Upsized AmeriGas, Concho, American Midstream price; recent RSP Permian, Carlson issues trade up

By Colin Hanner

Chicago, Dec. 13 – Several issues that priced in the past few days traded in the high yield secondary realm on Tuesday, and one-off high yield names reacted to news of the day.

Energy operator RSP Permian, Inc.’s $450 million of eight-year notes, which priced on Monday, were “very active” during Tuesday’s session, though a bit off their previous day’s levels, and Carlson Travel Inc. continued to see its second-straight session of gains after Friday’s new deal.

Retailer Neiman Marcus Group Ltd. posted its fiscal first quarter figures on Tuesday, which showed a year-over-year loss amid reports of a faulty merchandising system hurting sales.

With the announcement that it will not repay $57.1 million of its senior notes held by Clear Channel Holdings, iHeartMedia, Inc. did not see much movement, traders said, noting intraday fluctuation before a rise later in the afternoon.

Several sector names, including Community Health Systems Inc., Concordia International Corp. and Valeant Pharmaceuticals International Inc., all saw downward movement.

AmeriGas upsizes

Three single-tranche deals from the red hot energy sector priced during the Tuesday session, with a combined take of $1.6 billion.

Two came as drive-bys.

One was upsized.

Two priced at the tight ends of talk, while the third came at the wide end.

AmeriGas Partners, LP priced an upsized $700 million issue of 8.5-year senior bullet notes (Ba3//BB) at par to yield 5½%.

The issue size was increased from $550 million.

The yield printed at the tight end of the 5½ % to 5¾% yield talk and inside of initial guidance in the 5¾% area.

Wells Fargo was the left bookrunner for the debt refinancing deal. JP Morgan was the joint bookrunner.

Concho prices tight

Concho Resources Inc. priced a $600 million issue of eight-year senior notes (Ba2/BB+) at par to yield 4 3/8%.

The yield printed at the tight end of yield talk in the 4½% area and well inside of initial guidance in the 4¾% area.

BofA Merrill Lynch, J.P. Morgan and Wells Fargo were joint bookrunners for the debt refinancing deal.

American Midstream

In the session's only deal to have run a roadshow, American Midstream Partners, LP and American Midstream Partners Finance Corp. priced a $300 million issue of five-year senior notes (Caa1/B+) at par to yield 8½%.

The yield printed at the wide end of the 8¼% to 8½% yield talk.

Wells Fargo was the left bookrunner for the debt refinancing.

AmeriGas, Concho and American Midstream will not be the last hurrah from the scorching energy sector during the present week, sources say.

Look for a big energy deal to surface on Thursday, they advise.

New, recent issues trade up

“A fair amount of stuff that’s pricing is whatever – it’s trading up a little bit but nothing too notable,” a trader said on Monday, referring to new and recent issues’ modest, but unexciting movement.

A trader quoted RSP Permian’s 5¼% senior notes due 2025 at “par-and-a-half” on the day’s session, “up a smidge from yesterday,” while another trader said the notes were “active,” trading at a “par-and-3/8-area.”

Another market source saw the notes going out with a 100 3/8 bid, 100¾ offered.

Continuing to buck the trend were Carlson Travel’s 6¾% notes due 2023, which a market source quoted up 1½ points to 103¾, while another market source quoted said notes with a 102¾ bid, 103¾ offered.

Carlson’s 9½% notes due 2024 went out with a 103¼ bid, 104 offered, a market source said.

Communications Sales & Leasing, Inc., a telecommunications-oriented real estate investment trust, priced its 7¼% senior notes due 2024 on Monday, which were “straddling” 101 before trading “up a smidge” to 101¼ on Tuesday, a trader said.

A market source said the similar notes were going out with a 101 bid, 101 3/8 offered.

Noble for Wednesday

Noble Holding International Ltd. plans to price a $500 million offering of non-callable senior notes set to mature in January 2024 on Wednesday.

The deal was scheduled to be marketed by means of a Tuesday afternoon investor conference call.

Credit Suisse, Barclays, Citigroup, DNB, HSBC, JP Morgan, SunTrust and Wells Fargo are the joint bookrunners for the debt refinancing deal.

Noble takes a position on an active forward calendar that appears to be thinning ahead of the holidays.

It includes Baffinland Iron Mines Corp., which is on the road with a $350 million offering of five-year senior secured notes (Caa1/B-) via Goldman Sachs.

