HealthSouth add-on, Anixter drive-by price; new PPD stays busy; Sprint runs up after results

By Paul Deckelman and Paul A. Harris

New York, Aug. 4 – The high-yield primary sphere saw drive-by activity for a second consecutive session on Tuesday as electronic wiring and cable producer Anixter Inc. and healthcare services provider HealthSouth Corp. came to market with opportunistically timed and quickly shopped deals.

Anixter did $350 million of 7.5-year notes, while HealthSouth priced an upsized $350 million add-on to its November 2024 paper.

Traders saw the new Anixter notes having firmed when they hit the aftermarket.

Elsewhere among recently priced issues, Pharmaceutical Product Development, LLC’s eight-year megadeal, which had priced on Monday and had firmed a little after that in very busy initial dealings, remained one of the most active credits in Junkbondland on Tuesday.

There was also a decent amount of dealings going on in clean-energy provider TerraForm Global Inc.’s new 2022 notes, which had priced on Friday.

Away from the primary arena, Sprint Corp.’s notes across its capital structure were firmer in busy trading after the domestic wireless carrier reported better than expected earnings and then sounded an upbeat assessment of the company’s liquidity situation.

Statistical market performance indicators turned mixed on Tuesday, after having been lower across the board on Monday.

Anixter prices atop talk

Following a two-week dry spell during which the dollar-denominated high-yield primary market saw no quick-to-market deals, the drive-by market sparked back to life as August got underway.

The Tuesday session saw the second and third drive-by deals clear the market this week – Pharmaceutical Product Development actually broke the drought on Monday – as two issuers brought single tranches to raise a combined total of $702 million.

Executions appeared solid as one of the two deals was upsized and one priced at the rich end of price talk while the other came on top of yield talk.

And both deals were well subscribed, sources said.

Anixter priced a $350 million issue of non-callable 7.5-year senior notes (Ba3/BB) at par to yield 5½%.

The yield printed on top of yield talk and also on top of initial guidance, according to market sources.

The 5½% notes were quoted at par ½ bid, par ¾ offered at the underwriter, a portfolio manager said.

Just before that a trader saw them at par ¼ bid, par ¾ offered.

Wells Fargo was the left bookrunner for the acquisition financing deal. BofA Merrill Lynch and J.P. Morgan were the joint bookrunners.

HealthSouth upsizes

HealthSouth priced an upsized $350 million add-on to its 5¾% senior notes due Nov. 1, 2024 (B1/B+) at 100.5 to yield 5.678%.

The acquisition deal was increased from $300 million.

The reoffer price came at the rich end of the 100 to 100.5 price talk and also on top of earlier guidance.

Shortly after the terms circulated the add-on paper was at par ¾ bid, 101½ offered, a trader said.

Not long after a portfolio manager said the tap paper was at 101¼ bid, 101 5/8 offered, going out.

Goldman Sachs, BofA Merrill Lynch, Barclays, Citigroup, J.P. Morgan, Morgan Stanley, RBC, SunTrust and Wells Fargo were the joint bookrunners.

Emdeon roadshow

The opening week of August could be a front-loaded week, meaning that the news flow, which was comparatively strong in the first two sessions of the week, could taper off significantly, a buyside source said.

“We may start to hear those crickets that people keep talking about,” the investor quipped.

However there are likely still one or two deals – one expected from the energy sector and both possibly drive-bys – coming before Friday’s close, a syndicate source said.

On Tuesday Emdeon Inc. began a short roadshow for a $250 million offering of 5.5-year senior notes (Caa1/CCC+).

Initial guidance is in the low 6% yield context, according to a market source.

Citigroup, BofA Merrill Lynch, Deutsche Bank, Goldman Sachs, Jefferies, Mizuho and SunTrust are the joint bookrunners for the acquisition financing.

BUT talk is 102 to 102.5

Meanwhile the crickets have already started to chirp in the European primary market.

The news flow so far in August has been extremely thin there.

On Tuesday French electrical home equipment retailer BUT SAS talked a €66 million add-on to its 7 3/8% senior secured notes due Sept. 15, 2019 (B) at 102 to 102.5.

The deal, via bookrunner Goldman Sachs, is expected to price on Wednesday.

The Emerainville, France-based company plans to use the proceeds for general corporate purposes, which may include the purchase of additional stores or store networks.

Outflows

Cash flows to dedicated high-yield funds were negative on Monday, the most recent session for which data was available at press time, according to a buyside source.

High-yield ETFs saw $405 million of outflows on Monday.

Asset managers sustained $150 million of outflows on the session.

Dedicated bank loan funds also saw negative flows on Monday, sustaining $75 million of outflows on the session.

Anixter issue improves

In the secondary market, a trader said that Anixter’s 5½% notes due in March 2023 were moving around in a 100½ to 101¼ context when they were first freed for aftermarket dealings.

After that, he said, the new paper from the Glenview, Ill.-based distributor of electrical wire and cable and other electronic components “came in a touch” from its earlier highs, finishing around 100½ to 100¾ bid.

