Warrior Met Coal prices tap; Sprint, Rite Aid dominate in secondary; energy names take up volume

By James McCandless and Paul A. Harris

San Antonio, Feb. 26 – The week started slowly for the high-yield market, with the only new issue in the form of a $125 million add-on to Warrior Met Coal, Inc.’s 8% senior secured notes due 2024, and a sluggish secondary market, with volume down compared to recent weeks, traders said. Volume was mostly taken up by recent pricings and junk bonds.

A recent issue by Sprint Corp. has been dominating the secondary market since its $1 billion pricing last Wednesday.

Rite Aid Corp. notes managed to hold their own amid the low-volume day.

In energy, Whiting Petroleum Corp. and Chesapeake Energy Corp. provided most of day’s activity as oil futures rose slightly Monday.

Weatherford International plc’s recent pricing saw a handful of trades.

Intelsat SA and Northern Oil and Gas, Inc. added to the day’s activity.

Warrior Met taps 8% notes

In a quiet Monday session in the new issue market Warrior Met Coal, Inc. priced a $125 million add-on to its 8% senior secured notes due 2024 (B3/B+) at 103 to yield 7.42% in a quick-to-market trade.

The reoffer price came on top of both price talk and initial guidance.

Goldman Sachs &was the left bookrunner. Credit Suisse, Morgan Stanley, BMO, Citigroup and RBC were the joint bookrunners for the dividend deal.

Meanwhile the JP Morgan Global High Yield & Leveraged Finance Conference is underway in Miami.

The conference, which wraps up on Wednesday, could generate new issue business while in progress, a market source said.

Negative Friday flows

The cash flows of the dedicated high-yield bond funds were negative on Friday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs sustained $75 million of outflows on the day.

Sprint continues activity

Notes in the $1 billion new issue of Overland Park, Kan.-based wireless company Sprint were active to kick off the week. The notes have been some of the most active in the high-yield market, a trader said.

“It is not surprising, but those issues were some of the most heavily traded today,” a trader said.

The 7 5/8% notes due 2026 ticked up almost ¾ point to close near 100½ bid.

Rite Aid holds on

Camp Hill, Pa.-based drug store chain Rite Aid continued its activity from last week, market sources said, though at a lower level than the high volume it saw.

“Those notes managed to hold their own today,” a trader said.

The 7.7% issues ticked up more than ¼ point to close above 92¼ bid. The 6 1/8% issues shaved off ¼ point to close at 100½ bid.

Energy names trade

A slightly better day for oil futures drove volume in energy names, a trader said.

Denver-based E&P operator Whiting Petroleum saw its recent 6 5/8% paper due 2026 gain ½ point to close at 102½ bid.

Oklahoma City-based oil and gas name Chesapeake Energy had its 8% paper due 2025 traded up ¾ point to close at 99 ½ bid.

Weatherford active

Switzerland-based oilfield service name Weatherford International was another active name in the energy space, according to a market source.

The 9 7/8% notes due 2025 traded up 3/8 point to close at 100 1/8 bid.

Volume names trade

Luxembourg-based satellite communications company Intelsat saw its notes jump on the day, a trader said.

The Intelsat Jackson SA 7¼% issues due 2020 rose almost 2 points to close below 90½ bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas has seen a long stretch of high volume since announcing a note exchange, plans to raise new capital, and management changes, according to a trader.

The most active on the day were the 8% notes due 2020 that jumped 7½ points to close at 94 bid.

Indicators close slightly higher

Statistical market performance measures gained slightly after last week’s losses.

The KDP High Yield Daily Index rose 10 basis points to end at 70.77. Its yield fell by 2 bps to close at 5.64%.

The Merrill Lynch High Yield Index fell 0.347%, taking its year-to-date return to negative 0.236%.

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