Tenneco pre-markets LBO deal; junk secondary closes week with gains; CCCs underperform

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 8 – It was another quiet session for the domestic high-yield primary market with the active forward calendar empty heading into the coming week.

However, market players await a large leveraged buyout deal with Pegasus Merger Co., an affiliate of Apollo Global Management, Inc., pre-marketing $2 billion of secured notes and $1 billion of unsecured notes backing the buyout of Tenneco Inc.

While the market ended the first week of the second half of 2022 with gains, there remains a great degree of uncertainty in the market, a source said.

The ability of lower-quality credits to refinance their debt is a growing concern in the market and has taken its toll on CCC credits, which have underperformed even as the broader market rallied.

While the overall market firmed over the past week, Carvana Co.’s 10¼% senior notes due 2030 (Caa2/CCC) did not participate in the rally with the notes pinned near their all-time low.

Carnival Corp.’s senior notes (B2/B) also remained near their lows with the ability of the company to refinance its heavy debt burden an ongoing concern.

BB credits were the outperformers of the week with heavy inflows into the BB index, a source said.

Charter subsidiary CCO Holdings LLC’s junk bonds (B1/BB-) were slightly weaker amid the thin liquidity on Friday after a strong week.

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