Charter, Marriott drive by and upsize; WeWork, Uber dip; oil names down

By Paul A. Harris and James McCandless

Portland, Ore., Sept. 17 – On Tuesday, the high-yield market experienced some drive-by action.

Charter Communications, Inc. came upsized and tight to guidance for $1.35 billion.

And, Marriott Vacations Worldwide Corp. priced an oversubscribed $300 million.

Performance Food Group Co.’s and Installed Building Products, Inc.’s new notes became free to trade, trending upward.

Meanwhlie, WeWork Cos. Inc.’s issues dipped after the company announced that it would be delaying its initial public offering.

Uber Technologies, Inc.’s paper also moved to lower ground.

Oil names moved down as Saudi Arabia announced that it would be back up to full production by the end of the month.

Charter upsizes

The high yield drive-through window opened on Tuesday, with two issuers driving by with upsized deals that came in line with talk, raising a combined total of $1.7 billion.

Charter Communications, Inc. priced an upsized $1.35 billion issue of CCO Holdings, LLC/CCO Holdings Capital Corp. 10.5-year senior notes (B1/BB/BB+) at par to yield 4¾%.

The issue size was increased from $1 billion.

The yield printed at the tight end of the 4¾% to 4 7/8%, which was slightly wide to initial talk in the 4¾% area, sources say.

BofA Securities Inc. was the left bookrunner.

And Marriott Vacations Worldwide Corp. priced an upsized $350 million issue of 8.25-year senior notes (Ba3/BB-) at par to yield 4¾%.

The issue size was increased from $300 million.

The yield printed in the middle of yield talk in the 4¾% area.

Late in the morning the deal was playing to a $1 billion order book, a trader said.

Zero-handle for OTE

It's not your father's junk bond.

Greek telecom OTE plc priced a €500 million issue of 0.875% seven-year senior notes (S&P: expected BB+) at a 125 basis points spread to mid-swaps on Tuesday.

The spread came well inside of the mid-swaps plus 165 bps initial talk.

Bookrunner Goldman Sachs will bill and deliver. BNP Paribas was also a bookrunner.

New issues lifted

New junk hitting the secondary moved swiftly upward, traders said.

Richmond, Va.-based foodservice distribution company Performance Food’s new 5½% senior notes due 2027 were seen closing at 102½ bid.

The quick-to-market deal came in at $1.06 billion.

The yield was pinned at the tight end of the 5½% to 5¾% yield talk. Initial talk was in the mid-to-high 5% area, Prospect News reported.

Meanwhile, Columbus, Ohio-based building products contractor Installed Building’s new 5¾% 8.5-year senior notes reached 103 bid, according to a trader.

The deal priced at $300 million.

WeWork dips

Elsewhere, WeWork’s paper traded under par, market sources said.

The 7 7/8% senior notes due 2025 lost 6¼ points to close at 96½ bid.

The New York City-based coworking name announced on Monday that it would postpone its anticipated initial public offering amid questions of its value.

After initially pegging its value at $47 billion at the beginning of the year, the company recently cut that number to $20 billion.

Some in the market, including the company’s largest investor, had been pushing for a delay.

The name said in a statement that it expects to complete an IPO by the end of the year.

Uber lower

Uber’s notes were also moving lower, traders said.

The 7¾% notes due 2027 shaved off ¼ point to close at 100¾ bid.

The San Francisco-based transportation technology name and its competitor Lyft were riding a positive wave on Monday after an upgrade from an analyst at HSBC.

In a note, the analyst said that investors can expect an upside in the equity despite shifts in the regulatory climate.

The company is currently embroiled in a dispute over a California law that is at odds with how it classifies its workers.

PetSmart diverges

Meanwhile, retailer PetSmart, Inc.’s notes were mixed after as a subsidiary posted disappointing quarterly results., traders said.

The 8 7/8% senior notes due 2025 tacked on ¼ point to close at 95¼ bid. The 5 7/8% senior notes due 2025 lost ½ point to close at 99½ bid.

On Tuesday afternoon, Chewy.com, a subsidiary of Phoenix-based pet supplies retailer PetSmart released its quarterly earnings results.

The company reported a loss of 21 cents per share, wider than the 11 loss that analysts had expected.

Shares for the company went public in June after a drawn-out legal challenge over a private equity transfer of a major stake in Chewy.

Oil names lose

As oil futures leveled off, Chesapeake Energy Corp.’s, Valaris plc’s and Whiting Petroleum Corp.’s issues also gave back some of Monday’s gains, market sources said.

Tuesday saw oil prices taper off from historic Monday gains in the aftermath of an attack on Saudi Arabian crude oil facilities.

After initial fears of a world crude shortage, the Saudi energy minister said that full output would be restored by the end of the month and that half of production lost in the attack had been restored.

West Texas Intermediate crude oil futures for October delivery gave back $3.56 to settle the day at $59.34.

North Sea Brent crude oil futures for November delivery finished at $64.55 per barrel after a $4.47 dive.

Oklahoma City, Okla.-based producer Chesapeake Energy’s paper tracked lower.

The 8% senior paper due 2025 shaved off ¾ point to close at 85¼ bid. The 8% senior paper due 2027 slid 3 points to close at 81½ bid.

London-based contract driller Valaris’ notes followed the sector trend.

The 5.2% senior notes due 2025 dipped 3 points to close at 64 bid. The 7¾% senior notes due 2026 declined by 2 points to close at 66¼ bid.

Denver-based sector peer Whiting Petroleum’s issues also ended on lower footing.

The 6¼% senior notes due 2023 lopped off 1½ points to close at 84¾ bid. The 6 5/8% senior notes due 2026 declined by 2¼ points to close at 78 bid.

Big inflows for asset managers

The high-yield bond asset class continues to attract cash in notable volumes, the data suggests.

Actively managed high-yield funds, the asset managers, saw $1.25 billion of daily inflows on Monday, according to market sources.

That's the latest session for which data was available at press time.

High-yield ETFs saw $19 million of inflows on the same day.

Those numbers follow $1.08 billion of daily inflows to the junk ETFs last Friday, sources say.

Week to date, for the period that will conclude at Wednesday's close, the combined funds are tracking $2.9 billion of inflows, a source said.

Indexes negative

Three high-yield indexes were pushed under water Tuesday.

The KDP High Yield Daily index fell 9 basis points on Tuesday, finishing at 71.88 with the yield remaining at 5.34%.

The index shot up 17 bps on Monday, dropped 11 bps on Friday and lost 1 bp on Thursday.

The ICE BofAML US High Yield index shaved off 0.6 bps to close Tuesday with the year-to-date return at 11.885%

The index improved by 26.4 bps on Monday, fell 11.3 bps on Friday and ticked up 7 bps on Thursday.

The CDX High Yield 30 index declined by 31.63 bps on Tuesday to 107.6496.

The index added 31.48 bps on Monday, garnered 31.66 bps on Friday and improved by 31.90 bps on Thursday.

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