Tempur Sealy, Vivint, Universal Health price; Wednesday deals busy; funds up $1.14 billion

By Paul Deckelman and Paul A. Harris

New York, May 19 – The high-yield primary sphere continued to churn out new deals on Thursday. The day saw a pair of upsized purely junk-rated offerings totaling $1.1 billion as well as a split-rated $800 million two-part transaction.

Mattress-maker Tempur Sealy International, Inc. came to market with a quickly shopped $600 million of 10-year notes, while home security services provider Vivint, Inc. priced $500 million of secured 6.5-year notes through its holding company as a regularly scheduled forward calendar deal. Both of those upsized junk offerings were quoted having firmed modestly in the aftermarket; Vivint’s existing paper, some of which could be taken out using new-deal proceeds, was solidly better.

Hospital operator Universal Health Services, Inc. did a quick-to-market, split-rated $800 million two-part deal, consisting of an add-on to its existing 2022 notes and a tranche of new 10-year paper. Both of those bonds also moved up from their respective issue prices.

Traders meantime saw considerable activity in the issues that had come to market on Wednesday from Sirius XM Holdings, Inc., the day’s busiest issue; NXP BV and Vereit, Inc. Both halves of the latter company’s two-part issue were seen to have strengthened, while the Sirius XM and NXP bonds remained tethered around their respective issue prices.

Away from the new deals, Halcon Resources Corp.’s paper jumped on the news that the troubled energy company and its creditors had reached agreement on a pre-packaged Chapter 11 restructuring arrangement.

Statistical market performance measures were lower across the board for a second consecutive session on Thursday. They had weakened on Wednesday after having been mixed on Tuesday. It was the third lower session in the last five.

Another numerical indicator – flows of investor cash in to or out of high-yield mutual funds and exchange-traded funds, considered a reliable barometer of overall junk market liquidity trends – turned positive this week after having suffered two straight weeks of large outflows before that. Some $1.14 billion more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the week ended Wednesday, versus last week’s $1.91 billion cash loss. (See related story elsewhere in this issue.)

Tempur Sealy upsizes drive-by

Three issuers came with a total of four tranches on Thursday.

Only two of the four were straight junk. Those generated $1.1 billion of proceeds. The other two tranches were split-rated.

Two of the three issuers came with drive-bys.

Two of the three issuers upsized their deals.

All four tranches priced in the middle of price talk.

Tempur Sealy International priced an upsized $600 million issue of 10-year senior notes (B1/BB) at par to yield 5½%.

The issue size was increased from $500 million.

The drive-by deal priced on top of yield talk as well as initial guidance.

J.P. Morgan Securities LLC, BofA Merrill Lynch, Wells Fargo Securities LLC, Fifth Third and Goldman Sachs & Co. managed the sale.

The Lexington, Ky.-based bedding provider plans to use the proceeds to redeem all $375 million of its 6 7/8% senior notes due 2020. Any remaining proceeds will be used for general corporate purposes, which may include stock repurchases.

Vivint upsized

APX Group, Inc., the holding company of Vivint, priced an upsized $500 million issue of senior secured notes due Dec. 1, 2022 (B1/B) at par to yield 7 7/8%.

The deal size was increased from $350 million.

The yield came in the middle of the 7¾% to 8% yield talk. Initial guidance was 8%.

Credit Suisse Securities (USA) LLC, BofA Merrill Lynch, Deutsche Bank Securities Inc., Citigroup Global Markets, Goldman Sachs, HSBC, Macquarie Capital, Mizuho, Morgan Stanley & Co. LLC and Guggenheim were the joint bookrunners.

The notes have the same maturity as the existing 8 7/8% senior secured notes, which came in a $300 million private placement late last year.

Proceeds will be used for general corporate purposes and for refinancing existing secured debt.

Universal Health split-rated

Universal Health Services priced $800 million of split-rated senior secured notes (Ba2/BBB-) in two tranches.

The deal included a $400 million add-on to the 4¾% notes due Aug. 1, 2022, which priced at 101.5 to yield 4.351%. The reoffer price came on top of price talk.

In addition, the King of Prussia, Pa.-based hospital company priced $400 million of new 10-year notes at par to yield 5%. The yield printed on top of yield talk.

JPMorgan, BofA Merrill Lynch, Goldman Sachs, SunTrust, Credit Agricole and Wells Fargo were the joint bookrunners for the drive-by debt refinancing deal.

EMI Publishing starts Friday

EMI Publishing Group North America Holdings Inc. plans to start a roadshow with an investor meeting on Friday in New York.

The company plans to sell $350 million of eight-year senior notes.

The roadshow wraps up on May 26, and the debt refinancing deal is set to price thereafter.

Goldman Sachs is the left bookrunner. UBS is the joint bookrunner.

EMI plans to use the proceeds plus cash on hand to redeem its 12½% senior notes due 2020.

Hanesbrands, upsized and tight

The euro-denominated primary market saw two issuers price single-tranche deals to raise a total of €750 million on Thursday.

Both deals priced at the conclusion of roadshows.

One of the two was upsized.

Executions were solid. One came at the tight end of talk while the other priced at the tight end of downwardly revised talk.

Hanesbrands Inc. priced an upsized €500 million issue of eight-year senior notes (Ba1/BB) at par to yield 3½%.

The yield printed at the tight end of the 3½% to 3¾% yield talk. Initial price talk was in the mid-to-high 3% yield context.

