Primary high-yield market
Issuance slowed for the final session of the week, leaving one borrower poised to print new paper. Urban One Inc. was on track to wrap an $825 million tranche of secured bonds and advance year-to-date issuance to $8.23 billion.
The seven-year paper was guided to price in the 7.50% area. The deal supports the company's repayment of existing term debt and its 8.75% senior secured notes due December 2022 and 7.375% senior secured notes due April 2022. Issue ratings are B-/B3. Structure for the debt was revised today to include a special call allowing the company to redeem up to 10% of the notes at 103% of par per annum during the non-call period. Demand for the deal was said to be strong, with market sources noting a $3.7 billion book size.
Meanwhile, the pipeline for leveraged buyout bond offerings is heating up.
Cardtronics PLC has included a $450 million senior unsecured bridge facility in the debt financing package backing the company's buyout by Apollo Global Management and Hudson Executive Capital. The company will also put in place a $1.2 billion senior secured term loan facility and a $300 million senior secured revolving credit facility for the LBO.
Truck Hero Inc. will use proceeds of $550 million of eight-year senior unsecured notes and a seven-year $1.55 billion term loan B to back a buyout by L Catterton. S&P Global Ratings has assigned a CCC rating to the notes, and a B- rating to the loan. Additional financing includes a $200 million, five-year ABL revolver.
Primary high-yield market stories/links:
High-yield forward calendar
Urban One sets price talk for $825M of secured bonds
Secondary high-yield market
High yield headed into the weekend on solid footing after a subdued session, with traders anticipating more supply next week even as Treasury yields marched higher. The CDX HY 35 inched up for a fourth straight day, with indications near 109.375 at the close to leave the index roughly flat week over week net of Monday's initial dip.
The rally in energy names continued as oil rose another 3% to over $52 a barrel despite surging COVID-19 case numbers. That propelled several more depressed issues to fresh highs, pandemic-era and otherwise. Baytex Energy Corp.'s year-old placement of 8.75% unsecured notes due April 2027 was up 2.75 points on the day at 72.75 on the highs, continuing a steady climb from December trades in the low 40s.
Transocean Ltd.'s 5.875% senior notes due 2024 added a point to change hands at a four-month high of 87.5.
Occidental Petroleum Corp.'s December issue of 5.5% five-year senior unsecured notes moved another 2.75 points higher to trade at 108.5, while the 6.625% 2030 bonds tested 113 for the first time.
Baker Hughes reported that the U.S. gas rig count rose for the seventh week in a row. This week's addition of nine rigs takes the total to 360. Bonds backing Shelf Drilling Holdings Ltd., the world's largest contractor of jack-up rigs, surged higher, with the SHLFI senior unsecured notes due 2025 garnering 3.75 points to 55 on the highs from November trades in the low 30s.
The new-issue pipeline kept up its steady flow of deals, with a pair of double-B rated offerings on Thursday that took the week's tally to $7.4 billion. Sellers stepped in this afternoon for Hilcorp Energy Co.'s $1.2 billion of senior notes, which ended the session off their 102.875 highs, the 6% 2031 notes at 102.75 and the accompanying 5.75% 2029s an eighth of a point lower. Proceeds will be used to tender for the outstanding 5% senior notes due 2024 and 5.75% senior notes due 2025, both of which hit new highs this week. The 2024 notes were up 2.375 points at an all-time high of 101.875 while the 2025s opened at a two-year high at 103.125. Lamar Media Corp.'s $550 million of 3.625% 10-year senior notes ground higher over the session, heading into the close with a 102 handle after breaking to a 100.25 context. Proceeds will support a tender offer for the company's $650 million of 5.75% senior notes due 2026, which headed into last night's close at a pandemic-era low of 103.125.
Secondary high-yield market stories/links:
Thursday's new high-yield deals trade up in firmer secondary
High-grade market
Issuance was muted on Friday after an upside surprise for issuance volume through Thursday, and syndicate desks so far project relatively lighter volumes for the week ahead as the earnings reporting season draws near. Issuance for the week (ex-SAS and hybrids) reached $50.25 billion, or the heaviest five-day influx of supply since mid-September, and versus midpoint expectations for about $40 billion this week, according to LCD data and syndicate guidance.
GA Global Funding Trust today completed a debut offering of notes backed by funding agreements, or FAs, marking a notably hot start for the largely under-the-radar FA-backed bond sector. Today's placement of 1.625% notes at T+117 marked the seventh FA-backed deal so far this year, already more than issuers printed over all of January last year. GA Global Funding, which is part of Global Atlantic Financial Group Ltd., boosted today's placement to $650 million, from $400 million.
Looking ahead to next week, syndicate projections suggest an overall IG issuance total in the $32 billion area, per a survey from Mischler Financial's Ron Quigley. That average draws from a pool of estimates ranging from $20 billion to $45 billion, as respondents uniformly agreed that volume would downshift from the heady pace in the early sessions of 2021, with an eye to potential blockbuster totals later in January as U.S. money-center banks roll out of earnings blackouts.
For now, prospective issuers have not paid too high a price for missing the early-January window. The S&P U.S. Investment Grade Corporate Bond Index carried a 1.83% yield level into today's session, holding at that level for a second straight day, and reflecting a pullback of only 10 basis points from the pandemic-era lows at the start of this year. Notably, the 1.80% IG new-issue yield average in December was unchanged from the November level, which represented the lowest aggregate costs of the credit cycle, versus 3.17% in December 2019, according to LCD.
High-grade market stories/links
GA Global Funding places debut FA-backed offering
Distressed news stories/links
McGraw Hill upgraded to B3 following refinancing, new debt raise
Sungard upgraded by S&P Global Ratings to CCC+ on debt maturity extensions
Marathon Asset Management closes on new distressed fund
CBL & Associates, 1st-lien lenders agree to mediate dispute over credit pact
