RegionalCare to start roadshow; Gray notes gain; Dubai Aerospace dips; Newmark holds up

By Abigail W. Adams

Portland, Me., Nov. 2 – While high-yield new deal activity is expected to remain muted until mid-November, a billion-dollar-plus deal joined the forward calendar on Friday.

RegionalCare Hospital Partners Holdings, Inc. and LifePoint Health, Inc. plan to start a roadshow on Tuesday for a $1,575,000,000 offering of eight-year senior notes, according to a market source.

Meanwhile, the domestic and European primary market both saw deals that were expected to price on Friday pushed into the Nov. 5 week.

HC2 Holdings, Inc. remains in the market with its $535 million offering of senior secured notes although pricing was carried over to the coming week.

The deal was initially set to price earlier in the week just completed and then was heard to be coming on Friday although sources were skeptical.

Victoria plc is now expected to price its €450 million offering of five-year senior secured notes (BB-/BB) during the Nov. 5 week. Pricing was also expected on Friday.

Meanwhile, the tone in the secondary market continued to improve but volatility has taken its toll.

While spreads were seen 15 to 20 bps tighter with the rally in equities over the past few days, they were still 60 bps wider from last week, a market source said.

However, the market conditions did not impact the performance of Gray Television Inc.’s newly priced 7% senior notes due May 2027 (B3/B+/BB-) in the secondary space with the notes trading up in high-volume activity.

Newmark Group Inc.’s split-rated 6 1/8% five-year senior notes (expected BB+/BBB-/Kroll: BBB-) were also holding up in secondary trading, a market source said.

However, Dubai Aerospace Enterprise Funding LLC’s newly priced two-tranche issue of three-year and five-year senior notes (Ba2/BB+) was struggling, although volume was light, sources said.

Meanwhile, Hexion Inc.’s junk bonds again saw a steep decline on Friday furthering a downward spiral that began in mid-October.

RegionalCare on the road

RegionalCare Hospital Partners and LifePoint Health plan to start a roadshow on Tuesday for a $1,575,000,000 offering of eight-year senior notes.

The roadshow will run from Tuesday until Nov. 9 with pricing expected thereafter.

Barclays is the left lead for the Rule 144A for life deal.

Citigroup Global Markets Inc., RBC Capital Markets LLC, Deutsche Bank Securities Inc. and UBS Securities LLC are joint bookrunners.

Proceeds will be used to finance the acquisition of LifePoint Health by Apollo Global Management LLC for its merger with RegionalCare.

Pushed back

HC2 Holdings remains in the market with its $535 million offering of senior secured notes. However, pricing was pushed into the Nov. 5 week, according to a market source.

The deal was initially scheduled to price earlier in the week and was heard to be coming on Friday although sources were doubtful.

Volatile market conditions have taken a toll on the deal with price talk widening.

The structure was reduced to a three-year maturity with the deal now whispered to come with a coupon of 10% and a discounted offering price for a yield of 12½% to 13%.

Initial guidance, when the deal was announced on Oct. 22, was in the low-to-mid 9% area, sources said.

The European primary market also saw one deal pushed back.

Victoria plc remains in the market with its €450 million offering of five-year senior secured notes (BB-/BB). However, pricing was pushed into the Nov. 5 week, a market source said.

The forward calendar for the European market remained “very, very thin,” with not much issue activity expected in the final quarter, a market source said.

Gray dominates

Gray Television’s newly priced 7% senior notes due May 2027 (B3/B+/BB-) put in a strong performance in the secondary space with the notes trading ¾ to 1 point above their issue price, a market source said.

They were seen trading in the par 7/8, 101 context during Friday’s session with more than $61 million of the bonds on the tape.

“They’re doing well,” a market source said. “There’s a lot of secondary demand.”

Gray priced an upsized $750 million of the 7% notes at par in a Thursday drive-by. The initial size of the deal was $500 million.

Pricing came on top of revised talk of 7%.

Price talk was previously 7% to 7½%, which came on top of early guidance in the low 7% area, according to market sources.

In a reversal of a previous trend, which has seen issuers flock to the leveraged loan market, Gray’s concurrent term loan was downsized to $1.4 billion from $2.15 billion with proceeds shifted to the senior notes offering.

Dubai struggles

While Gray Television’s senior notes were in demand in the secondary space, Dubai Aerospace Enterprise Funding’s newly priced two-tranche issue of three-year and five-year senior notes (Ba2/BB+) struggled.

Both tranches were lagging their issue price in secondary trading, although trading volume was light, a market source said.

The 5¼% senior notes due 2021 were seen at 99¼ bid, par offered with trades largely wrapped around 99¾, a market source said.

However, there was little trading volume with only $8 million on the tape in the late afternoon.

The 5¾% senior notes due 2023 were seen at 99 bid, 99¾ offered with trades around 99¾, sources said. However, only $11 million of the bonds changed hands during Friday’s session.

Dubai Aerospace priced a $500 million tranche of the 5¼% notes and a $500 million tranche of the 5¾% notes at par on Thursday.

The deal was largely marketed to high yield accounts, a market source said.

Newmark holds up

High-yield players were eyeing Newmark Group’s newly priced split-rated 6 1/8% senior notes due 2023 (expected BB+/BBB-/Kroll: BBB-), which were “holding up,” in secondary trading, a market source said.

The 6 1/8% notes were seen trading at a slight premium to their issue price.

They were seen at 99 bid, 99½ offered early in the session with trades between 99¼ and 99½, a market source said.

Newmark priced an upsized $550 million issue of 6 1/8% senior notes at 98.937 to yield 6 3/8%, according to a market source.

Price talk was for a yield in the 6½% area. The initial size of the deal was $500 million.

Hexion down again

Hexion’s senior notes due 2020 were again trading down on Friday, deepening losses that began in mid-October.

Hexion’s 6 5/8% first-lien senior notes due 2020 dropped 1½ points in active trading to 86½, a market source said.

While less active, the 9% senior notes due 2020 traded down 2 points to 57½.

The 6 5/8% notes have now dropped 14 points and the 9% notes 20 points since the sell-off in the notes began in mid-October.

The sell-off was sparked when 9% second-lien noteholders hired law firm Milbank, Tweed, Hadley & McCloy in anticipation of upcoming negotiations regarding the 2020 bonds.

The second-lien noteholders are preparing to fight first-lien note holders with the 2020 maturity wall approaching, a market source said.

Indexes gain

Indexes closed out the week with gains although some still posted losses for the week.

The KDP High Yield Daily index was up 6 basis points to close Friday at 69.11 with the yield now 6.33%.

The index was up 2 bps on Thursday and 5 bps on Wednesday after a 12 bps drop on Tuesday and 14 bps drop on Monday.

The index was down 13 bps on the week after a 60 bps drop last week.

The ICE BofAML US High Yield index climbed back above the 1% year-to-date return threshold on Friday.

The index was up 10.2 bps with the year-to-date return now 1.006%.

The index was up 6.4 bps on Thursday and 26.8 bps on Wednesday after a 23.4 bps drop on Tuesday. The index gained 4.4 bps on Monday for a 24.4 bps gain on the week.

The index slid 74.5 bps during the week before, dropping below the 1% year-to-date return threshold last Friday.

The CDX High Yield 30 index saw a solid week of gains after a steep drop last week. The index was up 11 bps to close Friday at 105.68.

The index was up 30 bps on Thursday, 32 bps on Wednesday, 11 bps on Tuesday and 5 bps on Monday for an 89 bps gain on the week. The index dropped 92 bps last week.

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