Primary parade continues as Springleaf, CareTrust, CDK issues price; new issues active

By Paul Deckelman

New York, May 10 – The high-yield primary had a second consecutive busy session on Wednesday, with a trio of issuers bringing some $1.4 billion of new U.S. dollar-denominated and fully junk-rated paper to market.

That came on the heels of Tuesday’s even busier session, when a total of $3.5 billion of new paper from six different domestic or industrialized-country borrowers got done in seven tranches – the most seen in more than a month in Junkbondland.

Unlike Tuesday’s issues, almost all of which were opportunistically timed and quickly shopped same-day drive-by offerings, Wednesday’s activity all came off the forward calendar, with deals pricing after being on roadshows, or, at least, being in the market overnight.

CDK Global, Inc., a provider of information technology and digital marketing solutions to the automotive retailing industry, had the day’s biggest deal, an upsized $600 million of 10-year notes.

Consumer finance company Springleaf Finance Corp. did an upsized $500 million of five-year notes, which were seen having firmed in active initial aftermarket dealings.

Care Trust REIT Inc., which specializes in owning healthcare and senior living properties, brought a $300 million issue of eight-year notes.

Away from the issues actually pricing during the day, downward revised price talk emerged on broadcaster Salem Media Group Inc.’s planned offering of seven-year secured notes, which is expected to price after the books finally close on Thursday morning.

And Tallgrass Energy Partners LP was heard preparing a $200 million add-on to its existing 2024 notes, with pricing on that deal also expected on Thursday.

Secondary traders meantime saw considerable activity, nearly all of it to the upside, in deals which came to market on Tuesday, including Fortescue Metals Group Ltd., Chemours Co., Community Health Systems Inc. and Century Communities Inc.

Statistical market performance measures turned higher across the board on Wednesday after having been mixed for three consecutive sessions before that.

CDK Global upsizes

CDK Global, Inc. had the big deal of the day, as it priced an upsized $600 million issue of 10-year senior notes (Ba1/BB+).

Those 4 7/8% notes came to market at par to yield 7/8%, after the deal was upsized from an originally announced $500 million.

The Rule 144A/Regulation S deal, being sold with registration rights, was brought to market via joint book-running managers Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley& Co. Inc., MUFG Securities Americas, Inc., U.S. Bancorp Investments, Inc. and Wells Fargo Securities LLC.

BMO Capital Markets Corp., BB&T Capital Markets, Citizens Capital Markets, Inc. and Lloyds Securities Inc. were senior co-managers on the deal and The Williams Capital Group, LP acted as a co-manager on the

Hoffman Estates, Ill.-based CDK – a leading global provider of integrated information technology and digital marketing solutions to the automotive retailing and related industries, expects to use the net proceeds from the offering for general corporate purposes, which may include share repurchases, dividends, acquisitions, repayments of debt and working capital and capital expenditures.

Held-over Springleaf prices

Springleaf Finance Corp. priced an upsized $500 million issue of 6 1/8% senior notes due 2022 (B2/B/B-) at par, after some tinkering around in the size of the deal that caused what had been expected to be Tuesday’s business to be floated over till Wednesday.

The issue was upsized from an originally announced $400 million – although the company on Tuesday had first indicated that it would be enlarged to $600 million, and later to $700 million, before lowering that on Wednesday morning to its finally agreed-upon size.

The issue had originally been expected to price late Tuesday, after having been first announced that morning – but the company opted to hold the deal over till Wednesday because of the upsizing.

Price talk on Tuesday envisioned a yield of around 6.25%.

The SEC-registered offering was brought to market via joint bookrunning managers Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley, Natixis Securities America LLC, RBC Capital Markets Corp. and SG Americans Securities LLC, as well as co-managers Keefe Bruyette & Woods, Inc., Sander O’Neill & Partners, LP and Williams Capital.

Evansville, Ind.-based consumer finance company Springleaf plans to use the new-deal proceeds for general corporate purposes, which may include debt repayments and repurchases.

Care Trust comes to market

The day’s other new deal, from CareTrust REIT, Inc. was a $300 million offering of 5¼% eight-year senior notes (B1/BB-) priced at par, in line with pre-deal market price talk of a 5¼% yield.

The regularly scheduled SEC-registered offering was brought to market via bookrunners KeyBancCapital Markets Inc., BMO and Barclays, along with co-managers Raymond James Securities, Capital One Securities, Inc., Fifth Third Securities Inc. and RBC.

The notes are to be issued through the company’s CTR Partnership, LP and CareTrust Capital Corp. subsidiaries.

