Charter, Clear Channel and MasTec upsize; Wyndham, POWDR trade up; Occidental gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 21 – The domestic high-yield primary market continued to be modestly active on Tuesday with three deals clearing the market.

Charter Communications Inc. priced a massively upsized $1.5 billion add-on to the CCO Holdings LLC/CCO Holdings Capital Corp. 4¼% senior notes due Feb. 1, 2031 (B1/BB).

Clear Channel International BV priced an upsized $375 million issue of five-year senior secured notes (B2/B).

And MasTec, Inc. priced an upsized $600 million issue of eight-year senior notes (Ba3/BB).

Meanwhile, it was another risk-on day in the secondary space with the cash bond market up more than ½ point, sources said.

With inflows strong, there was money to be put to work and large offers-wanted-in-competition lists were circulating the market.

Recent deals were among the benefactors of the buying pressure that was buoying the overall space.

Wyndham Destinations, Inc.’s newly priced 6 5/8% senior secured notes due 2026 (Ba3/ BB-/BB+) jumped in high-volume activity.

POWDR Corp.’s new 6% senior secured notes due 2025 (B1/B) were also putting in a strong performance.

Tuesday was a strong day for the energy sector as WTI crude oil futures soared.

Occidental Petroleum Corp.’s senior notes were among the benefactors of rising oil prices with the fallen angel’s capital structure up 1 to 2 points.

Eldorado Resorts, Inc.’s 8 1/8% senior notes due 2027 (Caa1/CCC+) saw renewed attention with the notes breaking par following the completion of the gaming company’s acquisition of Caesars Entertainment Corp.

Upsized

News flow in the high-yield primary market moderated on Tuesday, as numerous issuers are presently sidelined in an earnings blackout, sources say.

The session saw three deals price, all of them upsized.

Two of the three came as drive-bys.

Charter priced a massively upsized $1.5 billion add-on to the CCO Holdings LLC/CCO Holdings Capital Corp. 4¼% senior notes due Feb. 1, 2031 at 102, resulting in a 4.015% yield to maturity.

The drive-by deal increased from $500 million.

The issue price came on top of price talk.

MasTec priced an upsized $600 million issue of eight-year senior notes at par to yield 4½%.

The issue size increased from $400 million.

The yield printed at the tight end of yield talk in the 4 5/8% area. Initial guidance was in the high 4% to 5% area.

And Clear Channel International priced an upsized $375 million issue of 6 5/8% five-year senior secured notes in a drive-by.

The issue size increased from $350 million.

Price talk was in the 7% area.

The deal was heard to be at least a couple of times oversubscribed, a bond trader said.

Wyndham in focus

Wyndham Destinations’ 6 5/8% senior secured notes due 2025 skyrocketed in high-volume activity in the secondary space.

Following a strong break, the notes continued to climb during Tuesday’s session and closed the day on a 102-handle, a source said.

The notes were trading in a 102¼ to 102½ context heading into the market close.

With more than $90 million in reported volume, the notes were the most actively traded during Tuesday’s session.

The notes were in demand despite the timeshare company’s dismal preliminary earnings report and a projected cut to its dividend.

Wyndham expects to report second-quarter revenue of $343 million, a year-over-year decrease of 67%, and adjusted EBITDA of $16 million, a year-over-year decrease of 94%, according to a market source.

The company also expects to slash the dividend on its stock to 30 cents from 50 cents in the third quarter.

However, the notes carry a hefty coupon for a BB credit and are secured, sources said.

Wyndham priced an upsized $650 million issue of the 6 5/8% notes at par in a Monday drive-by.

The yield printed at the tight end of yield talk in the 6¾% area. Initial talk was in the 7% area.

The issue size increased from $500 million.

The deal was heavily oversubscribed and was heard to be playing to more than $1.1 billion in orders.

POWDR strong

POWDR’s 6% senior secured notes due 2025 were also putting in a strong performance in the secondary space.

The notes started the day around par but gained strength as the session progressed and were changing hands in the 102 3/8 to 102 5/8 context heading into the market close, a source said.

The 6% notes were active despite the small size of the issue with more than $50 million in reported volume during Tuesday’s session.

POWDR priced a $300 million issue of the 6% notes at par in a Monday drive-by.

The yield printed on top of yield talk. Early guidance was in the 6¼% to 6½% area.

Occidental gains

Occidental Petroleum’s senior notes were on the rise as WTI crude oil futures hit their highest level since the March sell-off.

Occidental’s 3.4% senior notes due 2026 jumped more than 2 points in active trading.

The notes closed Tuesday at 89¼, according to a market source.

The bonds had more than $17 million in reported volume.

Occidental’s 8½% senior notes due 2027, a tranche from the company’s recently priced megadeal, gained 1½ points to close Tuesday at 107¾.

The fallen angel’s capital structure was posting gains as WTI crude oil futures surged on renewed optimism of an economic recovery.

WTI crude oil futures settled at $41.96 on Tuesday, an increase of $1.15 or 2.8%.

The energy sector was also buoyed by Chevron’s $5 billion acquisition of Noble Energy in an all-stock deal.

The acquisition is the first major merger and acquisition activity in the energy sector since March and has spawned optimism that there will be more, a source said.

Eldorado tops par

Eldorado’s 8 1/8% senior notes due 2027 topped par in active trading on Tuesday.

The 8 1/8% notes were up more than 1 point to close Tuesday at par ¼, according to a market source.

There was more than $23 million on the bonds on the tape heading into the market close.

The notes were posting gains following Eldorado’s completion of its acquisition of Caesars on Monday.

The 8 1/8% notes were the sole unsecured tranche from the $6.2 billion three-tranche megadeal that priced in late June to help fund the $17 billion acquisition.

However, the 8 1/8% notes have largely struggled below par since pricing and traded down to a 95-handle as recently as July 1, according to Trace data.

$1.11 billion Monday inflows

The dedicated high-yield bond funds saw a whopping $1.11 billion of net daily inflows on Monday, the most recent session for which data was available at press time, according to a market source.

It was the biggest daily inflow in a month, the source added.

High -yield ETFs had $642 million of inflows on the day.

Actively managed high-yield funds had $470 million of inflows on Monday.

The combined funds are tracking $1.9 billion of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes gain

Indexes were on the rise on Tuesday, which was another strong day for the secondary space.

The KDP High Yield Daily index gained 33 points to close Tuesday at 66.29 with the yield now 6.04%.

The index was up 13 bps on Monday.

The ICE BofAML US High Yield index jumped 64.6 bps with the year-to-date return now negative 1.487%. The index was up 44.8 bps on Monday.

The CDX High Yield 30 index rose 22 bps to close Tuesday at 101.80.

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