Fortress/Presidio, LifePoint drive by; Cloud, OneMain at a premium; funds add $2.35 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 9 – Issuers brought $1.98 billion of paper to the high-yield primary market on Thursday.

Two of the deals were upsized, and one was downsized. Two issues were add-ons.

Fortress Intermediate 3, Inc. priced $750 million, increased from $500 million, of seven-year senior secured notes (B2/B) at par to yield 7½%.

The yield printed at the tight end of the 7½% to 7¾% yield talk. Initial guidance was 8% to 8¼%.

The deal is backing the buyout of Presidio, Inc. by Clayton, Dubilier & Rice, LLC.

LifePoint Health, Inc. drove by with $800 million, downsized from $900 million, of 10% eight-year senior notes (expected ratings Caa2/CCC+).

The yield printed inside of yield talk in the 10¼% area. Initial talk was in the mid-10% area.

In another drive-by, Adams Homes, Inc. priced an upsized $150 million add-on to its 9¼% senior notes due Oct. 15, 2028 (B1/BB-/BB-) at 102.5.

Exeter Finance LLC priced a $175 million issue of Cobra AcquisitionCo LLC 12¼% senior notes due Nov. 1, 2029 at 98.09 to yield 12¾%.

Capstone Borrower, Inc., which does business as Cvent, priced a $100 million add-on to its 8% senior secured notes due June 15, 2030 (B2/B-/BB) at 101.5 for a yield to worst of 7.563%.

Meanwhile, it was a sideways day in the secondary space on Thursday as the market continued to take a breather from the post-Fed rally of the previous week.

While the market awaited the next round of macro data to help gauge rate expectations, new issuance remained in focus with the majority of deals to price over the past week performing well.

Cloud Software Group, Inc.’s 8¼% senior secured notes due 2032 (B2/B) continued their upward momentum after a strong break.

OneMain Finance Corp.’s new 7½% senior notes due 2031 (Ba2/BB//Kroll: BB+) also improved in active trade.

While unchanged day-over-day, Hess Midstream LP’s new 6½% senior notes due 2029 (Ba2/BB+/BB+) held on to the solid gains made after breaking for trade the previous session.

While the market remained focused on new issues, topical and earnings-related news continued to drive the largest price movements in the space.

iHeartCommunications, Inc.’s senior notes suffered large losses on Thursday after reporting earnings.

Meanwhile, high-yield mutual funds and exchange-traded funds saw $2.35 billion of inflows in the week through Wednesday’s close, a source said.

Cloud Software gains

Cloud Software’s new 8¼% senior secured notes due 2032 continued their upward momentum after a strong break the previous session.

The new 8¼% notes added ¼ point to close the day wrapped around 101, a source said.

There was $182 million in reported volume.

Cloud Software priced an upsized $1.8 billion, from $1 billion, issue of the 8¼% notes in a Wednesday drive-by.

The yield printed in the middle of yield talk in the 8¼% area.

Meanwhile, Cloud Software’s (Citrix) 9% second-lien notes due 2029 (Caa2/B-) and Citrix Systems Inc./Tibco Software Inc.’s 6½% senior secured first-lien notes due 2029 (B2/B) stabilized after some weakness the previous session on the heels of the latest offering.

The 9% second-lien notes due 2029 added about ¼ point to trade at 97¼ with a yield of 9 5/8% in the late afternoon, a source said.

The 6½% senior secured first-lien notes due 2029 were largely unchanged and trading at 95 5/8 in the late afternoon with a yield of 7½%, a source said.

Cloud Software formed through the merger of Tibco and Citrix. The 6½% senior secured first-lien notes and 9% second-lien notes priced to clear hung debt from Citrix’s acquisition.

OneMain improves

OneMain’s 7½% senior notes due 2031 improved in active trade after a relatively flat break.

The notes added ¼ point and were trading in the par 3/8 to par 5/8 context heading into the market close, a source said.

OneMain priced an upsized $750 million, from $500 million, issue of the 7½% notes in a Wednesday drive-by.

The yield printed at the wide end of 7 3/8% to 7½% yield talk.

Hess holds

While unchanged day-over-day, Hess’s 6½% senior notes due 2029 held on to the solid gains made after breaking for trade the previous session.

The 6½% notes were trading in the par ½ to par ¾ context heading into the market close, a source said.

There was $25 million in reported volume.

Hess priced an upsized $600 million, from $500 million, issue of the 6½% notes at par in a Wednesday drive-by.

The yield printed at the wide end of the 6 3/8% to 6½% yield talk.

iHeart hurts

iHeart’s senior notes saw some pain on Thursday with earnings dragging the notes down 4 to 9 points.

The unsecured 8 3/8% senior notes due 2027 (Caa3/CCC-) were the hardest hit in the debt stack.

They sank 8 to 9 points and were trading at 42½ heading into the market close, a source said.

The yield jumped to 45½%.

There was $36 million in reported volume.

The 4¾% senior secured notes due 2028 (Caa1/B-) sank 5 to 6 points.

They were trading at 65 5/8 with a yield of 18% in the late afternoon.

There was $48 million in reported volume.

The 5¼% senior secured notes due 2027 (Caa1/B-) were off 5 points to trade at 68 with a yield of 18 7/8%.

The 6 3/8% senior secured notes due 2026 were down 4 points to trade at 82 with a yield of 17 5/8%, a source said.

There was $29 million in reported volume.

The notes sank after the company posted numbers.

While earnings were largely in line, expectations were high heading into earnings, a source said.

Indexes

The KDP High Yield Daily index was up 8 basis points to close Thursday at 49.56 with the yield 6.97%.

The index was down 13 bps on Wednesday, down 2 bps on Tuesday and added 7 bps on Monday.

The ICE BofAML US High Yield index shaved off 1.9 bps with the year-to-date return now 1.514%.

The index was down 13.7 bps on Wednesday, inched up 3.4 bps on Tuesday and was up 20.3 bps on Monday.

The CDX High Yield 30 index was up 6 bps to close Thursday at 106.80.

The index was down 5 bps on Wednesday, was unchanged on Tuesday and up 17 bps on Monday.

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