Viking Cruises, OneMain/Springleaf, Match, Radian price; Encompass adds-on; Bausch dominates, Lamar flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 12 – Although it paled in comparison to the stampeding high-grade corporate bond new issue market, the speculative grade primary market maintained its healthy post-Fed pace on Tuesday.

Springleaf Finance Corp., a subsidiary of OneMain Financial Holdings, Inc., priced an upsized $600 million issue of 8 7/8% five-year senior notes (Ba3/BB-/BB+) at par to yield 8.872% in a drive-by.

The issue size increased from $400 million.

The yield printed tight to yield talk in the 9% area.

Viking Cruises Ltd. priced an upsized $675 million issue of 13% five-year senior secured notes (B1/B-) at 97 to yield 13.851%.

The issue size increased from $600 million.

The coupon came on top of coupon talk. The issue price came at the rich end of the 96 to 97 price talk. Official talk came in line with initial guidance (13% coupon including 3 to 4 points OID to yield in 14% area).

There were also covenant changes.

Encompass Health Corp. priced an upsized $600 million amount of senior notes (B1/B+) by means of tapping two existing issues in a drive-by.

The deal included an upsized $300 million (from $250 million) add-on to its 4½% senior notes due Feb. 1, 2028 which priced at 99.00 to yield 4.655%. The issue price came at the rich end of the 98.5 to 99 price talk.

Encompass Health also priced an upsized $300 million ($250 million) add-on to its 4¾% senior notes due Feb. 1, 2030 at 98.50 to yield 4.945%. The price came at the rich end of the 98 to 98.5 price talk.

The overall amount of issuance increased from $500 million.

Radian Group Inc. priced an upsized $525 million issue of five-year senior bullet notes (Ba1/BB+/BBB-) at par to yield 6 5/8% in a drive-by.

The issue size was increased from $400 million.

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

Also Match Group, Inc. priced a $500 million issue of 4 5/8% eight-year senior notes (Ba3/BB) in a drive-by.

$924 million Monday inflows

The dedicated high-yield funds saw $924 million of net inflows on Monday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $865 million inflows on the day.

High-yield ETFs saw $59 million of inflows on Monday, the source said.

The combined funds are tracking $2.6 billion of net inflows for the week that will conclude at Wednesday's close, the market source said.

Secondary flat or just under

Meanwhile, the secondary space was unchanged to slightly weaker on Tuesday.

News that the Federal Reserve had begun buying ETFs through its Secondary Market Corporate Credit Facility did little to lift the high-yield market.

“There was no dramatic move. It was already priced in,” a source said.

New paper continued to dominate trading activity.

Bausch Health Cos. Inc.’s 6¼% senior notes due 2029 (B3//B) were strong at the start of the day but drifted lower as the session progressed.

Lamar Media Corp.’s 4 7/8% senior notes due 2029 (Ba3/BB-) were largely flat in high-volume activity.

However, PowerTeam Services, LLC’s 9.033% senior notes due 2025 (B3/B-) were trading at a premium to their issue price.

Outside of the new paper, Grubhub Inc.’s 5½% senior notes due 2027 were active with the notes jumping several points in buyout speculation.

Bausch weakens

Bausch Health’s 6¼% senior notes due 2029 dominated activity in the secondary space on Tuesday.

However, after an initial pop early in the session, the notes came in heading into the market close, a market source said.

The 6¼% notes opened the day at par ½ bid, par ¾ offered and traded as high as 101 in intraday activity.

However, they drifted lower as the session progressed and were marked at par ¼ bid, par ¾ offered heading into the market close.

The notes were largely moving in line with the broader secondary space, which “didn’t really go anywhere,” on Tuesday, a source said.

The 6¼% notes were among the most actively traded during Tuesday’s session with more than $122 million in reported volume.

Bausch Health priced an upsized $1.5 billion issue of the 6¼% notes at par in Monday drive-by.

The issue size increased from $1.25 billion.

The yield printed at the tight end of the 6¼% to 6½% yield talk and inside of initial talk in the 6¾% area.

Lamar flat

Lamar Media’s 4 7/8% senior notes due 2029 fell flat in high-volume activity on Tuesday with the notes stuck at par for the majority of the session.

The notes were changing hands between par and par ¼ with more than $65 million in reported volume, sources said.

The lack of movement in the aftermarket was attributed to their tight pricing.

Price talk for the notes tightened a couple of times during bookbuilding, a source said.

Lamar priced a $400 million issue of 4 7/8% senior notes at par in a Monday drive-by.

Pricing came tight to talk for a yield in the 5% area. Initial talk had been for a yield in the mid-5% area.

PowerTeam trades up

PowerTeam Services’ 9.033% senior notes due 2025 were trading at a premium to their issue price.

The notes were changing hands at 98 for the majority of Tuesday’s session, a market source said.

The yield on the notes was 9.45%, which was decent for five-year secured paper, the source said.

PowerTeam priced a $586,735,000 issue of the 9.033% notes at 96.00 to yield 9.987% on Monday.

Pricing was in-line with talk for a coupon in the 9% area and a discount to around 96 for a yield in the 10% area.

The deal underwent covenant changes prior to pricing.

Grubhub gains

Grubhub’s 5½% senior notes due 2027 jumped several points in active trading on Tuesday on speculation the company would be bought out.

The 5½% notes gained about 5 points.

They were trading in the 97 to 98 context on Tuesday after closing Monday at 92 bid, 93 offered, according to a market source.

The bonds saw more than $38 million in reported volume.

Grubhub’s capital structure soared after Bloomberg reported that Uber had made an offer to acquire the food delivery service in an all-stock transaction.

Grubhub and Uber had been engaged in buyout talks for more than a year but still have yet to agree on a price, CNBC reported.

Indexes mixed

Indexes were mixed on Tuesday after all opened the week with losses.

The KDP High Yield Daily index gained 19 basis points to close Tuesday at 63.11 with the yield 7.48%. The index was down 10 bps on Monday.

The ICE BofAML US High Yield index gained 42.8 bps with the with the year-to-date return now negative 8.774%.

The index was largely flat on Monday, shaving off 0.4 bps.

The CDX High Yield 30 index was down 13 bps to close Tuesday at 94.13.

The index dropped 24 bps on Monday.

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