Traders meantime did not see any immediate aftermarket activity in Birmingham, Ala.-based post-acute healthcare services provider HealthSouth’s add-on to its 5¾% notes due 2024

Pharmaceutical Product active

For a second straight session, the 6 3/8% notes due 2023 from Pharmaceutical Product Development LLC and its corporate parent, Jaguar Holding Co. II were among the day’s most active junk bonds.

A trader quoted those notes at 100 3/8 bid, which he said was down by 1/8 point from their close on Monday.

He said volume topped $68 million, on top of the more than $66 million which had changed hands on Monday after the quick-to-market $1,125,000,000 offering had priced at par.

At another shop, a trader said that the Wilmington, N.C.-based clinical laboratory services provider’s new issue went home at 100½ bid, which he called a ½ point gain on the day.

Friday deals trade in a range

Going back a little bit further, traders saw the two offering that had come to market on Friday pretty much range bound on Tuesday, trading within ¼ point up or down from their levels on Monday, when each had been seen continuing to each trade well above their respective discounted issue prices.

A trader saw “a handful of trades” in TerraForm Global’s 9¾% notes due 2022, pegging those bonds up ¼ point on the day at 100 1/8 bid.

A second trader, though, quoted the bonds off 3/8 point, seeing them in a 99 5/8 to par context.

At another shop, a market source saw the notes about unchanged at 99 7/8 bid, though he saw “decent-sized trading” of over $14 million.

The Bethesda, Md.-based clean energy company had priced $810 million of those notes on Friday via its TerraForm Global Operating LLC subsidiary at 98.753 to yield 10% in a scheduled forward calendar offering.

They had immediately moved up to a par to 100¼ bid context on initial aftermarket volume of over $26 million and then continued to mostly hold those gains on Monday, when more than $17 million changed hands.

Friday’s other offering – Cable & Wireless Communications’6 7/8% notes due 2022 – were seen by a trader to be unchanged at 100½ bid, with “only a couple of trades there.”

A second trader quoted the paper at 100 3/8 bid, 101 1/8 offered, calling that a ¼ point gain on the day.

The London-based provider of telecommunications services to the United Kingdom had priced $750 million of those notes on Friday as a regularly scheduled forward calendar offering via its Sable International Finance Ltd. subsidiary.

The notes had priced at 98.644 to yield 7 1/8%, and had traded as high as a par to 100¼ bid context during initial aftermarket dealings of over $28 million.

Brisk activity continued on Monday, with over $17 million of the bonds seen moving around between 99¾ and 100 1/8 bid.

Sprint surges after results

A trader said that “a couple of new issues and Sprint kind of dominated today,” reporting active dealings at mostly higher levels in the Overland Park, Kan.-based wireless carrier’s paper.

“They had good numbers,” he said. “It looks like all of that stuff was up pretty good.”

Sprint’s most active issue, its 7 5/8% notes due 2025, “traded a ton” and was up more than 2 points, ending at 94 5/8 bid, he said.

A second trader saw the notes even better, quoting them at 95 1/8 bid late in the day, up 2 3/8 points on turnover of more than $31 million.

Among the company’s other issues, its 7 7/8% notes due 2023 jumped nearly 3 points to 98 bid, with over $23 million seen having traded, while its 7 1/8% notes due 2024 gained more than 2¼ points to end at 93½ bid, with about $19 million having moved around.

While revenues for the quarter came in at $8.03 billion, well below the $8.3 billion Wall Street was expecting, the 1 cent per share loss was less than the nickel per share of red ink analysts had expected.

And some internal performance measures showed clear improvement, including total net customer additions, which swung to a gain of 675,000 from a loss of 220,000 a year earlier, and customer turnover, or churn, which dropped to 1.56% from 2.05% a year ago.

The company also said it would be monetizing its receivables and expressed optimism about its overall liquidity situation.

Indicators turn mixed

Statistical measures of junk market performance turned mixed on Tuesday, after having been lower across the board on Monday, their first downside performance in a week.

Those performance measures had moved solidly higher last Tuesday and Wednesday to break out of a seven-session slump, and then turned mixed on Thursday and Friday.

The KDP High Yield Daily Index gained 5 basis points to close at 69.35 on Tuesday, after having retreated by 3 bps on Monday, its second consecutive loss.

Its yield, meanwhile, came in by 2 bps to 5.91%; it had been unchanged on Monday at 5.93%, after having edged up to that level by 1 bp on Friday.

The Markit Series 24 CDX North American High Yield Index was unchanged on Tuesday to end at 106 1/32 bid, 106 3/32 offered. It had been down 1/8 point on Monday after having improved by 1/32 point on Friday.

The Merrill Lynch North American Master II High Yield Index, though fell by 0.044% on Tuesday, its second straight setback, following Monday’s 0.095% retreat, its first downturn after four straight advances.

Tuesday’s loss lowered the index’s year-to-date return to 1.721% from 1.766% on Monday. Those levels also remained well down from the 4.062% reading recorded on May 29, the index’s peak level for the year so far.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.