AmWINS adds on; AM General trades above 103; L Brands pares losses; Tenet moves lower

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 22 – The primary market remained sluggish on Tuesday with a single add-on deal clearing the market.

AmWINS Group Inc. priced a $100 million tap of its 7¾% senior notes due July 1, 2026 (B3/B-).

However, the forward calendar continued to grow with $3.25 billion in deals set to price before the week draws to a close.

Meanwhile, the secondary space was firmer on Tuesday with several names paring their losses from the previous session.

Consolidated Communications Holdings, Inc.’s 6½% senior notes due 2028 (B2/B+) and L Brands, Inc.’s 6 5/8% senior notes due 2030 (B2/B+) regained some of the premiums lost during Monday’s sell-off.

AM General’s 9½% senior secured notes due 2028 (B2/B+) continued to shoot higher in active trading.

While several issues recouped their losses from Monday, Tenet Healthcare Corp.’s 6 1/8% senior notes due 2028 (Caa1/CCC+/B) was not among them with notes again moving lower.

Tuesday’s primary

The primary market remained sluggish on Tuesday.

A single add-on deal from AmWINS Group cleared the market.

AmWINS priced a $100 million tap of its 7¾% senior notes due July 1, 2026 (B3/B-) at 106, the rich end of talk, but not before shifting $100 million to its term loan, lifting the loan size to $200 million, which had been the originally contemplated size of the bond deal.

Also, a decent buildup of the forward calendar had it grow to $3.25 billion...all of it expected to price before the end of the week (see related stories in this issue).

The new issue bourse will see a more meaningful reactivation as soon as stability returns to the capital markets, and likely on Wednesday, a syndicate banker said on Tuesday afternoon.

However, the pace of issuance in high yield won't likely regain the feverish pace seen during the first two post-Labor Day weeks, anytime soon, the official said.

In any case there are certainly deals to be done, the investment banker added.

AM General gains

After a strong break, AM General’s 9½% senior secured notes due 2028 continued to shoot higher in active trading.

The notes rose to a 103-handle and stood posed to close the day at 103 5/8, according to a market source.

The notes were active with more than $26 million in reported volume during Tuesday’s session.

The notes had a strong break and were marked at 102 bid, 103 offered heading into Monday’s market close.

The notes, which will be used to back the leveraged buyout of the heavy vehicle manufacturer, carried a hefty yield for secured paper, a source said.

AM General priced a $600 million issue of the 9½% notes at par on Monday.

Pricing came in the middle of yield talk in the 9½% area. Initial guidance was in the high 9% to 10% area.

Paring losses

Several recent issues were paring their losses from the previous session as the market tone improved, a source said.

Consolidated Communications’ 6½% senior notes due 2028 returned to a 101-handle on Tuesday.

The notes were trading in the 101 3/8 to 101 5/8 context heading into the market close, a source said.

The notes traded up to a 102-handle after breaking for trade last Friday, but shaved off more than 1 point in Monday’s sell-off.

L Brands’ 6 5/8% senior notes due 2030 also regained some of their losses on Tuesday, although they were still below their previous level.

The 6 5/8% notes were changing hands in the par 5/8 to par 7/8 context going into Tuesday’s close, a source said.

The bonds remained active on Tuesday with $17 million in reported volume.

The 6 5/8% notes closed the previous session at par ¼.

They 6 5/8% notes have largely traded on a 101-handle since pricing on Sept. 16.

Tenet lower

While several issues were recouping their losses from Monday’s sell-off, Tenet Healthcare’s 6 1/8% senior notes due 2028 were not among them.

The 6 1/8% notes continued to move lower in active trading, a source said.

They were changing hands in the 95¾ to 96 context late in the afternoon.

The notes dropped 3 points on Monday and moved lower to a 96-handle with the health care sector particularly hard hit in Monday’s sell-off.

In addition to a general risk-off attitude, the death of Supreme Court Justice Ruth Bader Ginsburg and the uncertainty surrounding future challenges to the Affordable Care Act sparked a sell-off in Tenet’s already struggling notes.

$1.3 billion Monday outflows

The high-yield ETFs sustained a whopping $1.3 billion of outflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds had $140 million of inflows on the day, moderating net daily outflows to $1.16 billion, on Monday, the source said.

Monday's were the third consecutive daily net outflows for the present reporting period which will conclude with Wednesday's close.

Over those three sessions the combined funds are tracking $1.635 billion of net outflows, according to the market source.

Indexes down again

Indexes continued to move lower on Tuesday after opening the week with losses.

The KDP High Yield Daily index dropped 32 bps to close the day at 66.46 with the yield 5.53%.

The index was down 27 bps on Monday.

The ICE BofAML US High Yield index sank further into negative territory on Tuesday after crossing that threshold the previous session.

The index was down 14.3 bps with the year-to-date return now negative 0.352%.

The index dropped 69.6 bps on Monday.

The CDX High Yield 30 index dropped another 18 bps to close Tuesday at 105.6.

The index was down 71 bps on Monday.

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