Heartland Dental to price junk add-on; Nexstar downtrend continues; First Quantum lower

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 5 – The new issue market reactivated Tuesday on the heels of the extended Labor Day holiday weekend in the United States.

However, no deals priced, and the news volume remained thin, as the holiday-abbreviated week got underway.

Heartland Dental announced a $100 million add-on to the Heartland Dental, LLC/Heartland Dental Finance Corp. 10½% senior secured notes due April 30, 2028 (expected ratings B2/B-) with pricing expected Wednesday.

The first full week of September also reactivated the euro-denominated primary market with Boels Rental and Rexel SA joining the forward calendar.

Meanwhile, the secondary space opened the week on soft footing after logging solid gains the previous week that brought credit spreads to their tightest levels of the year.

ETFs and real money accounts were both sellers of the session with large bids-wanted-in-competition lists circulating the market, a source said.

The cash bond market shed ¼ to 3/8 point.

However, trading volumes remained light with topical news the driver of activity in the space as market players waited for the primary market to provide new paper.

Nexstar Media Group Inc.’s senior notes were still being traded on Tuesday with the carriage dispute between Disney and Charter continuing to drag on the telecom sector.

First Quantum Minerals Ltd.’s 8 5/8% senior notes due 2030 (//B+) were also under pressure on Tuesday as conflict continues surrounding the company’s mining rights in Panama.

Heartland’s tap

On Tuesday, Heartland Dental announced in the morning a $100 million add-on to the Heartland Dental, LLC/Heartland Dental Finance Corp. 10½% senior secured notes due April 30, 2028, and later in the day talked it at 99.5 to par, on top of initial price guidance.

Books close at 11 a.m. ET on Wednesday, and the deal is set to price shortly thereafter.

Forecasts for September issuance ranged from a modest $10 billion to an exuberant $30 billion.

A syndicate banker said that dealers are staging for around $20 billion, given that there will be a continuation of the favorable market conditions that were in play in late summer.

Euro primary

The first full week of September also reactivated the euro-denominated primary market.

Boels Topholding BV began a two-day roadshow for a €400 million offering of long five-year senior secured notes (expected Ba3/confirmed BB+/expected BB-).

Initial guidance is in the mid-to-high 6% area.

And Rexel began marketing a €400 million offering of seven-year sustainability-linked senior notes (expected Ba1/confirmed BB+), in the market with initial yield guidance of 5½% to 5¾%.

Both euro deals are expected to price Wednesday.

Nexstar down again

It was another day of selling in Nexstar’s capital structure with its senior notes dragged down another 1 to 2 points in heavy volume.

The telecom’s 5 5/8% senior notes due 2027 sank almost 2 points to a 91-handle.

The notes were trading in the 91 to 91 3/8 context with the yield rising to 8 3/8%, according to a market source.

There was $23 million in reported volume, with the tranche one of the most actively traded issues during Tuesday’s session.

Nexstar’s 4¾% senior notes due 2028 sank another 1 point after heavy selling last Friday dragged the notes down 2 points.

The 4¾% notes sank to the 83¾ to 84¾ context on Tuesday with the yield climbing to 8½%.

There was $16 million in reported volume.

Nexstar recently closed on an acquisition of a San Diego station and extended a multiyear affiliation agreement with Fox.

However, the notes were most likely under pressure due to investor concerns over the telecom sector that were sparked by Disney’s carriage fee dispute with Charter, a source said.

The dispute resulted in Disney blacking out channels, which include ESPN, for Charter’s Spectrum customers.

Nexstar also has a history of carriage disputes.

However, the company’s senior notes were trading rich to the B index, a source said.

First Quantum under pressure

First Quantum’s 8 5/8% senior notes due 2030 were under pressure on Tuesday as conflict continues surrounding the company’s mining rights in Panama.

The 8 5/8% notes sank 1½ points to break below a 101-handle.

They were changing hands in the par ½ to 101½ context heading into the market close, a source said.

There was $13 million in reported volume.

Conflict continues around the company’s copper mine in Panama with local protestors marching on the Panamanian Parliament on Tuesday to demand the government reject a contract with First Quantum.

The contract would give First Quantum rights to operate the mine for 20 years with another possible 20-year extension.

In February, First Quantum was forced to shut down its mining operations in Panama due to failed contract negotiations with the government.

The mine was reopened in early March after a draft agreement was reached, which is now going to a vote.

Indexes

The KDP High Yield Daily index fell 20 basis points to close Tuesday at 50.34 with the yield now 7.53%.

The index added 47 bps on the week last week.

The ICE BofAML US High Yield index was down 25.6 bps with the year-to-date return now 6.944%.

The CDX High Yield 30 index shed 31 bps to close Tuesday at 102.64.

The index added 61 bps on the week last week.

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