54%. The index inched up 2 bps Wednesday, shaved off 5 bps on Tuesday and added 2 bps on Monday.

The ICE BofAML US High Yield index gained 17.7 bps with the year-to-date return now 7.243%.

The index added 9.6 bps on Wednesday, was off 4.6 bps on Tuesday and gained 13.1 bps on Monday.

The CDX High Yield 30 index added 18 points to close Thursday at 103.

The index rose 15 bps on Wednesday, was down 16 bps on Tuesday and was up 20 bps on Monday.

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