Junk bond primary moves $2.25 billion; Tenet funds acquisition; Compass above issue price

By Paul A. Harris and Cristal Cody

Portland, Ore., Nov. 16 – Amid moderate news flow in the high-yield new issue market on Tuesday three issuers priced single-tranche, dollar-denominated deals, raising a total of $2.25 billion.

Among those issuers Tenet Healthcare Corp. priced $1.45 billion of 4 3/8% eight-year senior secured first-lien notes (B1/B+/B+) at par, in the middle of talk.

The acquisition-financing deal was driven into the market on as much as $650 million of reverse inquiry, playing to a book that closed containing around $2.4 billion of orders, according to a trader who added that accounts were buying it to own it, as opposed to trading it.

Junk steadied, somewhat, on Tuesday after widening substantially on Monday.

The Tuesday closing yield to worst was 4.29%, one basis point tighter versus Monday's 4.3% close, which represented a substantial widening from Friday's 4.19%.

In the secondary market, new junk paper was mixed on Tuesday.

Compass Group Diversified Holdings LLC’s $300 million issue of 5% senior notes due Jan. 15, 2032 (B1/B+) traded about ¼ point to ¾ point better than issuance over the day.

Travel + Leisure Co.’s $650 million offering of 4½% senior secured bullet notes due 2029 (Ba3/BB-/BB+), priced on Monday, were wrapped around issuance.

Meanwhile, Tenet Healthcare Corp.’s notes were under pressure as the company offered $1.45 billion of new senior secured first-lien notes due January 2030 during the session.

Compass improves

Compass Group’s new 5% senior notes due Jan. 15, 2032 (B1/B+) traded Tuesday about ¼ point to ¾ point better than issuance and went out at 100¾ bid, a source said.

The Westport, Conn.-based investment and holding company sold $300 million of the notes at par to yield 5% in a Monday drive-by.

The yield printed at the tight end of the 5% to 5¼% yield talk and tight to initial guidance in the low-5% area.

Travel + Leisure flat

Travel + Leisure’s 4½% senior secured bullet notes due 2029 (Ba3/BB-/BB+) stuck close to trading around issuance Tuesday with the issue quoted by the close at par, a source said.

The notes were up about ¼ point earlier in the day.

Travel + Leisure sold $650 million of the notes on Monday at par to yield 4½%.

The yield on the Orlando, Fla.-based membership and leisure travel company’s issue printed at the wide end of the 4¼% to 4½% talk and wide to initial guidance in the low 4% area.

Tenet softens

Tenet Healthcare’s existing notes were under pressure Tuesday as the company offered $1.45 billion of new senior secured first-lien notes due January 2030 during the session, a source said.

Tenet’s 4¼% senior secured first-lien notes due 2029 (B1/B+/B+) fell about ½ point to 100¼ bid by late afternoon.

The Dallas-based health care services provider sold $1.4 billion of the 2029 notes back on May 18 at par.

Tenet’s new issue was talked to price at the 4½% area, and ultimately ended up coming tight to talk.

Indexes mixed

The iShares iBoxx High Yield Corporate Bond ETF improved 4 cents to $86.79 after ending Monday 10 cents lower.

The CDX High Yield 30 index rose to 109.31 on Tuesday from 109.27 on Monday.

The KDP High Yield Daily index declined to 68.2 and a yield of 3.89% versus 69.63 with a yield of 3.91% on Monday and 69.77 and a 3.85% yield on Friday.

Fund flows

The dedicated high-yield bond funds saw $81 million of net daily inflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $80 million of inflows on the day.

High-yield ETFs were essentially flat, posting $1 million of inflows on Monday, the source said.

The combined funds are tracking $111 million of net outflows for the week that will conclude with Wednesday's close, according to the market source.

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