Springleaf, Antero Midstream price; XPO in focus; Mednax trades up; Uniti down, Windstream rebounds

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 20 – The domestic high-yield primary market was once again open for business on Wednesday with two deals totaling $1.65 billion pricing.

Springleaf Finance Corp. priced an upsized $1 billion issue of 6 1/8% five-year senior bullet notes (ratings Ba3/BB-) at par to yield 6.123%.

Antero Midstream Partners LP priced an upsized $650 million issue of eight-year senior notes (Ba3/BB+/BBB-) at par to yield 5¾% in a quick-to-market trade.

Meanwhile, the secondary space was again flat on Wednesday.

XPO Logistics, Inc.’s newly priced 6¾% senior notes due 2024 (Ba3/BB) were in focus with the notes trading at a slight premium to their issue price.

Mednax, Inc.’s 6¼% senior notes due 2027 were trading well above their reoffer price after the company priced a tap of the split-rated notes.

While new paper was in focus, Windstream Corp.’s junk bonds rebounded on Wednesday after tanking on a court’s verdict in favor of a hedge fund that challenged the telecommunications company spin-off of Uniti Group Inc.

While Windstream’s bonds were making gains, Uniti’s 8¼% senior notes due 2023 were posting losses in active trading.

Springleaf doubles deal-size

Springleaf Finance doubled the size of its four-B bullet deal and priced it on the tights, on Wednesday.

The Indiana-based consumer finance company priced an upsized $1 billion issue of 6 1/8% five-year senior bullet notes (ratings Ba3/BB-) at par to yield 6.123% in a drive-by.

The issue size doubled from $500 million.

The yield printed slightly inside of the 6 1/8% to 6¼% yield talk.

Left lead Barclays will bill and deliver. Barclays and SG CIB were the joint active bookrunners.

Proceeds will be used to redeem the Springleaf Finance 5¼% senior notes due December 2019.

Antero Midstream upsizes

Antero Midstream Partners priced an upsized $650 million issue of eight-year senior notes (Ba3/BB+/BBB-) at par to yield 5¾% in a quick-to-market trade.

The issue size increased from $600 million.

The yield printed at the tight end of the 5¾% to 5 7/8% yield talk.

JP Morgan, Wells Fargo, BofA Merrill Lynch, Capital One, Citigroup and Credit Agricole were the joint bookrunners.

The Denver-based limited partnership plans to use the proceeds to pay down bank debt.

Market of opportunity

The market appears open to opportunistic issuers wishing to address near- and intermediate term debt maturities, as has been the case so far in the Feb. 18 week, sources say.

Such issuers will either have a solid high-yield credit profile or be well known to junk bond investors, and in many cases both, they add.

The JP Morgan Global High Yield & Leveraged Finance Conference, set to take place next week, Feb. 25 to Feb. 27, in Miami, is expected to generate some primary market business, an investor said on Wednesday.

The dynamics of the market would seem to support more vigorous new issue activity than that which has materialized since the beginning of the year, a trader said.

Junk, which has returned 1% in the month of February to Tuesday's close, and 5.61% in the year to that point, is off to its strongest start to a calendar year since 2001.

XPO in focus

XPO Logistics’ newly priced 6¾% senior notes due 2024 were in focus in the secondary space with the notes trading at a slight premium to their issue price, sources said.

The 6¾% notes were quoted at par ¼ bid, par ½ offered with most prints around par ¼, sources said.

With more than $92 million on the tape by the late afternoon, the 6¾% notes were the most actively traded in the secondary space.

XPO Logistics priced a $1 billion issue of 5.5-year senior notes (Ba3/BB) at par to yield 6¾% in a quick-to-market trade on Tuesday.

The yield printed 12.5 basis points beyond the wide end of the 6½% to 6 5/8% yield talk.

While XPO’s 6¾% senior notes were trading at a slight premium, the transportation company’s 6 1/8% senior notes due 2023 continued to trade down.

