KeHE prices; junk calendar adds new names; CSC Holdings softens; Sinclair rally continues

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 23 – KeHE Distributors, LLC priced Tuesday’s sole dollar-denominated deal, a $750 million issue of five-year senior secured notes (B3/B) that came at par to yield 9%, in the middle of talk.

Meanwhile, it was a relatively flat day in the secondary space with the cash bond market either side of unchanged as market focus turns towards earnings.

Buyers were in search of paper with several offers-wanted-in-competition lists circulating, a source said.

Activity surrounding recent issues began to slow as market players eyed the new deals on deck.

After logging strong gains since breaking for trade, Altice USA Inc. subsidiary CSC Holdings, LLC’s 11¾% senior guaranteed notes due 2029 (B2/B) softened in heavy volume on Tuesday.

Sinclair Broadcast Group, Inc.’s 4 1/8% senior secured notes due 2030 (Ba3/BB-) continued to rally in the wake of its settlement with subsidiary Diamond Sports Group, LLC.

Primary

KeHE Distributors’ new $750 million offering played to $1 billion of demand, according to a bond trader who added that the new KeHE 9% notes due 2029 broke above 101 before settling to par ½ bid, par 7/8 offered, late Tuesday afternoon.

Away from KeHE’s deal primary market news volume was heavy on Tuesday.

Merlin Entertainments plc talked its $400 million offering of seven-year senior secured notes to yield in the 7½% area, inside of early guidance. The deal is set to price Wednesday.

Also on Wednesday, watch for Caesars Entertainment Inc. to show up with a $1.5 billion senior secured notes offer, a sellside source advised, adding a note that the deal could upsize.

Elsewhere, the active forward calendar ballooned to $5.5 billion.

NGL Energy Partners LP scheduled a Wednesday conference call to kick off its $2.1 billion two-part offering of senior secured notes.

The deal, which began being telegraphed to the market around the beginning of the year, includes five-year notes and seven-year notes.

Talos Production Inc. (Talos Energy Inc.), began marketing a $1 billion two-part offering of senior secured second-priority notes (B3/BB-/B+) on Tuesday.

It’s coming in tranches of five-year notes with initial talk in the 10% area, and seven-year notes with initial talk in the 10½% area.

Pricing is set for Friday.

Crash Champions plans to kick off a $650 million offering of five-year senior secured notes on a Wednesday investor call, and to have the deal in roadshow mode through the early part of the week ahead.

Crash Champions comes on the heels of the debut issue from Caliber Collision, issuing last week as Wand NewCo 3 Inc.

Caliber priced $1.25 billion of 7 5/8% eight-year senior secured notes (B3/B) in a blowout last Friday that was heard to have generated demand from 240 accounts, 65 of which got zeroed.

The Texas-based collision repair operator managed to price its deal deep inside of initial talk, as investors were keen to gain exposure to the auto collision sector which, as a sellside source pointed out, is not a cyclical sector.

Away from news on the active calendar, the shadow calendar also had a substantial buildup on Tuesday (see related stories in this issue).

CSC gives back gains

CSC Holdings’ 11¾% senior guaranteed notes due 2029 softened in heavy volume on Tuesday after logging strong gains since hitting the secondary space.

The notes were off about ¼ point to close the day in the 102 to 102¼ context, a source said.

There was $39 million in reported volume.

Until Tuesday, the notes’ trajectory has been straight up since the $2.05 billion issue, which priced at par, broke for trade on Jan. 18.

Sinclair rally continues

Sinclair’s 4 1/8% senior secured notes due 2030 continued to rally with the notes climbing another 1 point in heavy volume on Tuesday.

The 4 1/8% notes traded up to a 75-handle and were marked in the 75¼ to 75¾ context heading into the market close, a source said.

The yield tightened to just shy of 9%.

There was $27 million in reported volume.

Sinclair’s 4 1/8% notes have gained about 6 points since the media company announced a settlement with subsidiary Diamond Sports on Jan. 17.

Sinclair announced last week that in exchange for a $495 million cash payment, Diamond Sports would withdrawal its $1.5 billion complaint against parent company Sinclair.

Diamond Sports’ complaint was over transactions Sinclair had made since its acquisition of the company in August 2019 which Diamond Sports alleged was against its interests.

Diamond Sports filed for bankruptcy in March 2023 with restructuring plans that include becoming a stand-alone company.

Sinclair’s settlement with Diamond Sports coincided with Diamond Sports’ announcement about a restructuring support agreement and a plan to emerge from bankruptcy.

Fund flows

The dedicated high-yield bond funds had $758 million of net daily cash inflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $661 million of inflows on the day.

Actively managed high-yield funds had $97 million of inflows on Monday, the source said.

The combined funds are tracking $440 million of net inflows on the week that will conclude with Wednesday’s close, according to the market source.

Indexes

The KDP High Yield Daily index dipped 4 basis points to close Tuesday at 50.49 with the yield now 6.92%.

The index gained 6 bps on Monday.

The ICE BofAML US High Yield index was off 8.5 bps with the year-to-date return now negative 0.461%.

The index added 29.3 bps on Monday.

The CDX High Yield 30 index was down 5 bps to close Tuesday at 105.73.

The index shaved off 6 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.