Calpine prices; Albertsons adds on; Nationstar gains continue; C&S at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 2 – The high-yield primary market had an active Wednesday session that saw two drive-by deals clear the market and two more join the forward calendar.

Calpine priced a downsized $900 million issue of 10.25-year senior secured notes (Ba2/BB+) and Albertsons priced an upsized $600 million add-on to the Albertsons Cos, Inc., Safeway Inc., New Albertsons LP, Albertson's LLC 3½% senior notes due March 15, 2029 (B1/BB-).

Seagate Technology joined the forward calendar with a $1 billion two-part offering of senior notes (Ba1/BB+/BB+).

And IPL Plastics stepped forward with a $125 million offering of senior PIK toggle notes due Jan. 15, 2026 (expected ratings Caa2/CCC) backing a dividend.

Meanwhile, the secondary space continued to grind tighter on Wednesday with buyers outnumbering sellers, a source said.

New paper remained in focus and continued to perform well despite tight pricing.

Nationstar Mortgage Holdings Inc.’s 5 1/8% senior notes due 2030 (B2/B) continued to gain in high-volume activity following a strong break.

While C&S Group Enterprises LLC’s 5% senior notes due 2028 (B2/B) were coming in from their highs, they continued to trade at a healthy premium to their issue price.

PowerTeam Services, LLC’s 9.033% senior secured first-priority notes due 2025 (B3/B-) were active and trading at a premium to their reoffer price following an add-on.

Wednesday’s primary

An active Wednesday session had two on-the-run high yield issuers complete drive-by deals.

Calpine priced a downsized $900 million issue (from $1 billion) of 3¾% 10.25-year senior secured notes (Ba2/BB+) at par, on top of talk.

The issue size decreased from $1 billion with the shift of $100 million to the bank loan, which increased to $1 billion from $750 million.

The bond deal was heard to be playing to $1.6 billion of orders early Wednesday afternoon, a trader said.

Albertsons priced an upsized $600 million (from $500 million) add-on to the Albertsons Cos, Inc., Safeway Inc., New Albertsons LP, Albertson's LLC 3½% senior notes due March 15, 2029 (B1/BB-) at 99 to yield 3.64%.

The deal came at the rich end of talk in the 98.75 area.

Two issuers kicked off brief roadshows.

Seagate Technology came with a $1 billion two-part offering of senior notes (Ba1/BB+/BB+).

The deal is coming in tranches of notes due July 15, 2029 with initial talk in the high 3% to 4% area, and notes due July 15, 2031 with initial talk in the low 4% area.

Meanwhile IPL Plastics stepped forward with a PIK toggle holdco deal backing a dividend, one of the market's most aggressive structures.

Price talk on the Intelligent Packaging Holdco Issuer LP $125 million offering of senior PIK toggle notes due Jan. 15, 2026 (expected ratings Caa2/CCC) has the deal coming with a 9% cash coupon at 99. The coupon steps up by 75 basis points for PIK payments.

Proceeds will fund a distribution to sponsor Madison Dearborn Partners, which closed on its acquisition of the company in October.

IPL is heard to be 75% done in reverse inquiry, a trader said.

Both Seagate and IPL are expected to price Thursday (see related stories in this issue).

An active December

New issue activity has been steady since the beginning of the week, however there remains an expectation that the deal pace will increase during the run-up to Christmas, which is expected to include at least a healthy portion of the Dec. 14 week, sources say.

Previous to Thanksgiving, prospective borrowers ran non-deal roadshows, and some of them are expected to take advantage of the presently robust conditions in the high-yield market, and issue during the interval in question, a trader said.

One company that ran a non-deal roadshow was Radiology Partners which announced a definitive agreement to acquire Mednax Radiology Solutions in mid-September, the trader said.

The acquisition, which has an enterprise value of $885 million, cleared the Hart-Scott-Rodino Antitrust Improvements Act waiting period on Nov. 23.

Goldman Sachs served as financial adviser to Radiology Partners. Barclays was financial adviser to Mednax.

Nationstar in focus

Nationstar Mortgage Holdings’ 5 1/8% senior notes due 2030 (B2/B) were in focus on Wednesday with the notes continuing to gain following a strong break.

The 5 1/8% notes traded to an intraday low of 101 1/8 early in the session.

However, they gained momentum as the session progressed and were wrapped around 102 heading into the close, a source said.

The bonds were active with more than $57 million in reported volume.

The notes saw a strong break and were marked at par ½ bid, 101 offered shortly after freeing for trade on Tuesday, a source said.

In a heavily oversubscribed offering, Nationstar priced a $650 million issue of the 5 1/8% notes at par on Tuesday.

Pricing came at the tight end of yield talk in the 5¼% area. Initial guidance was in the 5½% area.

The deal played to as much as $3 billion in orders.

C&S at a premium

C&S’ 5% senior notes due 2028 were coming in from their highs on Wednesday.

However, they continued to trade at a healthy premium to their issue price.

The 5% notes were changing hands in the par 5/8 to 101 context throughout Wednesday’s session, a source said.

The notes were active for a small issue with more than $51 million in reported volume.

The 5% notes traded to a high of 101¼ after breaking for trade on Tuesday.

The offering was a decent deal compared to the market.

While a single-B credit, the Keene, N.H.-based wholesale grocery distributor is a “conservatively run business with decent tailwinds for the foreseeable future,” a source said.

C&S priced an upsized $400 million, from $300 million, issue of the 5% notes at par on Tuesday.

Pricing came at the tight end of the 5% to 5¼% yield talk.

The deal was heard to be as much as 2x oversubscribed.

PowerTeam’s add-on

PowerTeam’s 9.033% senior secured first-priority notes due 2025 (B3/B-) were active on Wednesday following the pricing of an add-on the previous session.

The notes were trading at a steep premium to the reoffer price of the add-on but were still below their previous level.

The 9.033% notes gained 1 point from their reoffer price and stood poised to close Wednesday at 109, according to a market source.

There was more than $42 million in reported volume.

Artera Services, LLC priced a $250 million add-on to PowerTeam’s 9.033% notes at 108 on Tuesday.

The issue price came at the rich end of the 107.5 to 108 price talk.

Initial guidance was in the 107.5 area.

$188 million Tuesday inflows

The dedicated high-yield bond funds had $188 million of net daily inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $298 million of inflows on the day.

However actively managed funds saw $110 million of outflows on Tuesday, the source said.

Indexes gain

Indexes were on the rise on Wednesday.

The KDP High Yield Daily index gained 8 points to close the day at 68.15 with the yield now 4.72%.

The index was up 14 bps on Tuesday after shaving off 1 bp on Monday.

The ICE BofAML US High Yield index gained 15.1 bps with the year-to-date return now 4.564%. The index was up 23.3 bps on Tuesday.

The CDX High Yield 30 index rose 16 bps to close Wednesday at 109.1. The index shaved off 6 bps on Tuesday.

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