Royal Caribbean Cruises Ltd. was the first issuer to emerge this year from a high-yield pipeline that is expected to burgeon over the course of the day. Along with a tender-backing tap from Covanta Holding Corp., almost $1.5 billion of supply broke into a soft Tuesday market that closed about 0.125-0.375 point lower across the board.

Debt-laden Royal Caribbean inked an upsized $1 billion tranche of 4.375% 5.5-year senior unsecured notes (B/B2) at par pricing, largely to honor principal payments on debt maturing in 2022. The tightly priced new bonds broke to trades on either side of 101 before sellers stepped in and left the paper around the 100.75 mark midmorning. The outstanding 5.25% senior unsecured notes due 2022, which hit 102.75 on the highs yesterday, were lower this morning, at 102.125, for a yield of about 2.716%, while the rest of the company's stack was 0.125-0.25 point lower on the session.

The Royal Caribbean deal was well timed, pricing after the Food and Drug Administration on Monday expanded the age range of those eligible for COVID-19 vaccine boosters, boosting the number of potential cruise line passengers and countering last week's ominous warnings from the U.S. Centers for Disease Control and Prevention for people to avoid cruises regardless of their vaccination status. But even though cruise line operators have thus far ignored the CDC's warning, none has made a profit in the past two years and interest payments on debt will likely consume any free cash flow resulting from a rebound in passenger numbers. Royal Caribbean, which had almost $20 billion of long-term debt as of Sept. 30, reported a wider-than-expected adjusted loss of $4.91 per share for the third quarter of 2021.

Reducing interest expenses was the aim as Covanta set out to buy back its 6% senior notes due 2027 with proceeds of a $465 million tap of its 4.875% sustainability-linked unsecured notes due December 2029 (B/B1). The add-on bonds priced at 101, for a yield of 4.642%, from initial talk around 100.5-101. The paper shed 1.75 points in mixed trading yesterday and moved another quarter-point lower this morning to change hands in round lots at around 101.6.

In a Tuesday report, S&P Global Ratings said the add-on and refinancing "will modestly reduce interest expense while minimally increasing total funded debt."