Builders FirstSource, US Acute Care add on in junkland; GrubHub gains; Golden Nugget loses

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 19 – High-yield new issue market traders saw a $525 million face amount of paper sold in a pair of single-tranche drive-by add-on deals.

Builders FirstSource, Inc. priced a $300 million add-on to its 4¼% senior notes due 2032 (Ba2/BB-) and US Acute Care Solutions, LLC priced a $225 million add-on to its 6 3/8% senior secured notes due 2026 (B2/B-).

The forward calendar also continued to grow with VistaJet starting a roadshow for an $800 million offering of eight-year senior notes.

The primary market activity came amid continued volatility in the secondary space.

While the cash bond market rallied early in the session, selling pressure took hold as the session progressed with the market ending the day in negative territory.

While the market was up ¼ point in intraday activity, it closed the day down 1/8, a source said.

However, trading activity remained muted amid the volatility.

Grubhub Inc.’s 5½% senior notes due 2027 (B3/BB-) were on the rise in active trading.

However, Fertitta Entertainment, LLC’s recently priced tranches continued to trend lower alongside the broader market with both tranches now trading below par.

Park Hotels & Resorts Inc.’s 4 7/8% senior notes due 2029 (B1/B+) were active although with little movement in price.

Wednesday’s add-ons

In the Wednesday primary market, each of the single-tranche drive-by add-on deals priced at the rich ends of price talk.

Builders FirstSource priced a $300 million add-on to its 4¼% senior notes due Feb. 1, 2032 (Ba2/BB-) at 100.5 to yield 4.188% in a deal heard to be playing to $800 million of orders at 1 p.m. ET on Wednesday.

And US Acute Care Solutions priced a $225 million add-on to its 6 3/8% senior secured notes due March 1, 2026 (B2/B-) at 101.5 to yield 5.831%. The deal was heard to be two-times oversubscribed at 1 p.m. ET.

There were additions to the active forward calendar.

VistaJet began a roadshow for an $800 million offering of eight-year senior notes, in the market with initial guidance in the high 6% area to 7%.

The deal is heard to be completely done in reverse inquiry, traders said.

Informal VistaJet conversations have taken place at 6½%, a trader added.

Grubhub gains

Grubhub’s 5½% senior notes due 2027 were on the rise in active trading on Wednesday.

The notes rose about ¼ point to close the day at 98¼ with the notes offering an attractive yield of 5 7/8%, a source said.

There was about $18 million in reported volume.

While the notes fell to a 98-handle amid the weakness in the market, they have been slowly recovering over the past week, a source said.

Fertitta weakens

Fertitta’s (Golden Nugget) recently priced tranches continued to trend lower amid the weakness in the overall market with both tranches closing the day below par.

The 6¾% senior notes due 2030 (Caa2/CCC+) were trading hands in the 99½ to par context throughout Wednesday’s session and stood poised to close the day at 99¾, a source said.

There was about $17 million in reported volume.

While less active, Fertitta’s 4 5/8% senior secured notes due 2029 (B2/B+) were on a 99-handle with the notes changing hands in the 99 5/8 to 99¾ context throughout Wednesday’s session.

Fertitta priced a $1 billion tranche of the 4 5/8% notes and a $1.25 billion tranche of the 6¾% notes at par on Jan. 12.

While the notes initially performed well on the break, they gave way to selling pressure with both tranches dropping below par.

Park Hotels active

Park Hotels’ 4 7/8% senior notes due 2029 were active on Wednesday although with little movement in price.

The 4 7/8% notes remained wrapped around 102 in active trading.

There was about $15 million in reported volume heading into the close.

The notes are secured and from a strong credit, a source said.

However, the activity in the name may have been the result of profit-taking.

ETFs see $992 million Tuesday outflows

High-yield ETFs sustained $992 million of daily outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

Actively managed funds were positive on Tuesday, posting $153 million of inflows on the day.

With only Wednesday's daily fund flow numbers waiting to go into the tally the combined funds are tracking $2.24 billion of net outflows for the week to Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index closed Wednesday flush with Tuesday at 64.87. However, the yield shaved off 1 basis point to close the day at 4.3%.

The index was down 34 points on Tuesday.

The CDX High Yield 30 index sank another 15 bps to close Wednesday at 107.86.

The index was down 37 bps on Tuesday.

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