Tenet, Vistra, Albertsons, MGM price; Studio City on tap; Acrisure, HCA, Energizer down

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan 22 – The high-yield primary market was in full force on Tuesday with four deals totaling $4.15 billion pricing in quick-to-market trades.

It was the highest volume day for new deal activity since Sept. 18 with all four deals upsizing and executions coming tight.

Tenet Healthcare Corp. doubled the size of its offering, pricing a $1.5 billion issue of eight-year senior secured second-lien notes at par to yield 6¼%.

Vistra Energy Corp. priced an upsized $1.3 billion issue of eight-year senior notes (Ba3/BB) at par to yield 5 5/8%.

MGM Growth Properties LLC priced an upsized $750 million issue of eight-year senior bullet notes (B1/BB-) at par to yield 5¾%.

Albertsons Cos., Inc. priced an upsized $600 million issue of seven-year senior notes (B3/B+) at par to yield 7½%.

In addition to the new deal activity, Studio City Co. Ltd. and Studio City Finance Ltd. joined the forward calendar with a $425 million offering of five-year senior notes (S&P: B+) which will roadshow during the latter part of the Jan. 21 week.

Meanwhile, the secondary space was soft on Tuesday with concerns about a slowdown in global growth dragging down equities and crude oil futures again on the decline.

The new paper remained in focus in the secondary space with recent deals continuing to come in from their initial highs after pricing.

Acrisure LLC’s and Acrisure Finance Inc.’s 8 1/8% senior notes due 2024 (B3/B) were down in high-volume activity on Tuesday while still trading sharply above their new issue price.

HCA Inc.’s 5 7/8% senior notes due 2029 (Ba2/BB-/BB) and their 5 5/8% senior notes due 2028 also saw a slight decline in active trading.

Energizer Holdings, Inc.’s 7¾% senior notes due 2027 (B2/B+) were losing ground on Tuesday after trading up their first two days in the market.

Outside of the new paper, Adient Global Holdings Ltd.’s 4 7/8% senior notes due 2026 were again down on Tuesday after staging a recovery following a sell-off last week.

Tenet doubles, prices tight

Tenet Healthcare doubled the size of its deal, pricing a $1.5 billion issue of eight-year senior secured second-lien notes at par to yield 6¼%.

The issue size doubled from $750 million.

The yield printed at the tight end of yield talk in the 6 3/8% area and well inside of initial guidance in the 6¾% area.

Barclays was the active bookrunner.

The Dallas-based health care services provider plans to use the proceeds to redeem its 5½% senior notes due 2019 and its 6¾% senior notes due 2020.

The additional proceeds, resulting from the $750 million upsizing of the deal, will be used to redeem its 7½% senior secured second-lien notes due 2022.

Vistra upsized

Vistra Energy priced an upsized $1.3 billion issue of eight-year senior notes (Ba3/BB) at par to yield 5 5/8% in a Tuesday drive-by.

The issue size was increased from $700 million.

The yield printed in the middle of the 5½% to 5¾% final talk and tight to initial guidance in the 5¾% area.

J.P. Morgan Securities LLC was the lead.

The Irving, Texas-based integrated power company plans to use the proceeds to purchase and/or redeem Dynegy Inc.’s 7 3/8% senior notes due 2022 and for general corporate purposes.

The notes were lagging their issue price in the secondary space and were trading down to 99 7/8 shortly after breaking for trade, according to a market source.

MGM upsizes bullet deal

MGM Growth Properties priced an upsized $750 million issue of eight-year senior bullet notes at par to yield 5¾% in a quick-to-market Tuesday trade.

The issue size increased from $500 million.

The yield came at the tight end of the 5¾% to 5 7/8% yield talk. Initial guidance had the deal coming with a yield in the 5¾% to 6% area.

JPMorgan was the lead.

The Las Vegas-based real estate investment trust (REIT) plans to use the proceeds to repay revolver draws which were primarily related to payments for acquisitions completed in 2018 or expected to be completed in early 2019.

Albertsons drive-by

Albertsons Cos. priced an upsized $600 million issue of seven-year senior notes (B3/B+) at par to yield 7½% in a quick-to-market Tuesday trade.

The issue size was increased from $500 million.

The yield printed at the tight end of the 7½% to 7¾% yield talk.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Barclays, Deutsche Bank Securities Inc., RBC Capital Markets LLC, Wells Fargo Securities LLC and MUFG were the joint bookrunners.

