Bombardier bonds gain on new TL placement; Bed, Bath & Beyond ticks up on M&A settlement; Navient pops on earnings – Mid-Day Commentary
High yield investors faced a bombardment of news to digest this morning, on topics ranging from US-China relations to new government investment in COVIS-19 vaccines – as well as a slew of issuers reporting 2Q20 earnings.
US-China tensions flared as China condemned the US decision to order the closure of China’s consulate in Houston. China added that if the US does not reverse the decision, retaliation is imminent.
On the domestic front, after a record day of more than 1,000 coronavirus deaths, the US government has offered pharmaceutical manufacturers Pfizer and BioNTech USD 1.95bn in an initial order for 100m doses of the companies’ COVID-19 vaccine contenders. The government can acquire up to another 500m doses of the inoculation.
Pfizer’s equity is trading this morning at USD 37.86 per share and a market cap of USD 210.29bn, up 3.16% from yesterday’s close. BioNTech’s stock rose 8.33% on the day to USD 99.23 per share and a market cap of USD 22.50bn.
Cruise liner Royal Caribbean Cruises bonds moved up on increased hopes in a vaccine.
The USD 700m 3.7% senior unsecured notes due 2028 traded today at 71 to yield 9.035% from trades at 67.5 to yield 9.848% yesterday, according to MarketAxess. Its USD 650m 5.25% senior unsecured notes due 2022 traded today at 83.912 to yield 13.592%, up from trades at 82.262 to yield 14.539% on 20 July.
Meanwhile, United Airlines bonds traded up slightly after the company posted better-than-expected revenue and cash burn figures late yesterday (21 July), according to a sellsider and buysider. However, the company’s revenue and operating loss results were still drastically lower compared to 2Q19, the sources added.
The USD 300m 6% senior unsecured notes due 2020 last traded today at 100.34 to yield 4.975%, compared to trades at 99.625 to yield 6.938% on 8 July, according to MarketAxess. Its USD 350m 4.875% senior unsecured notes due 2025 nudged up to 81.75 to yield 10.034% after market close yesterday (21 July) from trades at 80.5 to yield 10.436% earlier in the day.
Bombardier’s bonds rose several points this morning after the company disclosed its cash usage for 2Q20 was USD 500m better than expected and that it has secured a term loan from HPS Investment Partners. More details will be released during Bombardier’s 2Q20 earnings report on 6 August.
The new loan from HPS will be up to USD 1bn in size, with a three-year tenor, providing Bombardier additional liquidity for working capital and general corporate purposes.
Its USD 1.2bn 6% senior unsecured notes due 2022 traded today at 87.762 to yield 12.454%, compared to trades at 82.25 to yield 15.725% on 20 July, according to MarketAxess. Its USD 2bn 7.875% senior unsecured notes due 2027 traded today at 74 to yield 13.951% from trades at 72 to yield 14.527% yesterday.
Bed Bath & Beyond’s debt traded up this morning after the retailer reached a settlement regarding its litigation with 1-800-FLOWERS.COM yesterday evening (21 July).
As part of the agreement, 1-800-FLOWERS.COM will proceed with its previously announced purchase of PersonalizationMall.com from the issuer for roughly USD 245m. In return, Bed Bath & Beyond will withdraw its litigation related to the purchase.
Bed Beth & Beyond filed a complaint on 1 April in Delaware Chancery Court seeking a declaratory judgment finding 1-800-Flowers had breached the parties’ sale agreement as well as an order compelling the company to follow through on the transaction. The original purchase price was USD 252m.
The transaction is now expected to close on or before 3 August.
Bed Bath & Beyond’s USD 900m 5.165% senior unsecured notes due 2044 jumped to 59 this morning for a 9.544% yield compared to 56.25 on yesterday, according to MarketAxess. Meanwhile its common shares traded at USD 9.94, up 5.36% from previous close, with a USD 1.25bn market cap.
Navient’s debt and equity popped after the financial services provider reported 2Q20 earnings that beat estimates. The borrower reported its core earnings improved to USD 179m compared to USD 175m for the same period last year while EBITDA dropped to USD 8m from USD 11m.
Its USD 750m 7.25% unsecured notes due 2022 jumped to 104.2 for a 4.333% yield this morning from 101.75 on 13 July while its USD 500m 6.75% unsecured notes due 2025 traded at 100.5 this morning yielding 6.627% from 99.5 yesterday, according to MarketAxess. Common shares for the issuer were up 3.69% from yesterday’s close to trade at USD 7.87 and a USD 1.5bn market cap.
In the new issue space, Clear Channel International BV’s new USD 375m 6.625% senior secured notes due 2025 traded up this morning to 102.5 for a 5.82% yield after pricing at par yesterday. The foreign subsidiary of Clear Channel Outdoor had upsized its offering from USD 350m following strong interest from buysiders on the deal, as reported. Lead bookrunner Deutsche Bank had been gauging investor interest in a financial transaction for the company since at least last week, as reported.
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