Medline on deck; forward calendar grows; Altice lags; Blackstone flat; Consensus Cloud outperforms

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 27 – While no dollar-denominated deals cleared the high-yield primary market on Monday, the forward calendar ballooned to $12 billion.

Medline launched a roadshow for its $7.77 billion two-tranche offering, which is slated to run through Wednesday. The junk bonds are part of the largest leveraged buyout financing since the global financial crisis.

Rockcliff Energy II LLC’s $600 million offering of eight-year senior notes (B3/B+/B+) and Ahern Rentals, Inc.'s $550 million offering of five-year senior secured second-lien notes (Caa1/CCC+) are on deck for Tuesday’s session.

Meanwhile, the secondary space was again soft as the 10-year Treasury yield continued to climb, pressuring rate sensitive names.

The 10-year Treasury yield came in as the session progressed; however, it reached as high as 1.512% early in the session.

While the market was soft on Monday, trading volume outside of recent issues remained light with holders reluctant to sell.

However, the weakness in the market could be seen in the performance of some recently priced issues.

Altice France SA’s 5½% senior secured notes due 2029 (B2/B) were lagging their issue price during Monday’s session, and Blackstone Mortgage Trust, Inc.’s 3¾% senior secured notes due 2027 (Ba2/B+) were wrapped around par.

However, Consensus Cloud Solutions, Inc.’s two tranches of senior notes (B2/B+) outperformed as investors chased the higher coupon paper.

On deck

Although no dollar-denominated deals priced Monday the active forward calendar ballooned to $12 billion with the announcement of 10 deals.

The biggest by far is Medline with $7.77 billion of notes in two tranches, on a roadshow set to run through Wednesday.

The deal includes $3.77 billion of 7.5-year senior secured notes with initial talk low 4% area and $4 billion of eight-year senior unsecured notes with initial talk 6% area.

There is reverse inquiry in the deal, and demand is heard to be massive, a trader said late Monday.

Meanwhile at least two deals head to the block on Tuesday.

Rockcliff Energy began marketing a $600 million offering of eight-year senior notes (B3/B+/B+) on Monday, and later in the day talked the notes to yield 5 5/8% to 5 7/8%, tight to initial guidance in the 6% area.

Also, Ahern Rentals' $550 million offering of five-year senior secured second-lien notes (Caa1/CCC+) is heard to be possible Tuesday business.

The deal was 80% done last week, and heard to be playing to $1 billion of orders, a trader said.

Pending official talk there is double-digit whisper: 10 ½% to 11% (see related stories in this issue).

As to whether Monday's massive march of deals will continue apace in the coming days of the September-October crossover week, only the dealers know, a trader said on Monday afternoon, but added that the massive calendar feels a little heavy.

Altice lags

Altice France’s 5½% senior secured notes due 2029 (B2/B) and Blackstone Mortgage’s 3¾% senior secured notes due 2027 were lagging their issue price during Monday’s session.

Altice France’s 5½% senior notes were down about ½ point to drop below par. They were marked at 99 ½ bid, par offered heading into the market close.

The notes were marked at par bid, par ½ offered after breaking for trade last Friday.

The lackluster performance of the notes was attributed to their tight pricing and weak market conditions on Monday.

Altice France priced a $2 billion tranche of the 5½% notes at par last Friday.

The notes priced in the middle of yield talk in the 5½% area.

The deal also included an €800 million tranche of 4¼% notes which priced at par.

Blackstone under pressure

Blackstone Mortgage’s 3¾% senior secured notes due 2027 fell flat in the aftermarket.

The notes were marked at 99 7/8 bid, par 1/8 offered heading into the market close.

REITs are particularly sensitive to rising rates, a source said.

Blackstone priced a $400 million issue of 3¾% notes at par last Friday.

The yield printed at the wide end of yield talk in the 3 5/8% area.

Consensus Cloud outperforms

While several recent deals were putting in lackluster performances in the secondary space, Consensus Cloud’s two tranches of senior notes were not among them.

Consensus Cloud’s 6% senior notes due 2026 were marked at 101½ bid, 102 offered at the market close, a source said.

The 6½% senior notes due 2028 were marked at 101¾ bid, 102¼ offered.

The performance of the notes was attributed to their yield and the small size of the offering, which increased demand.

Consensus Cloud priced a $305 million tranche of the 6% notes and a $500 million tranche of the 6 ½% notes at par last Friday.

The 6% notes priced at the tight end of the 6% to 6¼% yield talk; the 6½% notes priced at the tight end of the 6½% to 6¾% yield talk.

$47 million Friday inflows

The dedicated high yield bond funds saw a modest $47 million of net inflows 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 $41 million of inflows on the day.

High yield ETFs saw $6 million of inflows on Friday, the source said.

Indexes

The KDP High Yield Daily index fell 8 basis points to close the day at 70.2 with the yield now 3.58%.

The index was down 20 bps on the week last week.

The CDX High Yield 30 index rose 3 bps to close Monday at 109.7.

The index was up 7 bps on the week last week.

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