And Avison Young (Canada) Inc. is in the market with a $130 million offering of senior secured notes due 2021 (B3/B+) via sole bookrunner William Blair.

Inflows on Monday

The cash flows of the dedicated high yield bond funds remained strongly positive on Monday, according to a market source.

High yield ETFs saw $192 million of inflows on the day.

Actively managed funds saw $210 million of inflows on Monday.

Secondary market active

Oilfield service company SESI, LLC saw one of the biggest gainers on Tuesday, according to a market source, in its 7 1/8% notes due 2021, which were up 2¼ points to 102¾.

Sprint Corp.’s 6 7/8% notes due 2028 were unchanged with a 98½ handle, a trader said, adding that the 7 7/8% notes due 2023 were up 3/8 point to a 106 zip code.

Stamford, Conn.-based Frontier Communications Corp.’s 11% notes due 2025 were up ½ point to 103 5/8 on “pretty active” trading, a trader said.

In energy, Chesapeake Energy Corp.’s 8% notes due 2025 were up ¾ point to 102¾, a trader said, and Dynegy Inc.’s 7 3/8% notes due 2022 saw a 1/8-point decrease on a half-dozen trades to go out with a 92 handle, a trader said.

iHeart ‘not really off’’ on news

Off news that it will not repay the $57.1 million of 5½% senior notes held by its Clear Channel Holdings, Inc. affiliate when they mature on Dec. 15, iHeartMedia’s bonds were “not really off,” said one trader.

Another trader said though the notes did not go out as low as expected, intraday fluctuation caused a flurry of, “trading down, then trading back up again.”

“Initially everything traded off, then everything traded back up and finished back up on the day,” the trader said.

A trader said the 14% notes due 2021 traded ¾ point higher to 38¼, while the 9% notes due 2019 were down ½ point to 77½.

The 10% notes due 2018 were down as low as a 63 handle but bounced back to go out at 68, around the same level they finished on Monday.

The 14% notes due 2021 followed with the intraday movement, going as low as 37 before shooting back up to a 40 zip code, a 1½-point increase on the day.

The company said the decision not to repay the notes was made by a special committee of independent directors as part of iHeartMedia’s ongoing effort to address its capital structure while maximizing the value of its assets.

While the $192.9 million of 2016 legacy notes held by other holders will be paid in full at maturity, the company said the $57.1 million balance held by Clear Channel will remain outstanding.

As a result, iHeartMedia said it will continue to have at least $500 million of legacy notes outstanding on Dec. 15 and will therefore not be obligated to grant additional security interests in favor of some of its debtholders under a so-called “springing lien.”

Neiman down on quarter results

“Neiman was busy and active a bit,” a trader said, referring to the retailer’s announcement of its first quarter sales on Tuesday, which caused several of its notes to trek downward.

The company announced a loss of $23.5 million, a $13.5 million year-over-year widening, which was in large part due to an inventory management system implementation that botched tens of millions of dollars for the company.

“They had weak numbers,” another trader said.

A trader said the 8% notes due 2021 were down around 3 points to a 76 handle, while the 8¾% due 2021 notes “weren’t nearly as busy,” trading around a 70 handle, a 5-point decrease.

In healthcare

Inpatient rehabilitation hospital operator HealthSouth Corp. was up ¼ point in its 5¾% notes due 2024, which went out with a 101¼ handle, a trader said.

A trader said Tenet Healthcare Corp.’s 7½% notes due 2022 were up 1/8 point to 104¾.

After announcing a small asset sale of two West-Coast hospitals, Community Health still saw a decrease in its 5 1/8% notes due 2018, which were down ¼ point to 98 5/8.

Valeant Pharmaceuticals’ 6 1/8% notes due 2025 were down ½ point to 75¾, a trader said, and Concordia International’s 9½% notes due 2022 were down 2½ points to 34 1/8.

Pattern for market indices

The KDP High Yield index rose by 7 basis points to 71.59, the index’s 10th consecutive gain and its 15th advance in the last 16 sessions.

The index’s yield dropped by 3 bps to 5.41%, the same drop in the yield that was seen during the Monday and Friday sessions. It was the yield’s 13th straight decline and its 14th downward movement in the past 15 sessions.

For the second straight session, the Markit Series 27 CDX index retreated by a similar 1/8 point to end at 106.87 bid, 106.97 offered, its third downturn in the past four sessions.

Caroline Salls contributed to this review

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