CVR, CQP cap active week of junk issuance; J.B. Poindexter extends gains; iHeart falls

By Abigail W. Adams

Portland, Me., Dec. 8 – The domestic high-yield primary market capped a high-volume week of issuance with two deals totaling $1.1 billion.

CVR Energy Inc. priced $600 million of five-year senior notes (B1/B+/BB-) and CQP Holdco LP and BIP-V Chinook Holdco LLC priced a downsized $500 million offering of 10-year senior secured notes (B1/BB).

While fatigue was starting to set in, the new paper still played to solid demand and both notes were trading flat or at a premium to their issue prices in aftermarket activity.

The secondary space had a softer tone on Friday as Treasury yields rose on the heels of a better-than-expected U.S. nonfarm payrolls report.

The two-year Treasury yield closed Friday up 14 basis points at 4.727% and the 10-year yield was up 9.2 bps at 4.248%.

The secondary space was holding up comparatively well with buyers still active in the space with the cash bond market off about 1/8 point, a source said.

CVR Energy’s new notes were wrapped around their issue price after breaking for trade amid the softer tone.

XPO Inc.’s new 7 1/8% senior notes due 2032 (Ba3/BB-/BB+) leaked alongside the broader market although they held on to the majority of gains made on the break.

J.B. Poindexter & Co., Inc.’s 8¾% senior notes due 2031 continued their strong upward momentum in active trade.

Outside of recent issues, iHeartCommunications, Inc.’s senior notes sank 2 to 4 points in active trade after a ratings downgrade.

CVR flat

CVR Energy priced $600 million of five-year senior notes (B1/B+/BB-) on Friday at par to yield 8½%, according to a market source.

Pricing came at the midpoint of talk for a yield in the 8½% area. Initial guidance was for a yield in the mid-8% area.

The new paper was flat on the break and trading in the 99 7/8 to par 1/8 context heading into the market close, a source said.

CQP prices

CQP priced a downsized $500 million offering of 10-year senior secured notes (B1/BB) on Friday at par to yield 7½%, according to a market source.

Pricing came at the midpoint of talk for a yield in the 7½% area, according to a market source.

Initial guidance was for a yield in the mid-7% area.

The initial size of the issue was $700 million.

However, $200 million of proceeds were shifted to the concurrent term loan, which was upsized to $2.22 billion from $2.02 billion.

XPO leaks

XPO’s 7 1/8% senior notes due 2032 were slightly weaker in active trade although the notes maintained the majority of gains made on the break.

The 7 1/8% notes were off 1/8 to ¼ point to trade in the par 3/8 to par 5/8 context, a source said.

There was $22 million in reported volume.

XPO priced a $585 million issue of the 7 1/8% notes at par on Thursday.

Pricing came toward the tight end of talk for a yield in the 7¼% area.

J.B. Poindexter gains

J.B. Poindexter’s 8¾% senior notes due 2031 continued their strong upward momentum in the aftermarket with the notes the outperformers of the deals to price over the past week.

The 8 3/8% notes shot up another ½ point to a 102-handle.

They were trading in the 102 to 102½ context heading into the close, a source said.

There was $31 million in reported volume.

J.B. Poindexter priced an upsized $600 million, from $550 million, issue of the 8¾% notes at par on Thursday.

Pricing came at the midpoint of talk for a yield in the 8¾% area.

The notes shot up to a 101-handle on the break.

iHeart’s downgrade

iHeart’s senior notes were under pressure on Friday after Moody’s Investors Service slashed the company’s credit rating.

iHeart’s 6 3/8% senior secured notes due 2026 (Caa1/B+) were down almost 4 points to close the day at 79¾ with the yield 17%, a source said.

There was $13 million in reported volume.

The 4¾% senior secured notes due 2028 were down 2½ points to close the day at 71¾ with the yield about 14%.

There was also $13 million in reported volume.

The 8 3/8% senior notes due 2027 (Caa3/CCC+) were down 3½ points to 61 with the yield rising to 26½%.

There was $12 million in reported volume.

iHeart’s senior notes were under pressure after Moody’s downgraded the company’s corporate family ratings to Caa1 from B2, its secured notes to Caa1 from B1 and its unsecured notes to Caa3 from Caa1.

The company’s elevated leverage and refinancing risks were cited as reasons for the downgrade.

Indexes

The KDP High Yield Daily index was down 16 bps to close Friday at 49.57 with the yield 7.29%.

The index was up 2 bps on Thursday, 9 bps on Wednesday, 7 bps on Tuesday and was flat on Monday.

The index added 2 bps on the week.

The ICE BofAML US High Yield index was down 23.8 bps with year-to-date returns now 10.107%.

The index gained 8.5 bps on Thursday, 15.7 bps on Wednesday, 24.1 bps on Tuesday and 6.5 bps on Monday.

The index posted a cumulative gain of 54.8 bps on the week.

The CDX High Yield 30 index was up 13 bps to close Friday at 103.94.

The index gained 10 bps on Thursday after falling 16 bps on Wednesday, 15 bps on Tuesday and 15 bps on Monday.

The index posted a cumulative loss of 23 bps on the week.

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