Envision accelerates timing; W&T on tap; Rite Aid gains; Hi-Crush drops; Ascent, Altra unchanged

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 27 – While the domestic primary market saw no new deals price during Thursday’s session, Friday promises to be an active day.

Envision Healthcare Corp. accelerated timing on its highly anticipated $1,625,000,000 offering of eight-year senior notes (Caa1) with pricing now expected on Friday.

Vine Oil & Gas LP and Vine Oil & Gas Finance Corp.’s $350 million offering of senior notes due April 15, 2023 (Caa1/B-) is also on tap for Friday.

The forward calendar continued to grow with W&T Offshore, Inc. planning a roadshow for a $625 million offering of five-year notes with pricing expected in the Oct. 1 week.

The European primary market saw some action on Thursday.

James Hardie International Finance priced an upsized €400 million issue of eight-year senior notes (Ba1/BB/BBB-), and Avis Budget Finance plc priced a €350 million issue of 4¾% long seven-year senior notes (expected B1/confirmed BB).

El Corte Ingles, SA set price talk for its €600 million offering of 5.5-year senior notes (expected ratings Ba1/BB+/BB+) with pricing expected on Friday.

Meanwhile, the deals to price during Wednesday’s session were largely unchanged in secondary trading.

Altra Industrial Motion Corp.’s 6 1/8% senior notes due 2026 (B2/B+) and Ascent Resources Utica Holdings, LLC’s 7% senior notes due 2026 (B2/BB-) continued to trade above their issue price.

Chesapeake Energy Corp.’s 7% senior notes due 2024 improved slightly in high-volume activity with the notes climbing back to par.

Refinitiv’s 8¼% senior notes due 2026 (Caa2/B-/B+) remained major volume movers with the notes continuing to trade down in the final days before the deal’s settlement.

However, Rite Aid Corp.’s 6 1/8% senior notes due 2023 were the most active bonds in the space with the notes seeing gains after the company announced earnings.

Hi-Crush Partners LP’s 9½% senior notes due 2026 were losing ground after the company announced it was idling operations at one of its plants.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw outflows of $1.569 billion in the week ended Wednesday, Sept. 26, according to fund-flow statistics generated by AMG Data Services Inc.

The outflow is the largest that funds have seen since the week ended July 4 when $1.73 billion left the space. Most of the outflows came from ETFs, sources said.

Envision accelerates

Envision Healthcare accelerated timing on its $1,625,000,000 offering of eight-year senior notes (Caa1), according to market sources.

The deal, backing the buyout of the company by KKR, is now on deck for Friday, cutting short a roadshow that had been expected to continue into the early part of the Oct. 1 week.

As the market awaits official price talk, the deal is shaping up at 8¾% to 9%, according to sources, one of whom saw a sizable order at the wide end of that range.

Earlier in the week, the deal was heard to be going very well at initial price talk in the high 8% area.

Timing on Envision Healthcare's $5.5 billion term loan, heard to be a blowout, was also accelerated earlier in the week.

Vine Oil & Gas on deck

Vine Oil & Gas is expected to price its $350 million offering of senior notes due April 15, 2023 (Caa1/B-) on Friday.

As the market awaits official talk, initial talk on the 4.5-year notes is in the 9½% area, a trader said.

W&T Offshore starts Monday

W&T Offshore plans to start a roadshow on Monday in New York for a $625 million five-year second lien notes offering.

Pricing is expected late in the Oct. 1 week.

Morgan Stanley is a joint bookrunner for the debt refinancing deal with other joint bookrunners expected to be announced, the source said.

James Hardie upsizes

In the busier euro-denominated primary, James Hardie International Finance priced an upsized €400 million issue of eight-year senior notes (Ba1/BB/BBB-) at par to yield 3 5/8%.

The issue size was increased from €350 million.

Dealer markets were in the range of par 7/8 bid, 101 ¼ offered, a market source said.

HSBC was the lead bookrunner.

Avis Budget prices tight

Avis Budget Finance plc priced a €350 million issue of 4¾% long seven-year senior notes (expected B1/confirmed BB) at par to yield 4.751% on Thursday.

The yield printed at the tight end of the 4¾% to 4 7/8% yield talk, and tight to initial guidance in the high 4% area.

Joint bookrunner Credit Agricole will bill and deliver. Barclays, Deutsche Bank and JPMorgan are also joint bookrunners.

El Corte Ingles talk 3% to 3¼%

El Corte Ingles talked its €600 million offering of 5.5-year senior notes (expected ratings Ba1/BB+/BB+) to yield 3% to 3¼%.

The deal is set to price Friday.

Unchanged

The deals to price during Wednesday’s session were seen as unchanged in secondary trading on Thursday.

While trading volume was light, Altra Industrial’s 6 1/8% senior notes due 2026 were seen at 101½ bid, 102 offered, according to a market source.

