SeaWorld sells junk bonds; AdaptHealth, Wolverine, Eldorado move up; Stagwell, Carvana flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 13 – The domestic high-yield primary market closed out a high-volume week with one downsized offering clearing the market.

SeaWorld Entertainment, Inc. priced a downsized $725 million issue of eight-year senior notes (Caa1/B-), closing out a $13 billion week.

There remains a modest calendar for the week ahead with Cooke Aquaculture, Sylvamo Corp., and MultiPlan Inc. expected to price deals.

Meanwhile, it was a quiet end to a subdued week in the secondary space with the market unchanged amid light trading volume.

New deals continued to dominate the tape with mixed trajectories.

While the notes struggled during bookbuilding, Eldorado Gold Corp.’s 6¼% senior notes due 2029 (B3/BB-/B+) had a strong reception in the aftermarket with the notes trading up to a 101-handle.

While AdaptHealth LLC’s 5 1/8% senior notes due 2030 (B1/B) were coming in from the heights reached in intraday activity, they stood poised to close the day with a solid premium.

Wolverine World Wide, Inc.’s 4% senior notes due 2029 (Ba2/BB) also moved higher in the aftermarket.

However, Carvana Co.’s 4 7/8% senior notes due 2029 (existing ratings Caa2/CCC+) and Stagwell Inc.’s 5 5/8% senior notes due 2029 largely fell flat in the aftermarket.

Friday’s primary

The new issue machine took a breather on Friday, with just one deal clearing the market on the day.

SeaWorld Entertainment priced a downsized $725 million issue (from $825 million) of 5¼% eight-year senior notes (Caa1/B-) at par, playing to a $2 billion order book on Friday morning, a trader said.

The week to Friday the 13th had around $13 billion of issuance, as 2021 drives deeper into record issuance territory, ending the week at approximately $358 billion, as the market takes aim at possibly topping yearly issuance of $400 billion.

The primary could clear that mark before October, a trader said Friday, adding that a staggering $60 billion September shadow calendar is now heard to be taking shape.

The August 16 week is set to get underway to a modest calendar.

Cooke Aquaculture is marketing $580 million of eight-year senior notes (Caa1/CCC+) on a roadshow set to wrap up Monday. Initial talk is in the high 5% to 6% area.

And Sylvamo, the uncoated papers business being spun off by International Paper, is on the road with $500 million of eight-year senior notes (B1/BB) through Thursday. Initial guidance is in the high 5% area.

Also look for MultiPlan to pull the wrapper off of a $775 million offering of secured notes in the week ahead. Goldman Sachs & Co. LLC will run the books, according to a bond trader who added that early pricing discussions on the deal (which has been pre-marketed) have taken place in the mid-5% area.

101-handle

While the deal was heard to have been struggling during bookbuilding, Eldorado Gold’s 6¼% senior notes due 2029 were putting in a strong performance in the aftermarket.

The 6¼% notes rose to a 101-handle and were changing hands in the 101 3/8 to 101 5/8 context during Friday’s session.

However, volume in the name was light with $16 million in reported volume.

Eldorado Gold priced a $500 million issue of the 6¼% notes at par on Thursday.

The yield printed wider than the 5¾% to 6% yield talk. The books on the deal were slow to fill, a source said.

At a premium

AdaptHealth’s 5 1/8% senior notes due 2030 closed Friday with a solid premium, although they were coming in from the heights reached in intraday activity.

The 5 1/8% notes were marked at par 5/8 bid, par 7/8 offered Friday afternoon.

However, they continued to lose steam as the session progressed and were changing hands just shy of par ½ heading into the close, a source said.

They traded as high as 101 after breaking for trade, a source said.

AdaptHealth priced an upsized $600 million, from $550 million, issue of the 5 1/8% notes at par on Thursday.

The yield printed at the tight end of yield talk in the 5¼% area.

Wolverine World Wide’s 4% senior notes due 2029 were also trading with a solid premium in the aftermarket.

The 4% notes were marked at par ¾ bid, 101 offered in the late afternoon, a source said.

Wolverine priced a $550 million issue of the 4% notes at par on Thursday.

The yield printed in the middle of yield talk in the 4% area.

The deal was heard to have played to around $1.25 billion of demand.

Flat

While several deals to price during Thursday’s session were putting in strong performances in the aftermarket, Carvana’s 4 7/8% senior notes due 2029 and Stagwell’s 5 5/8% senior notes due 2029 were not among them.

Both issues were stuck in a tight range around par, sources said.

Carvana’s 4 7/8% notes were marked at par bid, par ¼ offered – a level reached after breaking for trade.

There was $35 million in reported volume.

Carvana priced a $750 million issue of the 4 7/8% notes at par on Thursday.

The yield printed in the middle of yield talk in the 4 7/8% area.

While the deal saw a lackluster reception in the secondary space, the books were heard to have been two-times oversubscribed.

Stagwell’s 5 5/8% senior notes due 2029 were stuck at par bid, par ½ offered – a level also reached after breaking for trade on Thursday.

While the notes were active with $54 million in reported volume, there was little price movement in the name, sources said.

Stagwell priced a $1 billion issue of the 5 5/8% notes at par on Thursday.

The yield printed in the middle of yield talk in the 5 5/8% area.

Thursday fund flows

High-yield ETFs had $98 million of daily cash inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

Actively managed funds sustained $38 million of outflows on the day.

News of Thursday's daily cash flows trails a Thursday report that the combined high-yield bond funds saw $510 million of inflows in the week to the Aug. 11 close, according to the Refinitiv Lipper Fund Flow Report Newsline.

Of that amount, the ETFs saw $366 million of inflows on the week.

Year to date the combined junk funds have sustained $14.5 billion of outflows, compared to the $44.9 billion of inflows they saw in the entire year of 2020, the source said.

Indexes

The KDP High Yield Daily index was up 2 basis points to close Friday at 69.84 with the yield now 3.8%.

The index was down 4 bps on Thursday, 12 bps on Wednesday, 0.05 bp on Tuesday and 4 bps on Monday.

The index posted a cumulative loss of 18.05 bps on the week.

The CDX High Yield 30 index gained 7 bps to close Friday at 109.49.

The index was up 21 bps on Thursday and 17 bps on Wednesday after falling 21 bps on Tuesday and 19 bps on Monday.

The index posted a cumulative gain of 5 bps on the week.

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