Morning Commentary: Sinclair/Diamond Sports starts roadshow for $4.875 billion; junk opens unchanged

By Paul A. Harris

Portland, Ore., July 9 – Sinclair Broadcast Group Inc. kicked off the high-yield portion of its financings for acquisitions from the Walt Disney Co., on Tuesday: a whopping $4,875,000,000 two-part offering via indirect, wholly owned subsidiaries Diamond Sports Group LLC and Diamond Sports Finance Co.

The deal features $2.55 billion of seven-year senior secured notes and $2,325,000,000 of eight-year senior unsecured notes.

The roadshow is set to start Wednesday and wrap up on July 18.

Proceeds, along with $4 billion of bank debt, will be used to help fund the acquisition of 21 Regional Sports Networks and Fox College Sports from Disney.

Elsewhere Melco Resorts Finance Ltd. is expected to price a $500 million offering of eight-year senior notes (expected ratings Ba2/BB) on Tuesday.

The issuer, a wholly owned subsidiary of Macau based gaming and entertainment operator Melco Resorts & Entertainment Ltd., plans to use the proceeds to pay down bank debt under the revolving credit facility.

Junk opens flat

Junk opened flat on Tuesday, according to a bond trader in New York.

The CDX HY32 index of high-yield credit default swaps was 0.07 points better at 107.335 bid, 107.425 offered, according to a hedge fund manager.

With the Dow Jones industrial average down 100 points at midmorning high-yield ETF share prices were flat to slightly lower. The iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down six cents, or 0.07%, at $86.76 per share.

Among recent issues the Hannon Armstrong Sustainable Infrastructure Capital Inc. (HAT Holdings I LLC and HAT Holdings II LLC) 5¼% green eligible senior notes (BB+/BB+) due July 2024 were 102¾ bid, 103¼ offered, according to a hedge fund manager.

Those notes were 102 5/8 bid, 103 1/8 offered on Monday, the source said.

The $350 million issue priced at par on June 26.

Moving out to the higher beta range of the credit spectrum the Michaels Stores, Inc. 8% senior notes due July 2027 (B1/B) were 97¼ bid, 98¼ offered on Tuesday.

That paper was 98¼ bid, 99¼ offered on Monday, the hedge fund manager said.

The $500 million issue priced at par on June 21.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, according to a fixed income investor.

High-yield ETFs sustained $196 million of outflows on the day.

However actively managed high-yield funds saw $60 million of inflows on Monday, the investor said.

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