While volume was light, the notes dropped another 3/8 point to close Wednesday at 99 3/8, according to a market source.

The notes have been on a downward trajectory since last Friday when the company reported a fourth-quarter earnings miss and a projected continued decrease of revenue in 2019 due to the loss of a major customer.

The customer is assumed to be Amazon.

Prior to the earnings announcement, the 6 1/8% notes were trading between 101 5/8 and 102.

Mednax trades up

Mednax’s split-rated 6¼% senior notes due 2027 were trading well above their reoffer price following the pricing of an add-on.

The notes were quoted at par bid, 101 offered and traded up to 101 by the late afternoon, sources said.

More than $23 million of the bonds were on the tape during Wednesday’s session.

While trading at a premium to their reoffer price, the 6¼% notes were trading between 101¼ and 101¾ prior to the add-on, according to Trace data.

Mednax priced an upsized $500 million add-on to the 6¼% senior notes at 99.75 to yield 6.289% in a Tuesday drive-by.

The issue size increased from $200 million.

The issue price came in the middle of price talk in the 99.75 area.

Windstream rebounds, Uniti down

Windstream’s junk bonds saw a slight rebound on Wednesday after tanking during Tuesday’s session.

Windstream’s 8 5/8% senior notes due 2025 were the most active of the capital structure with more than $16 million of the bonds changing hands, according to a market source.

The notes rose 1 5/8 points to 90¼.

The 8¾% notes due 2024 rose 6¼ points to 38¼.

The 7½% notes due 2023 rose 4¼ points to 40¼. The 7¾% notes due 2020 rose 3¼ points to 46¼.

The 6 3/8% notes due 2023 rose 2½ points to 40¾.

The notes were rebounding with people focusing on the recovery rating in the event of a bankruptcy, a market source said.

Windstream’s capital structure dropped on average between 10 to 20 points during Tuesday’s session as word spread about a federal court ruling in favor of Aurelius Capital Management.

Aurelius claimed Windstream’s spin-off of its wire and fiber optic cables into real estate investment trust Uniti and subsequent lease-back to Windstream of those assets violated the covenants of Windstream’s 6 3/8% senior notes due 2023, of which Aurelius was a majority owner.

While Windstream has appealed the decision, there is concern the judgement could push the telecom into bankruptcy.

While Windstream’s junk bonds rebounded on Wednesday, Uniti’s 8¼% senior notes due 2023 dropped in high-volume activity.

The 8¼% notes traded down 1 point to 80¼ on Wednesday, according to a market source.

With more than $46 million of the bonds on the tape by the late afternoon, the notes were among the most actively traded in the secondary space.

The notes were trading around the 92 level in mid-February.

Tuesday inflows

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

High-yield ETFs saw $316 million of inflows on the day.

Actively managed high-yield funds saw $100 million of inflows on Tuesday.

With only Wednesday's numbers pending, with the first three sessions of the current weekly reporting period now in the book (the present week being abbreviated by the Monday Presidents Day holiday) the combined funds are tracking weekly inflows of $400 million, the trader said.

Indexes

Indexes were again mixed on Wednesday after all saw a cumulative gain in the previous week.

The KDP High Yield Daily index rose 13 basis points to close Wednesday at 69.88 with the yield now 6.10%.

The index was up 3 bps on Tuesday after a cumulative gain of 24 bps on the week last week.

The ICE BofAML US High Yield index gained 15.3 bps with the year-to-date return now 5.782%.

The index was up 10.5 bps on Tuesday after a cumulative gain of 64 bps on the week.

The index shot past 5% returns on Feb. 12 after sinking below the 5% threshold Feb. 7.

The index initially crossed the 5% threshold on Feb. 5 after surpassing 4% year-to-date returns on Jan.30.

The CDX High Yield 30 index dropped 1 bps to close Wednesday at 106.35.

The index was down 7 bps on Tuesday after a cumulative gain of 78 bps on the week last week.

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