Active bookrunner Barclays will bill and deliver for the acquisition-related deal. BofA Merrill Lynch, HSBC and JPMorgan were the joint bookrunners.

The euro-denominated offering comes just two weeks after the company priced $1.8 billion of non-callable senior notes (Ba2/BB) in two tranches in a debt refinancing transaction on May 3.

Nexans tight to revised talk

Paris-based Nexans priced a €250 million issue of five-year senior bullet notes (expected BB-) at par to yield 3¼%.

The yield printed at the tight end of the 3¼% to 3 3/8% revised yield talk.

Earlier talk was in the 3½% area, sources said.

Global coordinator Credit Agricole will bill and deliver. JPMorgan and Natixis were also global coordinators. Commerzbank and Nordea were the joint bookrunners.

Proceeds will be used for general corporate purposes, including upcoming debt maturities.

Old, new Vivint bonds better

In the secondary market, a trader said that the day’s focus was “definitely on the new deals, with four [tranches] pricing.”

He saw the new 7 7/8% senior secured notes due December 2022 issued by Provo, Utah-based home security services provider Vivint having moved up to around the 100½ bid mark from their par issue price.

Another trader quoted those bonds in a par to 100¼ bid context.

The company plans to use up to $140 million of the new-deal proceeds to repurchase its existing 6 3/8% senior secured notes due 2019 and/or its existing 8 7/8% senior secured notes due 2022.

A market source saw the 6 3/8% notes having jumped by more than 2½ points on the session following the new-deal pricing, with the existing notes ending around 101 5/8 bid, on volume of over $18 million.

Thursday issues firm

Among the day’s other pricings, a trader quoted the new Tempur Sealy International 5½% notes due 2026 at a 100½-to-100¾ bid context, up from their par issue price.

Also moving up in the aftermarket were both tranches of the Universal Health Services new deal.

A trader saw the add-on to its existing $300 million of 4¾% notes due August 2022 having firmed to around 102½ bid, up from their 100½ issue price, with over $16 million having traded.

And he saw the company’s 5% notes due 2026 at just under 100¾ bid, with over $13 million having changed hands.

Another trader pegged the latter bonds at 100½ bid, 100¾ offered and saw the add-ons at 102 1/8 bid, 102 5/8 offered.

Wednesday deals trade around

The new issues that came to market on Wednesday saw considerable activity on Thursday, traders said, none more so than the new Sirius XM 5 3/8% notes due 2026.

More than $60 million of those notes were moving around on Thursday, finishing the day right at the par level at which the New York-based satellite and internet radio broadcaster had priced its $1 billion quick-to-market issue via its Sirius XM Radio, Inc. subsidiary.

Dutch semiconductor manufacturer NXP’s $1.75 billion two-part drive-by issue saw sizable volume on Thursday, though like Sirius XM, its new paper stayed mostly around its issue price.

The company’s 4 1/8% notes due 2021 were seen going home at 100 1/8 bid, which a trader said was unchanged, with over $48 million traded. NXP and its NXP Funding LLC subsidiary had priced $850 million of the notes at par.

Its 4 5/8% notes due 2023 closed at 100¼ bid, up 1/8 point; $900 million of that paper had priced at par.

The day’s other deal, Phoenix-based real estate asset manager Vereit’s two-part scheduled forward calendar offering, was seen having done better. Its 4 7/8% notes due 2026 rose 5/8 point to 101¼ bid, with over $33 million traded, while its 4 1/8% notes due 2021 were ¼ point better at 100 7/8 bid, with over $26 million traded.

It had priced both tranches Wednesday at par.

Halcon higher on plan news

Away from the new deals, Halcon Resources’ bonds were among the day’s busiest issues, on the news that the troubled Houston-based energy company and its creditors had agreed in principle to the terms of a pre-packaged Chapter 11 restructuring plan. (See related story elsewhere in this issue.)

Its 8 5/8% second-lien notes due 2020 gained more than 3½ points on the day, ending at 93 ½ bid, on volume of more than $35 million.

Indicators’ retreat continues

Statistical market performance measures were lower across the board for a second consecutive session on Thursday; they had weakened on Wednesday after having been mixed on Tuesday. Thursday was the third lower session in the last five trading days.

The KDP High Yield Daily index slid by 30 basis points on Thursday to end the day at 67.10, its second straight loss and third downturn in the last five sessions; on Wednesday, the index had eased by 3 bps after having been higher the previous two sessions.

Thursday’s yield, accordingly, rose by 11 bps to 6.34% after having been unchanged on Wednesday and having narrowed for two consecutive sessions before that, including Tuesday, when it came in by 2 bps.

The Markit Series 26 CDX North American High Yield index saw its third successive loss and its fourth such downturn in the last five sessions, retreating by 7/32 point to end at 101 17/32 bid, 101 9/16 offered. On Wednesday, it had dropped by almost 5/16 point, while on Tuesday, it was off by ¼ point.

The Merrill Lynch North American High Yield Master II index was down for a second straight session on Thursday, losing 0.399%, on top of Wednesday’s 0.019% setback. Thursday was the index’s third loss in the last five sessions.

Thursday’s retreat lowered the index’s year-to-date return to 6.848% from Wednesday’s 7.276%.

The cumulative return remained down from the peak level for the year so far of 7.398%, reached on May 2.

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