LifePoint drives by junkland; Mineral Resources, Shelf hold premiums; AmeriTex flat

By Abigail W. Adams

Portland, Me., Sept. 29 – The domestic high-yield bond primary market capped the most active month of the year with one last offering.

LifePoint Health Inc. priced an upsized $1.1 billion of seven-year senior secured notes (B2/B) in a Friday drive-by.

The offering is the second time LifePoint has tapped the market in the third quarter with the capital raise an example of issuers taking advantage of a market that is wide open, a source said.

The offering lifted the September tally to $22.383 billion, which priced over 30 deals, marking the busiest month of 2023.

The primary market is expected to remain active in early October.

However, the dramatic widening of credit spreads over the past week may start to dampen activity, a source said.

Meanwhile, the secondary space remained volatile on Friday with a strong start to the day giving way to selling pressure.

The market launched the day enthusiastically with the latest Consumer Price Expenditure report, which came in below expectations, encouraging.

However, Michigan sentiment data that was later released cooled the market’s initial response with one-year inflation expectations unchanged at 3.2%, a source said.

Selling accelerated as the session progressed with a risk-off sentiment taking hold as market players eyed the increasing likelihood of a government shutdown.

“The market really deflated,” a source said.

However, new and recent issues continued to put in strong performances with the deals that priced in the previous session trading at or with premiums to their issue prices.

Mineral Resources Ltd.’s 9¼% senior notes due 2028 (Ba3//BB) and Shelf Drilling, Ltd.’s 9 5/8% senior secured notes due 2029 (B3/B-/B) were holding on to the strong premiums gained on the break in active trade.

While the notes were quiet, AmeriTex Pipe & Products’ 10¼% senior secured notes due 2028 (B2/B) fell flat with the notes wrapped around their discounted issue price.

LifePoint’s latest offering sparked some action in its capital structure with its 9 7/8% senior secured notes due 2030 (B2/B) weaker while its 9¾% senior notes due 2026 (Caa2/CCC+) made large gains.

LifePoint drives by

LifePoint priced an upsized $1.1 billion, from $1 billion, issue of seven-year senior secured notes (B2/B) at par with a coupon of 11% in a Friday drive-by, according to a market source.

Pricing came on top of talk for a yield of 11%.

The offering is the second time the Brentwood, Tenn.-based health care provider has tapped the market in the third quarter.

LifePoint priced an $800 million offering of 9 7/8% senior secured notes due 2030 at par on July 31.

LifePoint’s latest capital raise is an example of issuers taking advantage of a primary market that has proven itself to be wide open, a source said.

The latest offering sparked some activity in the company’s capital structure with the 9 7/8% notes due 2030 weakening while the company’s 9¾% senior notes due 2026 making gains.

The 9 7/8% notes shaved off ¼ point to close the day wrapped around 97 with the yield about 10½%.

The 9 7/8% notes have struggled since hitting the aftermarket with the notes underwater since breaking for trade.

They have spent much of September trading on a 97-handle with a yield of about 10 3/8%, a source said.

However, LifePoint’s 9¾% senior notes due 2026 made large gains with the notes up 2 points to close the day at 97 with a yield of about 10 7/8%.

The 9¾% notes become callable soon, a source said.

Holding premium

While it was a volatile day for the market, new issues continued to perform well with Mineral Resources’ 9¼% senior notes due 2028 and Shelf Drilling’s 9 5/8% senior secured notes due 2029 holding on to the gains made on the break.

Mineral Resources’ 9¼% notes were marked at par ¾ bid, 101¼ offer early in the session and continued to trade in that context into the close, sources said.

There was $32 million in reported volume.

Mineral Resources priced an upsized $1.1 billion, from $850 million, issue of the 9¼% notes at par on Thursday.

The yield printed at the tight end of the 9¼% to 9½% yield talk.

Shelf Drilling’s 9 5/8% senior secured notes due 2029 also continued to trade at a strong premium to their discounted issue price.

The notes traded in a tight range of 98 7/8 to 99 3/8 throughout the session, sources said.

There was $50 million in reported volume.

Shelf Drilling priced an upsized $1.095 billion, from $1.075 billion, issue of 9 5/8% notes at 98.184 to yield 10 1/8% on Thursday.

The yield printed in the middle of the 10% to 10¼% yield talk.

AmeriTex flat

While volume was light on Friday, AmeriTex’s 10¼% senior secured notes due 2028 remained flat.

The 10¼% notes remained wrapped around their discounted issue price and continued to trade in the 98 7/8 to 99 1/8, a source said.

AmeriTex priced a $530 million issue of the 10¼% notes at 99.035 to yield 10½% on Thursday.

The yield printed at the wide end of yield talk in the 10 3/8% area.

Indexes

The KDP High Yield Daily index added 6 basis points to close Friday at 49.55 with the yield now 7.9%.

The index dipped 4 basis points on Thursday, gained 6 bps on Wednesday after falling 20 bps on Tuesday and 12 bps on Monday.

The index was down 24 bps on the week.

The ICE BofAML US High Yield index gained 26.2 bps with the year-to-date return now 5.954%.

The index added 0.1 bp on Thursday and fell 16.7 bps on Wednesday.

The CDX High Yield 30 index fell 22 bps to close Friday at 100.78.

The index added 8 bps on Thursday after dropping 70 bps on Wednesday, 36 bps on Tuesday and 7 bps on Monday.

The index fell 127 bps on the week.

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