Junk: Tenet prices; VistaJet, Navient struggle; Six Flags dips to new low; Icahn hard-hit

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 2 – Tenet Healthcare Corp. was the lone deal in the junk bond primary space on Tuesday.

Meanwhile, it was soft in the secondary space as a risk-off sentiment swept through the market ahead of the Federal Open Market Committee’s rate*hike announcement.

While lower, the market held up well compared to the selling in equities with the cash bond market off ¼ point to 3/8 point.

Monday’s drive-by deals were struggling under the heavy market conditions with Navient Corp.’s new 9 3/8% senior notes due 2030 (Ba3/B+/BB-) and VistaJet Malta Finance plc’s 9½% senior notes due 2028 (B3/BB-/BB-) both underwater in heavy volume.

Six Flags Entertainment Corp.’s 7¼% senior notes due 2031 (B3/B) continued to see heavy selling pressure with the notes falling to a 96-handle.

However, Icahn Enterprises LP’s senior notes (Ba3/BB) were the largest losers of Tuesday’s session with the notes down 3 to 6 points after short-seller Hindenburg Research took aim at the company.

Primary

Tenet Healthcare priced a $1.35 billion issue of eight-year senior secured first-lien notes (B1/BB-/BB-) at par to yield 6¾% in a Tuesday drive-by.

The session’s sole deal, it came at the wide end of the 6½% to 6¾% yield talk.

The notes sale played to demand amounting to twice the size of the deal, sources said.

A handful of real money accounts were believed to have taken down much of the issue, a trader said.

There was little, if any, trading activity in the new notes heading into the Tuesday close, said the trader who marked them par ¼ bid, par ½ offered.

Meanwhile, the EquipmentShare.com Inc. $750 million offering of five-year second-lien senior secured notes (B1/B-) is shaping up on news that the debut high-yield issuer will make some covenant concessions to investors, and bring more rate to bear upon the transaction.

Pricing discussions took place in the yield context of 9¼% to 9½% on Tuesday, a sellside source said, noting that initial talk was in the mid-to-high 8% area.

The order book was up to $600 million on Tuesday afternoon, the sellsider said, adding that the concessions and higher pricing should suffice to get the deal done

There was also news from the euro-denominated new issue market on Tuesday.

Ohio-based Dana Inc. plans to participate in conference calls with fixed-income investors on Wednesday, ahead of a planned €425 million offering of eight-year senior notes, with proceeds to repay debt.

Underwater

While Navient’s new 9 3/8% senior notes due 2030 and VistaJet’s 9½% senior notes due 2028 had a flat break, the notes were dragged below their issue prices on a heavy day for the market on Tuesday.

Navient’s 9 3/8% notes launched the day at par.

However, they closed the day in the 99¼ to 99½ context, a source said.

There was $42 million in reported volume.

In a heavily oversubscribed offering, Navient priced a $500 million issue of the 9 3/8% notes at 99.933 to yield 9 3/8% in a Monday drive-by.

The yield printed in the middle of the 9 3/8% area yield talk.

VistaJet’s 9½% senior notes due 2028 also sank well below their discounted issue price.

The notes briefly traded as high as 99 1/8. However, the notes closed the day on a 98-handle with the notes trading in the 98¼ to 98½ context heading into the market close.

VistaJet priced a $500 million issue of the 9½% notes at 98.998 to yield 9¾% in a Monday drive-by.

The yield printed in the middle of talk for a yield in the 9¾% area and inline with talk for a discount of 1 point.

Six Flags new low

Six Flags’ 7¼% senior notes due 2031 continued to face heavy selling pressure on Tuesday with the notes driven down more than 1 point in heavy volume.

The notes fell to a 96-handle and stood poised to close the day at 96½, a source said.

The yield on the notes was 7 7/8%.

There was $77 million in reported volume.

The 7¼% notes have been on a strong downward trend since pricing at 99.248 to yield 7 3/8% last week.

The pricing was aggressive with the notes coming much tighter than the B index which has been yielding 8¾%, a source said

Icahn under pressure

Icahn’s senior notes were among the largest losers of Tuesday’s session with the notes falling 3 to 7 points after short-seller Hindenburg Research took aim at the company.

Icahn’s 5¼% senior notes due 2027 were the most active in the capital structure.

The notes fell 6 points to close the day at 88 with the yield rising to 8 7/8%, a source said.

There was $15 million in reported volume.

Icahn’s 6¼% senior notes due 2026 sank 7 points to close the day at 91 with the yield about 9¾%.

There was $9 million in reported volume.

The 4 3/8% senior notes due 2029 were off 6½ points to close the day at 81¼ with the yield 8½%.

There was $7 million in reported volume.

The 4¾% senior notes due 2024 fell 3½ points to close the day at 95 with the yield 8¾%.

There was $6 million in reported volume.

Carl Icahn’s company was under pressure after Hindenburg Research took aim at the legend of Wall Street with a report alleging the company was overleveraged and its assets were overvalued.

Fund flows

High-yield ETFs sustained $625 million of daily cash outflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds had positive flows on the day, posting $50 million of inflows on Monday, the source said.

The combined funds are tracking $726 million of net outflows on the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index fell 24 points to close Tuesday at 51.63 with the yield 7.2%.

The index was down 11 points on Monday.

The ICE BofAML US High Yield index was down 27.7 basis points with the year-to-date return now 4.3%.

The index was down 10.6 bps on Monday.

The CDX High Yield 30 index fell 61 bps to close Tuesday at 100.41.

The index was down 36 bps on Monday.

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