The notes were changing hands between 101 5/8 and 101¾ in high-volume activity after breaking for trade on Wednesday.

Altra Industrial priced a $400 million issue of the 6 1/8% notes at par on Wednesday.

Ascent Resources 7% senior notes due 2026 were also largely unchanged in high-volume trading on Thursday.

The 7% notes were seen at 99 5/8 bid, 99 7/8 offered with most trades around 99 5/8, sources said. About $30 million of the bonds had traded by late afternoon.

Ascent Resources priced a $600 million issue of the 7% notes at 99.236 to yield 7 1/8% on Wednesday.

Chesapeake up to par

Chesapeake Energy’s 7% senior notes due 2024 climbed back to par during Thursday’s session after spending much of Wednesday below.

The notes were seen at par bid, par ¼ offered on Thursday with most trades at par, sources said. They were trading between 99 5/8 and 99.938 on Wednesday.

The 7% notes remained active on Thursday with more than $26 million of the bonds on the tape by the late afternoon.

Chesapeake Energy’s 7½% senior notes due 2026 saw light trading volume on Thursday with the notes unchanged at par bid, par ¼ offered, sources said.

Chesapeake Energy priced $1.25 billion of senior notes in two-tranches in a Tuesday drive-by.

The deal included an $850 million tranche of the 7% notes and a $400 million tranche of the 7½% notes, both of which priced at par.

Sources pointed to the tight pricing of the notes as the cause of their lackluster performance in the secondary space.

Refinitiv weakens again

Refinitiv’s 8¼% senior notes due 2026 were again major volume movers during Thursday’s session with the notes continuing to lose ground.

The 8¼% notes were seen at 99½ bid, 99¾ offered early in the session but continued to trade down as the day progressed.

The 8¼% notes were seen trading between 99¼ and 99 3/8 in the late afternoon.

More than $44 million of the bonds had traded by the late afternoon.

The high-volume activity was largely the result of flippers who were again active before the Oct. 1 settlement of the notes, a market source said.

Refinitiv’s 6¼% notes due 2026 saw much lighter trading volume with about $10 million of the bonds changing hands on Thursday.

The 6¼% notes were also down about ¼ point to trade between par ¼ and par 3/8.

Refinitiv priced its four-tranche $4.25 billion equivalent offering on Sept. 18, which included a $1.25 billion tranche of the 6¼% first lien notes and a $1,575,000,000 tranche of the 8¼% notes.

Both tranches priced at par.

Rite Aid gains

Rite Aid’s 6 1/8% notes due 2023 were in focus and making gains in the secondary space after the company reported second-quarter earnings prior to the market open.

The 6 1/8% notes were up more than 1.5 points to trade at 90.5, according to a market source.

There were more than $48 million bonds on the tape by late afternoon.

While improved, the notes are still far below their levels prior to the termination of the retailer’s merger agreement with Albertsons in early August.

The notes were previously trading between 99 and par before the merger was called off.

Rite Aid reported EBITDA of $148.6 million for the second quarter, an increase over the previous year.

The company also announced a reduction in its debt balance to $3.4 billion and liquidity of $1.3 billion.

Hi-Crush drops

Hi-Crush’s 9½% senior notes due 2026 were trading down on Thursday after the company announced it was idling frac sand production at one of its sites.

The 9½% notes were down about ¾ point to trade at 93¾, a market source said. About $18 million bonds were on the tape by the late afternoon.

The 9½% notes were also down in active trading on Wednesday. They were trading in the 97 range prior to Wednesday’s session, a source said.

Hi-Crush announced on Wednesday that it was temporarily halting dry plant operations at one of its facilities in Wisconsin.

Outflows

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

High-yield ETFs, which have sustained conspicuous outflows in the past fortnight, disgorged another $404 million on Wednesday, the trader said.

Actively managed high-yield funds sustained $15 million of outflows on Wednesday.

On Thursday afternoon, the market learned that the dedicated junk funds saw $1.569 billion of outflows in the week to Wednesday's close, all but a fraction of it thought to have come out of the ETFs, market sources say.

Indexes mixed

Three benchmarks for the high-yield secondary market were again mixed on Thursday, as they have been for much of the week.

The KDP High Yield Daily index was up 3 basis points to close Thursday at 70.43. The index was down 1 bp on Wednesday, was flat on Tuesday, and was up 5 bps on Monday.

The ICE BofAML US High Yield index continued to climb on Thursday. The index was up 7.7 bps with the year-to-date return now 2.443%.

The index was up 7.6 bps on Wednesday but was down 1.3 bps on Tuesday and 3.8 bps on Monday.

The CDX High Yield 30 index gave up its gains from Wednesday. The index dropped 14 bps to close Thursday at 107.26. The index was up 11 bps on Wednesday after closing Tuesday flat.

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