Care Trust, a San Clemente, Calif.-based real estate investment trust specializing in healthcare and senior housing-related properties, plans to use the proceeds of the bond deal to redeem its $260 million of outstanding 5 7/8% senior notes 2021, repay a portion of its revolving credit facility borrowings and for general corporate purposes, including acquisitions.

Salem price talk narrows

High-yield syndicate sources meantime reported that revised price talk was heard Wednesday afternoon on Salem Media Group Inc.’s planned $255 million issue of seven-year senior secured notes, which were seen yielding in the 6¾% to 6 7/8% area.

That represented a tightening from the 7% to 7¼% area talk heard earlier in the session.

Books closed Wednesday afternoon for U.S. East Coast accounts and are scheduled to close on Thursday morning for West Coast accounts. Investors were being asked to reconfirm their orders by 10 a.m. ET on Thursday, with pricing expected thereafter.

The Rule 144A/Regulation S offering will be brought to market via sole bookrunner Wells Fargo Securities, along with co-managers Barclays and Noble Capital Markets.

Salem, a Camarillo, Calif.-based domestic multimedia company specializing in Christian and politically conservative content, with media properties comprising radio broadcasting, digital media and publishing outlets, will also be entering into a new under a new senior secured asset-based revolving credit facility

It plans to use the proceeds from the bond deal and the ABL facility to refinance outstanding debt, to pay offering fees and expenses and for general corporate purposes.

Tallgrass deal slates

Primaryside sources said that one dollar-denominated deal climbed aboard the forward calendar on Wednesday, as Tallgrass Energy Partners announced plans to sell a $200 million add-on to its existing 5½% senior notes due Sept. 15, 2024, with pricing anticipated for Thursday.

The Rule 144A/Regulation S for life add-on will be brought to market via joint bookrunners Credit Suisse, Capital One, Citigroup, Morgan Stanley, MUFG and PNC Capital Markets LLC.

The notes will be immediately fungible with the company’s $400 million of existing 5½% notes due 2024, which it sold last August.

Tallgrass, a Leawood, Kans.-based publicly traded, growth-oriented limited partnership that owns, operates, acquires and develops midstream energy assets in North America, plans to use the proceeds from the add-on deal to repay revolving credit facility debt.

New Springleaf trades actively

Secondary market traders noted that Springleaf Finance’s new deal priced earlier in the session than the day’s other two deals and thus saw some decent-sized aftermarket volume.

A market source saw more than $45 million of those notes traded, putting the new credit high up on the day’s Most Actives list.

He quoted the notes going home at 100 7/8 bid, up from their par issue price, while a second trader pegged the paper at 101 bid.

Recent deals move up

Traders said that besides the new Springleaf bonds, recently priced issues dominated the upper reaches of the volume leaders.

Chief among these were the twin tranches from Fortescue Metals Group, which priced on Tuesday.

The East Perth, Australia-based iron ore mining company’s 4¾% notes due 2022 traded up to 100 7/8 bid, a gain of ¾ point on the day, with over $50 million having changed hands.

The other part of that two-parter, FMG’s 5 1/8% notes due 2024, were even busier, with over $76 million having traded and the bonds ending at 100½ bid, a ¼ point gain.

Community Health Systems’ new 6¼% senior secured notes due 2023 were trading at 102 7/16 bid, up about 1/16 point on the day, with over $73 million of activity in the Franklin, Ten.-based hospital operator’s new deal.

Wilmington, Del.-based chemical manufacturer Chemours’ 5 3/8% notes due notes 2027 gained 5/8 point on the session to end at 101¼ bid, as $55 million of those new notes moved around.

Greenwood Village, Colo.-builder 2025 Century Communities Inc.’s 5 7/8% notes due 2025 were seen up 1/8 point, at par, as over $22 million traded.

Indicators turn firm

Statistical market performance measures turned higher across the board on Wednesday after having been mixed over the three previous sessions.

The KDP High Yield Daily index gained 9 basis points to close at 72.20, after having firmed by 1 bp on Tuesday.

Its yield came in by 3 bps, to 5.13% after having been unchanged over the previous two sessions.

The Markit CDX Series 28 index rose nearly 3/16 point on the day to finish at 107 5/8 bid, 107 11/16 offered, after having eased by 1/16 point on Tuesday.

The Merrill Lynch North American High Yield turned up by 0.008% on Wednesday, after gaining 0.101% on Tuesday, its second straight gain after two losses.

Wednesday’s rise upped the index’s year-to-date return to 3.934% from Tuesday’s 3.851%, although it remains down from last Wednesday’s close at 3.987%, its year-to-date high.

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