AMN drives by; Telesat joins slate; WeWork lower amid downgrade; Rite Aid better

By James McCandless and Paul A. Harris

San Antonio, Sept. 26 – The junk new-issue session generated a steady stream of news on Thursday, with one active drive-by, while new issues also dominated in high-yield secondary trading, netting positive result.

AMN Healthcare, Inc. priced a $300 million issue of eight-year senior notes (Ba2/BB-) at par to yield 4 5/8%, via SunTrust.

Telesat Canada and Telesat LLC rolled out a $500 million offering of eight-year senior notes, with pricing expected on Friday.

Pricing for the upsized $785 million Shutterfly Inc. seven-year senior secured notes deal, which has been brewing for almost two weeks, was refined to specify an 8½% coupon at an issue price of 95.

In the secondary, new Beacon Roofing Supply, Inc., Qorvo, Inc. and Howden (Granite Holdings US Acquisition Co.) notes were free to trade.

Elsewhere, WeWork Cos. Inc.’s issues moved lower amid a ratings downgrade.

Drug store name Rite Aid Corp.’s paper performed better after the company released better-than-expected second-quarter earnings.

AMN Healthcare price tight

AMN Healthcare priced a $300 million issue of eight-year senior notes (Ba2/BB-) at par to yield 4 5/8%, via SunTrust.

The yield printed at the tight end of yield talk in the 4¾% area, as well as initial guidance in the high 4% area.

Telesat Canada and Telesat LLC rolled out a $500 million offering of eight-year senior notes (B3/B) on a tight timeline.

The deal, which kicked off Thursday, is talked yield 6½% to 6¾%, inside of initial guidance in the 7% area, and is set to price Friday.

There was also news on the Shutterfly deal, which has spent nearly two weeks running the high-yield gauntlet.

Shutterfly honed talk on its upsized $785 million offering of seven-year senior secured notes (B1/B), specifying an 8½% coupon at an issue price of 95. The final coupon talk comes on top of coupon talk heard earlier in the week. The issue price is set at the cheap end of the 95 to 96 discount talk. That talk, itself, was revised from the earlier 8¼% to 8½% yield talk.

Initial guidance had the deal coming to yield in the low-to-mid 7% area, a trader said.

The deal is set to price Friday.

And Calumet Specialty Products Partners, LP talked its $550 million offering of 5.5-year senior notes (Caa1/B-/B-) to yield 11%.

Final talk comes in line with initial guidance in the high 10% to 11% area, a trader said.

There have also been covenant changes.

Books close Friday.

CABB talk

The European new issue market, where lately a vigorous appetite for risk has been on full display, heard news Thursday on a €640 million three-part offer from Germany's CABB Group, which one buyside source characterized as a conspicuously leveraged issuer.

The deal features two tranches of secured notes: €300 million minimum of 5.5-year fixed-rate notes talked to yield 5¼% to 5½%, as well as a to-be-determined amount of 5.5-year floating-rate notes talked to price at par with a 525 basis points to 550 bps spread to three-month Euribor and no Euribor floor, at par.

The sole unsecured tranche comes as a seven-year senior note with three years of call protection talked with a 9½% coupon at 97.522 to yield 10%.

CABB comes on the heels of Grupo Cirsa (LHMC Finco 2)'s upsized €400 million (from €375 million) six-year 7¼%/8% senior PIK toggle notes (S&P: CCC+), which priced at par in a notable Wednesday execution.

The cash, including the upsize amount, goes to sponsor Blackstone Group which completed its acquisition of Cirsa in July 2018.

Pressed for an explanation as to why some of the typically staid European high-yield accounts are all of the sudden sticking their necks out, an investment banker in London said that accounts have cash to put to work.

Also investors are keen to maximize returns on their portfolios for 2019, the banker said.

And the clock is ticking harder than one might expect, the official added, explaining that the European new-issue market can be expected to operate at a steady pace for about another month, following which investors will be keen to lock in those yearly returns around the end of October, whereupon the euro junk new-issue market can be expected to slow to a crawl in the run-up to the new year.

$258 million outflow

The dedicated high-yield bond funds sustained $258 million of net outflows in the week to Wednesday's close, according to information posted on the Internet, Thursday afternoon, by Lipper US Fund Flows.

That's a significant reversal in the retail cash tides of the high-yield asset class, according to a market source, who said that over the course of the previous two weekly reporting periods the funds saw a total of $5.2 billion of net inflows.

New notes active

New Wednesday notes saw the bulk of Thursday volume, traders said.

Herndon, Va.-based roofing materials distributor Beacon Roofing’s new 4½% senior secured notes due 2026 landed at 101¼ bid. Its more established 4 7/8% senior notes due 2025 shaved off ¼ point to close at 98 bid.

The two tranches combined to see about $62 million trading.

The $300 million issue priced at par on Wednesday.

The yield printed at the tight end of the 4½% to 4 5/8% yield talk. Initial talk was in the 4¾% area.

Greensboro, N.C.-based semiconductor company Qorvo’s new 4 3/8% senior notes due 2029 ended ½ point higher to close at 100½ bid.

About $33 million of the notes traded.

The $350 million issue, upsized from an initial $300 million, priced in a quick-to-market Wednesday trade.

Meanwhile, Glasgow, Scotland-based air and gas handling name Howden’s new 11¾% senior paper due 2027 moved up to 96½ bid.

About $16 million of the paper changed hands.

The paper came to market in a $300 million deal priced at 96.176.

WeWork lower

Elsewhere, WeWork’s notes were seen moving lower, market sources said.

The 7 7/8% senior notes due 2025 fell 1 point to close at 91 bid.

The New York City-based co-working name received ratings downgrades from S&P Global Ratings on Thursday.

The agency lowered its overall rating to B- from B and also shaved its senior unsecured notes rating.

S&P said that heightened uncertainty around the company’s ability to raise capital has potential consequences for liquidity.

It also revised its view to negative.

“It just goes to show that even start-ups have to fall in line eventually,” a trader said.

The company has been under pressure in the past few weeks after a dispute over its valuation led to the delay of an initial public offering and the resignation of its chief executive officer.

Rite Aid better

Rite Aid’s notes were seen performing better on Thursday, traders said.

The 6 1/8% senior notes due 2023 rose 1½ points to close at 81½ bid.

The notes saw about $24 million exchanged by the end of the day.

Early Thursday, the Camp Hill, Pa.-based drug store chain released better-than-expected second-quarter earnings results.

The company reported a 12 cents per share profit, better than the 8 cents per share profit expected by analysts.

Revenues were just under predictions at $5.37 billion.

The name’s structure has seen turmoil over the last year, experiencing rocky quarters and a change in the chief executive officer position.

“They can put out good numbers but they have to do it consistently,” a trader said. “That’s been one of their biggest problems.”

Indexes down

Three high-yield indexes saw negative shifts on Thursday.

The KDP High Yield Daily index shaved off 1 bps on Thursday, finishing the session at 71.65 with the yield unchanged at 5.37%.

The index dropped 14 bps on Wednesday, went unchanged on Tuesday and added 1 bps on Monday.

The ICE BofAML US High Yield index dipped 4.2 bps on Thursday with the year-to-date return now at 11.628%.

The index slid 21.3 bps on Wednesday, fell 1.2 bps on Tuesday and garnered 1.6 bps on Monday.

The CDX High Yield 30 index lost 32.78 bps to 107.1289.

The index improved by 32.58 bps on Wednesday, declined by 32.86 bps on Tuesday and increased by 32.39 bps on Monday.

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