Four issuers tap the market; forward calendar balloons; Prime at a premium; Cenovus jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 26 – The domestic high-yield primary market saw an active session on Monday with four drive-by deals pricing and the active forward calendar ballooning to $5.7 billion.

The activity came on a rough day for the market with the secondary space soft as equities experienced their worst single-day decline in almost two months.

However, while the market was down, the sell-off was orderly. “There’s been no real panic, no rush to hit bids,” a source said.

There were also some offers-wanted-in-competition lists circulating the market with buyers attempting to take advantage of a down day, another source said.

New paper remained in focus in the secondary space.

However, several recent deals had mixed performances.

Prime Healthcare Services, Inc.’s 7¼% senior secured notes due 2025 were putting in a strong performance with the notes trading up to a 101-handle.

However, Advantage Sales & Marketing Inc.’s 6½% senior notes due 2028 (B2/B) were lagging their issue price after breaking for trade.

Outside of the new paper, Cenovus Energy Inc.’s senior notes were the big winners of the day with the capital structure jumping more than 7 points on news of an acquisition.

Monday’s primary

Notwithstanding a rocky day in the stock market, with the Dow sustaining a 650 point drop, the high-yield primary market news flow was extremely heavy.

Four issuers brought drive-by deals, and the active new issue calendar rocketed to $5.7 billion.

In the face of the volatility in equities, executions appeared solid or better.

Cable One, Inc. priced an upsized $650 million issue (from $500 million) of 4% 10-year senior notes (B2/BB-) inside of talk.

In other drive-by action, MultiPlan upsized its offering of eight-year senior notes (B3/B-) to $1.3 billion from $1.2 billion.

Talk was revised to 5 5/8% to 5¾% from earlier talk in the 5¾% area.

Books were scheduled to close early Monday evening, and the deal, which was in the market as a Monday drive-by, was set to price thereafter.

No terms were available at press time.

The concurrent MultiPlan $2.47 billion term loan B was heard to have hit headwinds on Monday, as prospective lenders assert that covenants allow too much incremental first-lien flexibility, a trader said.

Advantage’s weak break

Advantage Sales & Marketing’s 6½% senior notes due 2028 (B2/B) saw a weak break after pricing wider than talk in a Monday drive-by.

While there were some trades of the 6½% notes above par, it was mostly the underwriter attempting to support the deal, a source said.

The majority of prints were on a 99-handle.

They were marked at 99¼ bid, 99¾ offered heading into the market close.

While the deal priced wider than talk, it was still tight for the credit.

“The market being down doesn’t help much either,” a source said.

Advantage priced an upsized $775 million, from $500 million, issue of the 6½% notes at par in a Monday drive-by.

Pricing came wider than price talk for a yield in the 6¼% area. Initial guidance was in the high 5% area.

Prime at a premium

Prime Healthcare’s 7¼% senior notes due 2025 (B2/B-/B) were putting in a strong performance on a weak day for the market.

The 7¼% notes were changing hands in the 101½ to 101 7/8 context heading into the market close.

There was $25 million of the bonds on tape during Monday’s session.

The deal carries a nice coupon for secured paper, a source said.

Health care names have also been in demand recently.

Prime priced an upsized $700 million, from $610 million, of the 7¼% notes at par on Friday.

The yield printed at the tight end of the 7¼% to 7½% yield talk and tight to initial guidance in the mid-7% area.

Cenovus gains

While the market was weak, Cenovus’ senior notes were up more than 7 points on news the oil and natural gas company plans to acquire Husky Energy Inc.

Cenovus’ 5 3/8% senior notes due 2025 gained 7 1/8 points to close the day at 107 3/8.

The notes were the most active in the capital structure with $18 million in reported volume.

The 4¼% senior notes due 2027 jumped 7¾ points to 102.

Cenovus announced on Monday that it would acquire rival Husky Energy in an all-stock deal valued at $2.9 billion.

Funds see $162 million Friday inflows

The dedicated high-yield bond funds saw $162 million of net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $157 million of inflows on the day.

Indexes drop

Indexes opened Monday with losses after all were largely flat the previous week.

The KDP High Yield Daily index sank 11 points to close Monday at 66.68 with the yield now 5.41%.

The index posted a cumulative gain of 4 bps on the week last week.

The ICE BofAML US High Yield index dropped 30 bps with the year-to-date return now 0.959%.

The index was up 18.5 bps on the week last week.

The CDX High Yield 30 index dropped 67 bps to close Monday at 105.08.

The index posted a cumulative gain of 1 bp on the week last week.

© 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.