High-yield primary in high gear; EQM, Darling at a premium; secondary rally fades

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 1 – The domestic high-yield primary market launched June with its highest volume day in more than one month.

Four drive-by issuers priced a cumulative $4.3 billion in junk rated paper. Kinetik Holdings LP priced $1 billion eight-year notes (Ba1/BB+/BB+) at a discount; Tenet Healthcare Corp. priced an upsized $2 billion issue of eight-year senior secured notes (B1/BB-/BB-); Ardagh Metal Packaging priced $600 million five-year senior secured green notes (Ba2/BB/BB); and Builders FirstSource, Inc. priced an upsized $700 million issue of 10-year senior notes (Ba2/BB-).

With the pipeline heating up, new deals were once again in focus in the secondary space with the issues to price during Tuesday’s session putting in strong aftermarket performances.

Money was again being put to work in new issues, sources said.

EQM Midstream Partners, LP’s recently priced tranches (Ba3/BB-/BB) were trading with strong premiums to their issue prices with the longer-duration notes outpacing their shorter-duration counterparts.

Darling Ingredients, Inc.’s 6% senior notes due 2030 (Ba3/BB+/BB+) were also trading with a strong premium in secondary action although they closed the day well off their highs.

While new issues were performing well, the rally in the secondary space faded as the 10-year Treasury yield resumed its climb to close the day at 2.914%.

The cash bond market was down ¼ point on Wednesday, a source said.

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