Medline, Miter price; secondary firm post-Fed; Crescent Energy adds; Altice crumbles post-earnings

By Paul A. Harris and Abigail W. Adams

Portland, Me., March 20 – In the junk bond market on Wednesday, two issuers used Fed day to price new offerings.

Medline Industries, LP and Miter Brands together brought $1.7 billion of new paper to the market.

Meanwhile, a flat open gave way to a strong close in the secondary space with the market gaining strength on the heels of the Federal Open Market Committee announcement and Federal Reserve chair Jerome Powell’s press conference.

“Everything moved up after the Fed,” a source said. “They liked what they heard.”

While the Fed did reduce its projections for rate cuts in 2025, it left the forecasted three cuts in 2024 unchanged.

Market players were bracing for a much more hawkish tone given the unexpected uptick in inflation in the latest Consumer Price Index and Producer Price Index reports.

The cash bond market opened the day flat but closed with a 1/8 to ¼ point gain, sources said.

New and recent issues remained in focus with the notes to break for trade following mixed trajectories during Wednesday’s session.

Crescent Energy Co.’s new 7 5/8% senior notes due 2032 (B1/BB-/BB-) continued to add in heavy volume after a decent break the previous session.

However, Landsea Homes Corp.’s new 8 7/8% senior notes due 2029 (B/B+) gave back all gains made on the break to return to issue price.

While new paper was the driver of trading volume on Wednesday, topical and earnings-related news sparked the largest price movements in the space.

Altice France Holding SA’s senior notes plunged in heavy volume after the company announced earnings and warned creditors they may need to participate in discounted debt exchanges.

Primary

News volume in the high-yield primary market remained strong and steady on Wednesday.

And demand for new issue paper remained intense.

Two dollar-denominated issuers raised a combined total of $1.7 billion.

In a deal that was in the market overnight, Medline Industries, LP priced a $1 billion issue of Medline Borrower, LP five-year senior secured notes (B1/B+/BB-) at par to yield 6¼%, in the middle talk.

Medline’s offer came into the market with $2.25 billion of reverse inquiry, and was already heavily oversubscribed by midday Tuesday, a sellside source said.

That left at least the sellsider pondering aloud what purpose was served by waiting to price the notes Wednesday.

Late Wednesday afternoon a trader saw the new Medline 6¼% secured notes due 2029 going out at par 1/8 bid, par 3/8 offered.

Elsewhere, in a Wednesday drive-by Miter Brands priced an upsized $700 million issue of eight-year senior secured notes (B1/BB-) at par to yield 6¾%.

The issue size increased from $500 million.

It was four-times oversubscribed before it was officially announced, Wednesday morning, a portfolio manager said.

Prior to upsizing the order book was eight-times deal-size, a trader said.

The yield printed 12.5 basis points through official yield talk.

Meantime in Wednesday’s euro-denominated session two issuers brought three tranches to raise a total of €1.22 billion (see related stories in this issue).

Crescent Energy adds

In the secondary market, Crescent Energy’s new 7 5/8% senior notes due 2032 continued to gain strength on Wednesday after a decent break the previous session.

The 7 5/8% notes added ¼ to 3/8 point in heavy volume.

They were trading in the par 3/8 to par 5/8 context heading into the market close.

There was $60 million in reported volume.

The notes closed the previous session in the par 1/8 to par 3/8 context.

Crescent Energy priced a $700 million issue of the 7 5/8% notes at par in a Tuesday drive-by.

The yield came at the tight end of yield talk in the 7¾% area.

Landsea returns to par

Landsea Homes’ 8 7/8% senior notes due 2029 gave back all gains from a strong break with the notes returning to issue price on Wednesday.

The 8 7/8% notes were down about ½ point to close the day in the 99 7/8 to par 1/8 context, a source said.

The notes traded as high as par ¾ after breaking for trade Tuesday.

Landsea Homes priced a $300 million issue of the 8 7/8% notes at par on Tuesday.

The yield printed at the tight end of the 8 7/8% to 9% yield talk.

Altice crumbles

Altice France’s senior notes crumbled on Wednesday after the company announced earnings and warned creditors that they may need to participate in discounted transactions to help the company achieve its leverage targets.

Altice France’s senior notes were the hardest hit with its secured tranches falling 7 to 11 points while its unsecured trances sank as much as 18, a source said.

Altice Financing SA’s senior notes were also under pressure with the notes off 3 to 6 points.

Altice France’s 8 1/8% senior secured notes due 2027 (B2/B-) sank 11 points to close the day at 84¾ with the yield about 15%.

There was $31 million in reported volume.

The 5 1/8% senior secured notes due 2029 were down 7 points to 72¼ with the yield 12 3/8%.

There was also $31 million in reported volume.

The 5½% senior secured notes due 2029 were also off 7 points to 72¼ with the yield 12½%.

There was $56 million in reported volume.

Altice France’s 6% senior notes due 2028 (Caa2/CCC) sank 16 points to 43½ with the yield 32 5/8%.

There was $18 million in reported volume.

The 10½% senior notes due 2027 were down 18 points to 54½ with the yield 35 5/8%.

There was $40 million in reported volume.

Altice Financing’s 5¾% senior secured notes due 2029 (B3/B) fell 6 points to 82½ with the yield 10%.

There was $15 million in reported volume.

Altice Financing’s 5% senior secured notes due 2028 were off 4 points to 86½ with the yield about 9¼%.

The 9 5/8% senior secured notes due 2027 were down 2½ points to 99¾ with the yield 9¾%.

The notes plunged after the company announced earnings with the company projecting a decrease in revenue and a large EBITDA decline for the current fiscal year, a source said.

Altice France also reported €24.2 billion in net debt.

However, it was the warning on the earnings conference call that creditors would need to participate in discounted transactions to reduce leverage that sparked a fire sale in the senior notes, a source said.

Indexes

The KDP High Yield Daily index added 3 basis points to close Wednesday at 50.71 with the yield 6.86%. The index was up 12 bps on Tuesday and inched up 1 bp on Monday.

The ICE BofAML US High Yield index added 7.4 bps with the year-to-date return now 1.153%.

The index added 19.5 bps on Tuesday and 10.2 bps on Monday.

The CDX High Yield 30 index gained 35 bps to close Wednesday at 107.21.

The index added 21 bps on Tuesday and 13 bps on Monday.

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