NFP drives-by; Charter returns to par; AMC active; Party City falls post-earnings

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 8 – NFP Corp. priced a $350 million issue of eight-year senior secured notes (B1/B) at par to yield 7½% in a Monday drive-by.

The third deal to clear the high-yield new-issue market in the past three sessions, its execution shares aspects with those of its two predecessors, the Advisor Group Holdings, Inc. 8 5/8% senior secured notes due 2027 (B2/B-/B) and the CCO Holdings, LLC/CCO Holdings Capital Corp. 6 3/8% senior notes due 2029 (B1/BB-).

Like them, NFP Corp. came as a drive-by, was upsized from $300 million, and enjoyed an execution that saw price talk plummet from early guidance.

In the case of NFP the yield printed at the tight end of the downwardly revised 7½% to 7 5/8% yield talk, which was cut from earlier talk in the 7¾% area, and from initial guidance in the 8% area.

Following a tumultuous month of July in the primary market, which saw deals delayed or postponed, or pricing at deep discounts to par, the trio of deals that have cleared the market since last Thursday – all pricing at par, at the tight ends of talk or inside of talk – demonstrates that the dealers can still scare up a crowd, and that high-yield bond investors, given the right circumstances, remain willing to put cash to work in new issues, sources say.

In the wake of NFP's Monday drive-by the active forward calendar was empty.

Meanwhile, the secondary space saw another strong session on Monday with the cash bond market adding ¼ to 3/8 point with ETF-buying continuing to lift the broader space.

However, trading volume remained light as activity in recent issues faded.

The strength on Monday came after the market wavered following last Friday’s jobs report, which blew past expectations reigniting concerns about inflation and an overly aggressive Federal Reserve.

The market staged another blockbuster rally following the Federal Reserve’s July 26 announcement and gained almost 2 points in a week and a half as the market dialed back its expectations for future rate hikes.

While the market remained strong on Monday, there is an air of caution in the market with many concerned there is more downside in store, a source said.

Market players will be closely watching July’s Consumer Price Index report set for release on Wednesday.

While volumes were relatively light, Charter Communications, Inc. subsidiary CCO Holdings, LLC’s recently priced 6 3/8% senior notes due 2029 (B1/BB-) continued to see heavy volume.

The notes returned to par after dropping below the previous session.

AMC Entertainment Holdings Inc.’s 10% senior secured second-lien notes due 2026 (Caa3/CCC-) continued to see heavy volume with the notes maintaining their post-earnings gains.

However, Party City Holdings Inc.’s senior notes underperformed the market and were down 1½ to 3 points following earnings.

Charter at par

CCO Holdings’ recently priced 6 3/8% senior notes due 2029 returned to par in heavy volume after dropping below the previous session.

The 6 3/8% senior notes traded as high as par 3/8 during Monday’s session.

However, they were changing hands in the par to par 1/8 context heading into the market close.

There was $42 million in reported volume.

The notes closed the previous session on a 99-handle.

CCO Holdings priced an upsized $1.5 billion, from $1 billion, issue of the 6 3/8% notes at par on Aug. 4.

While the offering was heavily oversubscribed, it fell below issue price amid the market weakness last Friday.

AMC active

AMC’s 10% senior secured second-lien notes due 2026 were among the most actively traded issues of Monday’s session.

While the notes were largely unchanged day-over-day, they held onto the strong gains made since reporting earnings.

The 10% notes continued to trade on an 84-handle and stood poised to close the day at 84¼ with the yield 15½%, according to a market source.

There was $47 million in reported volume.

AMC’s 7½% first-lien senior secured notes due 2029 (Caa1/B-) continued to rise with the notes adding another 1 3/8 point.

The notes were changing hands in the 93 1/8 to 93 3/8 context heading into the market close with the yield about 8 7/8%.

Both issues have gained about 3 points since AMC announced better-than-expected earnings and a special dividend in the form of a preferred equity unit for class A common stock holders.

The APE special dividend will give the company the ability to issue more preferred shares.

The market expects the company will issue more shares to reduce their debt burden, sources said.

Party City down

Party City’s senior notes underperformed the market with the notes falling following earnings.

The party goods retailer’s senior secured first-lien floating rate notes due 2025 (B3/B-), which currently carry a coupon of 8.061%, fell 2¾ points to close Monday at 60¼, according to a market source.

The small issue of about $156 million was active with $9 million on the tape.

The 8¾% senior notes due 2026 were off 1 5/8 points to close the day at 62 3/8 for a yield of 25 5/8%.

There was $7 million in reported volume.

While the company beat analyst expectations for adjusted EBITDA of $45.8 million, it still reflected an 87% decrease year-over-year.

Forward guidance was also weaker than expected, a source said.

Indexes

The KDP High Yield Daily index gained 18 points to close Monday at 57.31 with the yield now 6.45%.

The index posted a weekly loss of 3 points on the week last week.

The ICE BofAML US High Yield index gained 35.2 bps with the year-to-date return now negative 8.036%.

The index posted a cumulative gain of 75.1 bps on the week last week.

The CDX High Yield 30 index rose 16 bps to close Monday at 101.58.

The index posted a cumulative gain of 36 bps on the week last week.

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