Realogy, Crestwood Midstream, MDC price; Range Resources soars; Charter drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan 6 – The domestic high-yield primary market was active on Wednesday with three deals clearing the market, all of which saw tight executions despite the turmoil on Capitol Hill.

Crestwood Midstream Partners LP priced a $700 million issue of eight-year senior notes (B1/BB-).

Realogy Holdings Corp. sold an upsized $600 million offering of eight-year senior notes (Caa1/B-).

And MDC Holdings Inc. priced an upsized $350 million of 10-year senior bullet notes (Ba1/BB+/BBB-).

Meanwhile, the secondary space was largely unchanged on Wednesday despite the violence that erupted in Washington late in the trading session.

New paper dominated the tape with volume light outside of recent issues, a source said.

Range Resources Corp.’s newly priced 8¼% senior notes due 2029 (B2) were in focus with the notes soaring in active trading.

Equitrans Midstream Corp.’s recently priced tranches remained active although the notes were coming in from their highs.

Outside of recent issues, Charter Communications Operating LLC’s 3.7% senior notes due 2051 were busy with the notes trading off as a result of the Democratic victory in Georgia.

Wednesday’s primary

Capital markets in the United States appeared to shrug off the tumultuous events unfolding in Washington, D.C. as political volatility spikes in what has been anything but a routine period of transition between presidential administrations in early 2021, sources said on Wednesday.

In the junk bond market issuers saw tight executions, apparently reflecting a perception that positive credit stories outweigh clamorous political news headlines, a trader remarked.

Crestwood Midstream priced $700 million of eight-year senior notes (B1/BB-) at par to yield 6%, at the tight end of the 6% to 6¼% yield talk. Initial talk was in the 6¼% to 6½% area.

Realogy Holdings brought an upsized $600 million issue of eight-year senior notes (Caa1/B-) at par to yield 5¾%. The sale was increased from $400 million.

The yield printed at the tight end of the downwardly revised 5¾% to 5 7/8% yield talk. Earlier official talk was in the 6% area. Initial guidance had the deal coming to yield in the low-to-mid 6% area.

In spite of the cascading price talk and upsizing the market remained notably warm to the deal, a trader said, adding that it was heard to be eight-times oversubscribed at 3 p.m. ET on Wednesday.

Part of its luster had to do with the fact that if the Madison N.J.-based provider of residential real estate services is able to reduce its leverage by half a turn Moody’s said it will promote its senior unsecured credit rating to B3 from Caa1, the trader remarked, adding that the perception in the market is that the Moody’s improvement ultimately will materialize.

And MDC Holdings priced an upsized $350 million offering of 10-year senior bullet notes (Ba1/BB+/BBB-) at par to yield 2½%. The deal was raised from $300 million initially.

The yield came on top of final yield talk and at the tight end of earlier talk in the 2 5/8% area. Initial talk was in the 2¾% area.

The notes played to $800 million of orders in a book that built more slowly than expected, according to a source close to the trade.

The execution came on the investment-grade syndicate desk reflecting the buyer base, the source added, making note of the ultra-low yield and a perception in the market that the issuer's currently split senior unsecured credit ratings will likely be straight investment grade by the end of 2021.

Range Resources soars

Range Resources’ newly priced 8¼% senior notes due 2029 continued to gain in active trading after a strong break the previous session.

The 8¼% notes traded in a range of 101 7/8 to 103 3/8 during Wednesday’s session. The notes gained momentum into the close and stood poised to end the day on a 103-handle, a source said.

There was more than $75 million of reported volume during the session.

The 8¼% notes saw a strong break the previous session shooting up to a 101-handle shortly after freeing for trade.

The notes were bolstered on Wednesday by surging crude oil futures. WTI crude oil futures settled at $50.63 on Wednesday.

In a heavily oversubscribed offering, Range Resources priced an upsized $600 million issue of the 8¼% notes at par on Tuesday.

The notes priced at the tight end of the 8¼% to 8½% yield talk and were increased from $500 million.

The deal was heard to be as much as 5x oversubscribed, a source said.

Equitrans weakens

Equitrans’ two tranches of senior notes remained active on Wednesday although the notes were coming in from their highs.

Both tranches were down about ¼ point.

The 4¾% senior notes due 2031 stood poised to close the day at par 7/8 after closing the previous session on a 101-handle, a source said.

There was more than $30 million in reported volume during the session.

The 4½% senior notes due 2029 stood poised to close the day at par ¾ after closing the previous session at 101.

The notes saw about $15 million in reported volume.

Equitrans priced both tranches at par in a Monday drive-by.

Charter drops

Charter’s 3.7% senior notes due 2051 were trading off on Wednesday with the notes falling below par.

The notes were down 2 points and stood poised to close the day at 99 5/8.

The notes were among the most active issues outside of new deals with more than $21.5 million on the tape.

With the Democrats’ victory in Georgia, there is concern that the Federal Communications Commission will quickly move forward with regulating high-speed internet providers, a source said.

Charter is also one of 57 companies that have rushed to bid in the FCC’s C-Band auction.

The airwaves are a crucial part of the rollout of 5G in the United States and Charter may be getting outbid, according to a market source.

Tuesday fund flows

Dedicated high-yield bond funds saw a relatively modest $98 million of net outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $198 million of outflows on the day.

However actively managed high yield funds were positive on Tuesday, seeing $100 million of inflows on the day, the source said.

Indexes

The KDP High Yield Daily index gained 1 point to close Wednesday at 69.02 with the yield now 4.3%.

The index was up 2 points on Tuesday.

The ICE BofAML US High Yield index turned positive on Wednesday. The index was up 10.7 bps with the year-to-date return now 0.099%. The index was up 1.9 bps on Tuesday.

The CDX High Yield 30 index closed Wednesday at 108.86.

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