Primary floodgates open; Navient, VistaJet drive-by; three deals join calendar; Talen gains continue

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 1 – May got off to a $1 billion start in the high-yield new-issue market on Monday.

Two drive-by issuers each priced $500 million face amounts.

Both deals came in the middle of yield talk.

Navient Corp. priced a $500 million issue of 9 3/8% seven-year senior bullet notes (Ba3/B+/BB-) at 99.933 to yield 9 3/8%.

The deal was heard to have been three-times oversubscribed, according to a bond trader who had the notes wrapped around par at Monday’s close.

And VistaJet Malta Finance plc and co-issuer Vista Management Holding Inc. priced a $500 million issue of 9½% five-year senior notes (B3/B-/BB-) at 98.998 to yield 9¾%.

The new VistaJet notes were basically wrapped around issue price at Monday’s close, according to a bond trader who had them 99 7/8 bid, par 1/8 offered.

The deal rode into market on $150 million of reverse inquiry, a source said.

The active and shadow calendars saw a May Day buildup.

EquipmentShare.com Inc. plans to make its debut in the high-yield bond market with the sale of $750 million of five-year second-lien senior secured notes, which are expected to price Tuesday.

Initial guidance has them coming to yield in the mid-to-high 8% area.

Calderys Financing, LLC (formerly Imerys SA) started a roadshow on Monday for a $550 million offering of five-year senior secured notes (expected B2), in the market with early guidance in the high-10% to 11% area.

The roadshow runs through May 9.

Those two join Heartland Dental, LLC, which plans to sell $500 million of five-year senior secured notes (B2/B) this week. Initial talk has the notes coming to yield in the 10% area.

As to the shadow calendar, Aventiv Technologies LLC is expected to launch a $400 million offering of first lien senior secured notes during the present week, via Deutsche Bank.

The Dallas-based supplier of communications and other services to corrections and government services sectors also plans to syndicate a $700 million four-year term loan B beginning with an investor call set for Wednesday.

Meanwhile, it was a quiet and flat day in the secondary space as the market awaited the deals in the pipeline.

Few were making moves heading into the Federal Open Market Committee meeting set to launch on Tuesday with activity continuing to focus on new and recent issues and earnings-related news.

VistaJet’s 7 7/8% senior notes due 2027 (Caa1/B+) made large gains on the heels of its drive-by refinancing deal.

Talen Energy Supply, LLC’s 8 5/8% senior secured notes due 2030 (Ba3/BB/BB+) continued their upward momentum in heavy volume on Monday.

Charter Communications, Inc. subsidiary CCO Holdings, LLC’s senior notes (B1/BB-) improved in active trade following earnings the previous week.

Hertz Corp.’s 5% senior notes due 2029 (Caa1/B+) edged higher in active trade with the previous week’s earnings report moving the notes.

VistaJet rises

VistaJet’s 7 7/8% senior notes due 2027 made large gains in active trade on the heels of the aviation services company’s latest offering.

The 7 7/8% notes added 1½ points to close the day on a 95-handle.

They were trading in the 95¼ to 95¾ context heading into the market close with the yield about 9¼%.

There was $15 million in reported volume.

Talen up

Talen’s 8 5/8% senior secured notes due 2030 continued their upward momentum after a strong break in heavy volume on Monday.

The 8 5/8% notes added ¾ to 1 point to trade up to a 101-handle.

They were changing hands in the 101¼ to 101¾ context throughout the session, a source said.

There was $84 million in reported volume.

The notes closed the previous session at par ½ bid, 101 offered.

Talen’s offering was heavily oversubscribed after undergoing covenant changes with the demand for the notes following them into the secondary space.

Talen priced an upsized $1.2 billion, from $825 million, issue of the 8 5/8% notes at par last Friday.

The yield printed at the tight end of yield talk in the 8¾% area.

The deal was heard to have played to $3 billion in demand.

CCO active

Charter subsidiary CCO Holdings’ senior notes continued to add in active trade on Monday following earnings the previous week.

The 4½% notes due 2032 continued to make nominal gains,changing hands in the 80¾ to 81 context heading into the market close, according to a market source.

The yield was about 7½%.

There was $22 million in reported volume.

The notes were trading on a 79-handle heading into earnings, which were reported last Friday.

The 7 3/8% senior notes due 2031 remained wrapped around 98 with the yield just shy of 7¾%.

There was $15 million in reported volume.

The notes were trading on a 97-handle headed into Charter’s earnings report.

The 7 3/8% notes have struggled since the $1.1 billion issue priced at par on June 30.

While the notes have spent most of their existence below par, they are still well above their mid-March lows when they traded down to a 95-handle.

Hertz edges up

Hertz’s 5% senior notes due 2029 continued to edge higher in active trade with the notes trading up to an 82-handle.

The 5% notes added ¼ point to close the day in the 82 to 82½ context with the yield about 8 ½%, according to a market source.

There was $15 million in reported volume.

The notes were most likely still riding last week’s earnings, which beat expectations, a source said.

Indexes

The KDP High Yield Daily index fell 11 points to close Monday at 51.87 with the yield 7.12%.

The index posted a cumulative gain of 22 points on the week last week.

The ICE BofAML US High Yield index fell 10.6 basis points with the year-to-date return now 4.577%.

The CDX High Yield 30 index fell 36 bps to close Monday at 101.02.

The index posted a cumulative gain of 9 bps on the week last week.

Fund flows

The cash flows of the dedicated high-yield bond funds were essentially flat on Friday, the most recent session for which data was available at press time, according to a market source.

Actively managed high-yield funds saw $12 million of inflows on the day.

High-yield ETFs, meanwhile, sustained $9 million of outflows on Friday, the source said.

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