The Boise-based grocery retailer plans to use the proceeds to repay the outstanding Safeway notes due 2019 and for general corporate purposes.

Studio City roadshowing

Studio City will roadshow a $425 million offering of five-year senior notes (S&P: B+) during the latter part of the Jan. 21 week, according to a market source.

The offer is expected to price early in the Jan. 28 week.

Deutsche Bank Securities Inc. is the lead.

The notes come with two years of call protection.

The Macau-based gaming and entertainment company plans to use the proceeds to help fund the tender offer for its 8½% senior notes due 2020.

Acrisure down

Acrisure’s 8 1/8% senior notes due 2024 were trading down in high-volume activity on Tuesday.

The notes shaved off 7/8 point and stood poised to close the day around par 5/8, according to a market source.

More than $43 million of the bonds were on the tape by the late afternoon.

The 8 1/8% notes traded as high as 102½ after breaking for trade on Friday although they closed the day around 101½.

The high coupon and shortage of new paper was driving the strong demand for the notes on Friday, sources said.

Acrisure priced an upsized $750 million issue of the 8 1/8% notes at par.

The issue size was increased from $500 million and the yield printed at the tight end of talk in the 8¼% area and inside of early guidance in the mid 8% area.

HCA active

HCA’s 5 7/8% senior notes due 2029 and 5 5/8% senior notes due 2028 remained active in the secondary space.

While the notes continued to trade more than 1 point above their issue price, they were also coming in from their highs after hitting the secondary space.

The 5 7/8% notes dropped ¼ point to close Tuesday at 101 3/8. More than $39 million of the bonds changed hands during Tuesday’s session.

The 5 7/8% notes traded as high as 101 7/8 on Friday but closed the day at 101 5/8.

HCA’s 5 5/8% senior notes due 2028 dropped ½ point on Tuesday to close the day at par ¼, according to a market source.

More than $27 million of the bonds changed hands during Tuesday’s session.

HCA priced an upsized $1.5 billion of senior notes in two tranches last Thursday, which included a $1 billion issue of the 5 7/8% notes that priced at par and a $500 million add-on to its 5 5/8% senior notes due 2028 which priced at 99 to yield 5.761%.

Energizer comes in

After solid upward momentum since pricing, Energizer’s 7¾% senior notes due 2022 were also trading down on Tuesday.

The notes were down 7/8 point to close Tuesday at 101¾, according to a market source. The notes closed Friday at 102 5/8 after trading as high as 102 7/8.

The 7¾% notes have traded sharply higher since Energizer priced a $600 million issue of the notes at par last Thursday.

Tuesday’s level marked the lowest level for the notes since they hit the market.

Adient down again

After staging a rally following a sell-off last week, Adient’s 4 7/8% senior notes due 2026 were again on the decline on Tuesday.

The 4 7/8% notes traded down ½ point to 75½ in active trading on Tuesday, according to a market source.

More than $17 million of the bonds changed hands during Tuesday’s session.

Moody’s Investors Service downgraded Adient’s corporate family rating to B2 from Ba3 and senior unsecured rating to B3 from B1 on Tuesday.

The downgrade was due to the continued deterioration of the company’s operating performance, the ratings agency said in a press release (see related story in this issue).

The notes dropped more than 3 points last Tuesday after the automotive parts manufacturer released preliminary earnings that missed analyst expectations.

The notes traded as low as 94¾ last Tuesday.

However, they pared their losses as the week progressed and closed Friday at 96.

Friday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Friday, the most recent session for which data was available at press time, a trader said.

High yield ETFs sustained $504 million of outflows on the day.

Actively managed funds saw $45 million of outflows on the day.

Indexes drop

Indexes were on the decline on Tuesday after all posted strong gains on the week last week.

The KDP High Yield Daily index dropped 10 basis points to close Tuesday at 68.82 with the yield now 6.51%.

The index saw a cumulative gain of 32 bps on the week last week.

The ICE BofAML US High Yield index dropped 19.3 bps on Tuesday with the year-to-date return now 3.727%.

The index was up 71.8 bps on the week.

After closing 2018 with a year-to-date return of negative 2.265%, the index catapulted past 3% returns in the first two weeks of 2019.

The CDX High Yield 30 index dropped 59 bps to close Tuesday at 104.19. The index saw a cumulative gain of 88 bps on the week.

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