Junk: MoneyGram arrives late; Occidental boosted; Nissan lower; Venture Global active

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 31 – MoneyGram International Inc. was hammering out terms in the junk bond primary market throughout Wednesday, but cleared late in the evening with a new offering.

Meanwhile, it was a soft day in the secondary space with the cash bond market down 1/8 to ¼ point as the debt-limit deal goes to a House vote and a surge in job vacancies in the JOLTS report again called into question the Federal Reserve’s next rate move.

The market “wanted to go up” early in the session, but drifted lower following the release of the JOLTS report, a source said.

While soft, the market was largely quiet with the exception of one name – Occidental Petroleum Corp.

Occidental Petroleum’s split-rated senior notes (Baa3/ BB+) dominated the tape on Wednesday with the capital structure boosted following news Berkshire Hathaway had expanded its stake in the company.

While Occidental’s split-rated notes logged gains on Wednesday, Nissan Motor’s split-rated 4.81% senior notes due 2030 (Baa3/BB+) were under pressure in heavy volume.

Venture Global LNG Inc.’s recently priced tranches of senior secured notes (B1/BB/BB-) remained active with the notes weaker alongside the broader market.

MoneyGram

Mobius Merger Sub, Inc. priced an upsized $500 million issue of 9% seven-year senior secured notes (B2/B/B+) at 83 to yield 12.742% in Wednesday’s only new issue market action.

The deal, backing the buyout of MoneyGram International Inc. by Madison Dearborn Partners, was upsized from $450 million, and priced on top of official coupon, price and yield talk.

Official yield talk came nearly 175 basis points beyond the wide end of early guidance in the 10½% to 11% area.

In addition to the big rate concession came covenant changes.

With the $50 million upsize of the bonds the concurrent bank loan downsized to $400 million from $450 million.

Demand across both the bond and loan came to approximately $1.2 billion, a trader said.

Original tranche sizes were $400 million for the bonds and $500 million for the loan.

Occidental boosted

Occidental’s split-rated senior notes were in focus on Wednesday with the company’s capital structure lifted ¼ to ½ point following news Berkshire Hathaway had increased their stake in the company.

Occidental’s 6.45% senior notes due 2036 were the most active tranche in the debt pile.

The notes gained about 0.375 point to 101.625 with the yield about 6¼%, according to a market source.

There was $67 million in reported volume.

The 6 5/8% senior notes due 2030 gained 1/8 point to 104 1/8 with the yield 5 7/8%.

There was $58 million in reported volume.

The 6 1/8% senior notes due 2031 rose ¼ point to 101 5/8 with the yield also 5 7/8%.

There was $47 million in reported volume.

Occidental’s capital structure continued to rise higher on Wednesday following news that Berkshire Hathaway had bought $275 million in stock over the past week and upped their stake in the company to about 25%.

Nissan under pressure

Nissan’s 4.81% senior notes due 2030 had heavy selling pressure on Wednesday.

The notes fell 1½ points to 85 in active trade.

The yield rose to 7½%.

There was $23 million in reported volume.

The notes had 3x their average volume on Wednesday with sellers in the market, a source said.

Venture Global weaker

Venture Global’s recently priced tranches were lower in active trade on Wednesday.

The 8 1/8% senior secured notes due 2028 shaved off ¼ point to close the day at par 5/8, according to a market source.

There was $27 million in reported volume.

The 8 3/8% senior secured notes due 2031 were also down about ¼ point to close the day at par ¾.

There was $39 million in reported volume.

The highly liquid notes were weaker on Wednesday alongside the broader market, a source said.

Fund flows

High-yield ETFs had $127 million of daily cash inflows on Tuesday, according to a market source.

However actively managed high-yield bond funds sustained $12 million of outflows on the day, the source said.

The combined funds are tracking $946 million of net outflows for the week that is set to conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily shaved off 3 points to close Wednesday at 50.17 with the yield 7.5%.

The index gained 22 points on Tuesday.

The ICE BofAML US High Yield index shaved off 8.2 bps with the year-to-date return now 3.726%.

The CDX High Yield 30 index fell 29 points to close Wednesday at 101.

The index gained 33 points on Tuesday.

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