E.W. Scripps, MTS Systems on tap; Dish gains continue; HCA active; U.S. Steel comes in

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 8 – As high-yield players resumed their places, some doing so on the heels of an extended holiday weekend trailing last Thursday's July 4 market close, a new issue calendar began to take shape on Monday.

E.W. Scripps plans to roadshow a $400 million offering of eight-year senior notes and MTS Systems Corp. plans to kick off a $300 million e of eight-year senior notes (ratings B3/B+) with pricing expected later in the week.

In a deal that could potentially play to junk bond investors in the United States and Europe, as well as to emerging markets investors, Aberdeen-based Ithaca Energy Ltd. disclosed plans to sell $700 million of five-year senior notes (B3/B/B+).

Meanwhile, there was also an uptick in activity in the secondary space, although liquidity was still light.

The secondary space was weak on Monday with many issues trading off as the session progressed, a market source said.

However, Dish Network Corp.’s junk bonds were on the rise as speculation about the satellite broadcaster launching a wireless network continued.

HCA Healthcare Inc.’s 7½% senior notes due 2022 were active with the healthcare space in general eyed in light of proposed legislation regarding surprise medical bills.

United States Steel Corp.’s junk bonds were again active with the notes giving back some of their gains after the U.S. imposed additional tariffs on steel imports from Vietnam.

Primary reactivates

As players resumed their places, some doing so on the heels of an extended holiday weekend trailing last Thursday's July 4 market close, a new issue calendar began to take shape on Monday.

E.W. Scripps plans to roadshow a $400 million offering of eight-year senior notes.

Initial guidance has the deal coming to yield in the low-to-mid 6% area, according to a trader.

Morgan Stanley, Wells Fargo, SunTrust, BofA, Fifth Third, PNC and US Bancorp are the joint bookrunners.

MTS Systems plans to kick off a $300 million offering of eight-year senior notes (ratings B3/B+) on Tuesday.

Initial guidance has the deal coming to yield in the 6¼% area, a trader said.

Wells Fargo is the left bookrunner.

And in a deal that could potentially play to junk bond investors in the United States and Europe, as well as to emerging markets investors, Aberdeen-based Ithaca Energy disclosed plans to sell $700 million of five-year senior notes (B3/B/B+).

Initial guidance has that deal coming to yield in the 10% area, according to a bond trader.

JP Morgan is leading the offer.

Dish gains

Dish’s junk bonds were again in focus and posting gains as speculation mounts about the satellite broadcaster expanding its services to include wireless telecommunications.

Dish’s 5 7/8% senior notes due 2024 were among the most actively traded issues in the secondary space.

The notes moved up to a 97 handle during Monday’s session, according to a market source.

While they have moved around in recent sessions, they were previously trading in a 94 to 96 context, the source said.

The bonds saw more than $23 million on the tape during Monday’s session.

Dish’s 7¾% notes due 2026 were up about ¾ point. The notes stood poised to close the day at par ¼, according to a market source.

Dish has been in focus and posting gains in recent sessions as headlines circulate about the company purchasing some of T-Mobile’s assets to become the United States’ fourth service provider.

T-Mobile is believed to be selling some of its assets to Dish to gain regulator approval for its merger with Sprint.

The New York Post reported on Monday that Google was in talks to join Dish in the creation of a new wireless service.

However, Google has denied the report.

HCA active

HCA’s 7½% senior notes due 2022 were active on Monday, although the notes were largely unchanged.

The 7½% notes were seen at 110¼ bid, 110¾ offered with about $20 million on the tape heading into the market close, sources said.

While active, the notes saw little movement in terms of price.

However, the healthcare space has been eyed recently as a legislative battle heats up over various proposals to curb surprise medical bills for consumers.

While the proposed legislation has investors eyeing the bonds of healthcare providers, sources were doubtful the legislation would have much impact on HCA.

U.S. Steel comes in

U.S. Steel’s junk bonds were again active on Monday. However, the notes were giving back some of their gains from last week.

U.S. Steel’s 6¼% senior notes due 2026 were down ¼ and stood poised to close Monday at 89, according to a market source.

The bonds saw more than $14 million in reported volume during Monday’s session.

While there were a bunch of odd lot prints, U.S. Steel’s 6 7/8% notes due 2025 were changing hands between 94 and 95 on Monday, a market source said.

The notes were previously trading in the 96 to 97 context.

The notes were coming in due to tariff concerns, a source said.

They were posting gains last week on news the U.S. would collect duties of up to 456.23% on imports of steel products from Vietnam, due to businesses allegedly importing steel through Vietnam to circumvent tariffs.

Friday inflows

The dedicated high-yield bond funds saw healthy inflows of cash on Friday, the most recent session for which data was available at press time, according to an investor.

High-yield ETFs saw $301 million of inflows on the day.

Actively managed high-yield funds saw $90 million of inflows on Friday, the investor said.

The news of Friday's daily cash flows came as numerous market participants learned that the combined funds saw $802 million of net inflows for the week to the July 3 close...that information came from a report from Lipper US Fund Flows which customarily appears late Thursday afternoons.

Of course, the Independence Day 2019 holiday took place last Thursday, so among market players who managed to turn the Thursday holiday into an extended weekend, the Lipper news was fresh on Monday.

The inflow for the week to the July 3 close was the fourth consecutive positive flow.

The dedicated high-yield bond funds have seen $12.7 billion of new inflows in the year 2019 to Friday's close, the market source said.

A much different fund flow dynamic continues to operate in the leveraged loan asset class, the source said.

The loan funds sustained $754 million of outflows in the week to the July 3 close, said the market source who added that it was the 33rd consecutive outflow sustained by the dedicated bank loan funds.

Indexes flat to down

Indexes were flat to down on Monday after all posted cumulative gains on the week last week.

The KDP High Yield Daily index was flat at 70.93 with the yield remaining at 5.41%.

The index saw a 14-bps gain on the week last week.

The ICE BofAML US High Yield index shaved off 1.8 bps with the year-to-date return now 10.339%.

The index saw a cumulative gain of 23.9 bps on the week last week.

The CDX High Yield 30 index dropped 38 bps to close Monday at 107.32.

The index posted a cumulative gain of 11 bps on the week last week.

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