Primary high-yield market
Despite widening spread and yields, U.S. high-yield issuance ramped up today, as $4.4 billion was on track for pricing by the close, versus a slim $500 million yesterday. Today's spike was boosted via six expected tranches to advance month-to-date volume to roughly $32 billion, currently the third most on record for February, according to LCD. Year-to-date issuance, at roughly $84 billion, is up 23% year-to-year.
The average yield for the S&P U.S. Issued High Corporate Bond Index closed Feb. 23 at 4.03%, up 7 basis points, while spreads also increased 7 bps, to T+328.
Post Holdings Inc. accounts for a hefty portion of today's intraday volume with a $1.8 billion pitch of 10.5-year senior notes, guided at 4.50%-4.75%. Proceeds will be used to redeem the company's 5% notes due 2026 and for general corporate purposes. Issue ratings are B+/B2.
DaVita Inc. was also expected to place a $1 billion tack-on to its 4.625% senior notes due June 2030 after boosting the offer size by $250 million. Proceeds will repay revolver drawings and will be used for general corporate purposes. The initial $1.75 billion of the bonds was placed in May 2020. S&P Global Ratings has a B+ rating on the notes.
Pitches for Arconic Corp., Hillenbrand Inc., TopBuild Corp. and TTM Technologies Inc. round out Wednesday's docket.
Primary high-yield stories/links
High-yield forward calendar
TopBuild prices $400M of senior notes at par to yield 3.625%; terms
US Acute Care Solutions out to market with $375M bond offering
Ocwen Financial Corp. announces $400M secured bond offering
Arconic prices add-on to 6.125% 2nd-lien secured notes at 106.25; terms
Post Holdings circulates price guidance for $1.8B bond offering
Hillenbrand sets talk in 3.75% area for new 10-year notes; pricing today
TTM Technologies floats price talk for $500M bond tranche
Secondary high-yield market
The high-yield secondary settled down after a volatile morning in which U.S. Treasury rates jumped as the FDA deemed the Johnson & Johnson vaccine safe and effective. The CDX HY 35 advanced a quarter-point for the second session in a row, to 109.125. A slew of earnings kept traders busy after new issuance slowed to a single deal on Tuesday.
Diamond Sports Group LLC bonds pared early losses after management at parent Sinclair Broadcast Group Inc. said it is considering another debt exchange. Having dipped to a three-month low of 51.5, the 6.625% senior notes due 2027 ended the session down 2.5 points at 53.5. That's five points shy of the post-downturn high in June after the company swapped some $66 million in outstanding 6.625% senior notes due 2027 for new 12.75% senior secured notes due 2026. Sinclair CEO Chris Ripley said another exchange offer was under discussion.
Bonds backing Nabors Industries Ltd. advanced after the company revealed that free cash flow totaled $66 million in the fourth quarter, compared to $9 million in the prior quarter. Management reiterated its plan to tap the capital markets “early in the first quarter” while setting a target to reduce net debt to the low $2 billion range, from $2.5 billion at year-end. The borrower's 5.75% senior notes due 2025 were particularly active today, rising three points to trade at a new pandemic-era high of 77.75.
While shares in R. R. Donnelley & Sons Co. jumped as much as 40% and credit default swaps traded tighter after the company reported solid fourth-quarter earnings, activity in the borrower's illiquid bonds was limited. The 6.625% senior notes due 2029 were fluctuating between 108 and 110.75 for a 2-4 point gain on what was almost exclusively tag-end trades.
Bonds backing Carnival Corporation & PLC continued their upward trajectory despite the company canceling all its voyages through the end of May. The borrower's recent $3.5 billion offering of 5.75% six-year unsecured bonds advanced another point to a fresh high of 102.375, while the 7.625% 2026 notes edged 0.375 points higher to trade above 106 after trading with a 104 handle all last week.
Human resources solutions provider TriNet Group Inc., yesterday's sole new issue, a $500 million offering of 3.5% eight-year senior unsecured notes, was trading just off the highs at 100.375.
Secondary high-yield stories/links
Diamond Sports bonds bounce off earnings-related lows on exchange hopes
Tuesday's sole new high-yield print holds above par in flat secondary
High-grade market
Issuance volume increased again today, with NTT Finance Corp. leading the way, as expected, following yesterday's global investor presentations. Today's $11.45 billion docket built on $10 billion priced yesterday and propelled the week's total to $27.55 billion, already roughly in line with full-week syndicate projections, even when excluding a number of SAS and hybrid deals from the count, under LCD high-grade issuance inclusion criteria.
NTT, a subsidiary of parent Nippon Telegraph and Telephone Corp., placed $8 billion of notes in five parts in U.S. dollars, alongside €2 billion of notes across 4- and 9-year issues, as it refinanced a portion of the heavy debt load, it incurred to acquire NTT Docomo Inc. late last year. The dollar tranches attracted substantial demand, with order books reportedly well north of 3x the offering amount at the time of launch.
Cybersecurity company Fortinet Inc. today completed a $1 billion, two-part offering, marking its debut on the bond markets for general funds. Ameren Corp. completed a $450 million offering of 1.75% seven-year notes due March 15, 2028, at T+75, backing the repayment of short-term debt.
Rounding out the slate were Yankee bank-sector deals for Bank of Nova Scotia ($1.25 billion) and Bank of New Zealand ($750 million).
The NTT offering is so far the third-largest so far in February, trailing the $14 billion print for Apple Inc. and a $9.825 billion offering for Boeing Co., both in the first week of the month. The NTT deal becomes the sixth so far this month, totaling $5 billion or more.
Firm broad-market spread progressions have blunted some of the impact of the recent sharp steepening along the underlying yield curve, but issuers nevertheless are addressing a materially different funding environment relative to the start of the year. The 1.95% yield average for the S&P U.S. Investment Grade Corporate Bond Index, as of the Feb. 23 close, marked a high since the U.S. elections in early November, versus a pandemic-era low at 1.73% on Jan. 1. The latest T+89 spread level, however, compares with T+94 on the first day of the year and T+121 just ahead of election day, after the index touched a three-year low at T+86 last Friday.
In an indicative progression for gilt-edged IG debt, the Home Depot Inc. 2.375% 30-year bonds due 2051 — which it priced on the first active session this year, at a 98 dollar-price handle or T+77 — traded this week at sharply lower 87 handles, but at a weighted average of trades in line with the initial spread reoffer, according to MarketAxess.
High-grade stories/links
NTT Finance launches $8B offering to refinance M&A debt
Bank of New Zealand returns with 2026 notes
Fortinet adds long-term maturities to books with debut deal
Ameren to repay short-term debt with new 2028 notes
PPG Industries obtains $2B TLA for Tikkurila Oyj buy
ICON inks committed financing for $12B acquisition of PRA Health Sciences
Distressed story links
Belk reorganization plan nets confirmation
Owl Rock takes control of borrower, says Q4'20 non-accruals fell
Belk files Chapter 11, from which its expects to emerge within 24 hours
Form Technologies upgraded by S&P Global Ratings to CCC+ after cash injection
Abengoa files for bankruptcy in Spain
