Charter, Science Applications price; Del Monte joins calendar; health care names rally

By Abigail W. Adams

Portland, Me., March 4 – The domestic high-yield primary market returned to action on Wednesday with two deals pricing and one more joining the forward calendar.

Charter Communications Inc. priced a $2.5 billion two-tranche offering (B1/BB/BB+), which included new 12-year senior unsecured notes and a tap of CCO Holdings LLC and CCO Holdings Capital Corp.’s 4½% senior notes due 2030.

Science Applications International Corp. priced $400 million eight-year senior notes (B1/BB-).

And Del Monte Foods, Inc. started a roadshow on Wednesday for a $575 million offering of seven-year senior secured notes.

Meanwhile, the secondary space rebounded on Wednesday on the heels of the Super Tuesday election results with the market, in general, up about ½ point, sources said.

With Joe Biden now a frontrunner in the Democratic primary, health care names were rallying on the prospect of a defeat of Bernie Sanders’ “Medicare for All,” policy initiative.

Charter’s megadeal

Charter priced a $2.5 billion two tranche offering (B1/BB/BB+) in a Wednesday drive-by.

The deal included a downsized $1.1 billion tap of the company’s 4½% senior notes due 2030, which priced at 102½ for a yield-to-worst of 4.127%.

The add-on was downsized from $1.25 billion.

Pricing came at the rich end of talk for a reoffer price of 102¼ to 102½. Early whispers were for a reoffer price in the 102 area.

The total outstanding amount is now $2.75 billion.

Charter initially priced a $1.65 billion issue of the 4½% notes due 2030 on Feb. 3.

The deal also included an upsized $1.4 billion issue of 12-year senior unsecured notes, which priced at par to yield 4½%.

The tranche was upsized from $750 million.

The yield printed at the tight end of talk for a yield of 4½% to 4 5/8%.

Science Applications prices tight

Science Applications priced $400 million eight-year senior notes (B1/BB-) at par to yield 4 7/8% on Wednesday, according to a market source.

Pricing came tighter than talk for a yield in the 5¼% area and well inside of initial talk for a yield in the 5¼% to 5½% area.

The new paper skyrocketed in the secondary space.

The 4 7/8% notes traded as high as 102 7/8 but were mostly changing hands between 102 and 102¼ heading into the market close, sources said.

The notes saw more than $27 million in reported volume by the late afternoon.

Del Monte on the road

Del Monte started a roadshow on Wednesday for a $575 million offering of seven-year senior secured notes, according to a market source.

The roadshow will run until March 10, with pricing expected thereafter.

Early whispers have the notes coming with a yield of 11% to 12%, the source said.

Health care rallies

Health-care names were rallying on Wednesday on the heels of the Super Tuesday election results.

Several names jumped multiple points with Joe Biden now a frontrunner in the Democratic primary and the threat of a “Medicare for All” policy initiative fading, a market source said.

HCA Healthcare, Inc.’s 3½% senior notes due 2030 (Ba2/BB-/BB) were among the most actively traded issues in the secondary space.

The notes popped above par for the first time since pricing on Wednesday.

The notes were up 1½ point to close the day at par 7/8, sources said.

With more than $57 million in reported volume on the tape in the late afternoon, the notes were among the most actively traded issues in the secondary space.

The 3½% notes have largely floundered in the 98 to 99 range since HCA priced its $2.7 billion megadeal at par on Feb. 12.

Envision Healthcare Corp.’s 8¾% senior notes due 2026 also saw large gains during Wednesday’s session.

While volume was light, the notes were up 3 points to 60½, sources said.

Indexes gain

Indexes posted large gains on Wednesday.

The KDP High Yield Daily index gained 34 bps to close Wednesday at 70.24 with the yield now 5.46%.

The index was up 33 bps on Tuesday and 23 bps on Monday.

The ICE BofAML US High Yield index returned to positive territory on Wednesday.

The index gained 51.3 bps with the year-to-date return now 0.015%. The index gained 59 bps on Tuesday and was up 49.2 bps on Monday.

The CDX High Yield 30 index jumped 84 bps to close Wednesday at 105.58. The index plummeted 94 bps on Tuesday after a 28 bps gain on Monday.

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