Park River sells high-yield bonds; Boyd gains; Oasis stabilizes; Penske flat; DT notes weaken

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 26 – New deal activity slowed on Wednesday.

Park River Holdings Inc. priced a $340 million issue of eight-year senior notes.

Conduent Business Services, LLC was expected to price a $750 million offering of eight-year senior secured notes; however, deal terms were unavailable at press time.

Meanwhile, the secondary space opened the day strong but lost steam as the session progressed – a product of its oversaturation with new paper, sources said.

While new paper has been met with healthy demand, “I don’t know how many more $5 billion days we can handle,” a source said.

The deals to price during the primary market’s deluge the previous session dominated the tape on Wednesday, although few issues saw significant price movement from Tuesday’s close.

Oasis Petroleum Inc.’s 6 3/8% senior notes due 2026 (B3/B+) stabilized on Wednesday after a volatile break that saw the notes move 2 points in about 15 minutes.

Boyd Gaming Corp.’s 4¾% senior notes due 2031 (Caa1/B) were nominally improved with the notes moving up from a par-handle.

Penske Automotive Group, Inc.’s 3¾% senior notes due 2029 (Ba3/BB-) fell largely flat.

DT Midstream’s two tranches of senior notes were losing steam during Wednesday’s session although they continue to trade with a premium to their issue prices.

Wednesday’s primary

The news flow of the new issue market slowed on Wednesday.

Park River Holdings priced a $340 million issue of 6¾% eight-year senior notes (Caa1/CCC/CCC+) at par, in the middle of yield talk.

Conduent Business Services talked its $750 million offering of eight-year senior secured notes (B1/BB-) to yield 5½% to 5¾%, wide to initial guidance, and the deal had been expected to price later on Wednesday.

However, no terms were available at press time.

With no new deal announcements on Wednesday, only one deal was on deck to price Thursday.

CQP Holdco LP and BIP-V Chinook Holdco LLC are in the market with a $1 billion offering of 10-year senior secured notes, coming as a private placement that is expected settle with a Rule 144A-eligible Cusip number.

The deal was being talked on Wednesday to yield 5 3/8% to 5½%, in line with initial guidance, and scheduled to price Thursday morning.

Oasis stabilizes

Oasis Petroleum’s 6 3/8% senior notes due 2026 stabilized on Wednesday after a volatile break that saw it swing by 2 points in about 15 minutes.

The notes leveled off on a 101-handle and were marked at 101 3/8 bid, 101¾ offered heading into the close, a source said.

The 6 3/8% notes were well-bid out of the gate on Tuesday and quickly traded up to 102¼.

However, once the notes hit their high, they plummeted back down to a par-handle in about 15 minutes, a source said.

The notes traded down to par ¾ but bounced off their lows to close Tuesday’s session at 101 bid, 101¼ offered.

While Oasis Petroleum is a fundamentally stronger company since its emergence from bankruptcy, the name still has some stigma attached to it.

The wild price movements on Tuesday may have been the result of market players shorting the name at the 102-level, a source speculated.

In a heavily oversubscribed offering, Oasis Petroleum priced a $400 million issue of the 6 3/8% notes at par on Tuesday.

The yield printed tighter than the 6½% to 6¾% yield talk. The deal was heard to have played to $1.1 billion in demand.

Boyd improves

Boyd Gaming’s 4¾% senior notes due 2031 were nominally improved in active trading on Wednesday with the notes moving off of a par-handle.

The 4¾% notes gained about ¼ point to close the day at par 5/8 offered, 101 bid, a source said.

Boyd Gaming priced an upsized $900 million, from $750 million, issue of the 4¾% notes at par on Tuesday.

The yield printed at the tight end of the 4¾% to 5% yield talk.

The deal was also heavily oversubscribed with an order book of $2 billion, sources said.

Penske flat

Penske’s 3¾% senior notes due 2029 were “a non-event” in the secondary space, a source said.

The notes continued to trade with a mild premium to their issue price.

They were marked at par 1/8 bid, par 3/8 offered heading into Wednesday’s close – a level the notes have been stuck at since breaking for trade.

Penske priced a $500 million issue of the 3¾% notes at par on Tuesday.

The yield came in the middle of yield talk in the 3¾% area.

DT tranches weaken

DT Midstream’s tranches were losing steam in active trading on Wednesday with both the 4 1/8% senior notes due 2029 and the 4 3/8% senior notes due 2031 down about ¼ point, a source said.

The 4 1/8% senior notes due 2029 were marked at par ¼ bid, par ½ offered heading into Wednesday’s close.

The 4 3/8% senior notes due 2031 were marked at par 3/8 bid, par 5/8 offered, a source said.

As opposed to several recent refinancing deals, DT’s tranches were new debt.

They saw an initial bounce out of the gate with holders looking to increase their allocations. However, once that buying activity subsided, flippers drove the notes lower, a source said.

DT Midstream priced a $1.1 billion tranche of the 4 1/8% notes and a $1 billion tranche of the 4 3/8% notes at par on Tuesday.

The 4 1/8% notes priced at the tight end of yield talk in the 4¼% area; the 4 3/8% notes priced at the tight end of yield talk in the 4½% area.

The deal also played to heavy demand with $5 billion in orders across both tranches.

Asset manager outflows continue

Actively managed high-yield funds sustained $295 million of outflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

It was the ninth consecutive daily outflow sustained by the asset managers, although of the nine, Tuesday's was the smallest, according to the source who added that Tuesday's redemptions were concentrated, rather than spread across a large number of funds.

High-yield ETFs, meanwhile, had $137 million of inflows on Tuesday.

While the asset managers have been sustaining heavy outflows for the past nine market sessions, the high-yield ETFs had generally robust positive flows on seven of those nine sessions.

Indexes flat

Indexes were largely flat on Wednesday.

The KDP High Yield Daily index was again unchanged and closed Wednesday at 69.44. However, the yield shaved off 2 bps to close the day at 3.92%.

The index price and yield were flat on Tuesday after the index price shaved off 1 point on Monday.

The ICE BofAML US High Yield index rose 4.2 bps with the year-to-date return now 2.154%.

The index gained 10.6 bps on Tuesday and 7.7 bps on Monday.

The CDX High Yield 30 index closed Wednesday unchanged at 109.45.

The index fell 10 bps on Tuesday after rising 15 bps on Monday.

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