Primary sees $2.2 billion, GFL, ATS, Ascent price; calendar grows; Community Health rises; Genesis improves

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 14 – The high-yield drive through window opened wide on Monday with five issuers pricing a $2.2 billion face amount of junk in quick-to-market transactions.

GFL Environmental, Inc. priced a downsized $750 million of 3½% eight-year secured bullet notes.

ATS Automation Tooling Systems Inc. and Ascent Resources Utica Holdings LLC both accelerated timing and completed their deals as Monday drive-bys.

Meanwhile, the secondary space saw a strong open but came in as the session progressed and closed the day largely unchanged, sources said.

New paper remained in focus and continued to trade well.

Despite its massive upsize and tight pricing, Community Health Systems, Inc.’s recently priced tranches of senior secured notes (Caa2/B-/B) both closed the day on a 101-handle.

After closing out the previous week on a par-handle, Genesis Energy, LP’s 8% senior notes due 2027 (B1/B+) improved in high-volume activity on Monday.

Executions mostly sharp

Five issuers priced $2.2 billion of junk in quick-to-market transactions.

As a rule those issuers saw razor sharp executions with three of the five pricing their deals through talk, and another at the tight end of talk.

The lone exception to that rule was the session's biggest issuer.

GFL Environmental priced a downsized $750 million of 3½% eight-year secured bullet notes.

As a rule those issuers saw razor sharp executions with three of the five pricing their deals through talk, and another at the tight end of talk.

The lone exception to that rule was the session's biggest issuer.

GFL Environmental priced a downsized $750 million issue (from $1 billion) of 3½% eight-year secured bullet notes (Ba3/BB-) at the wide end of the 3¼% to 3½% talk.

An investor, commenting on background, said that the bonds would have been attractive at 3¾% (the wide end of early guidance) or even 3 5/8% (the middle of early guidance).

But the yield was squeezed to 3½%, and the investor passed.

The new GFL 3½% notes, which priced at par, went out par ¼ bid, par ¾ offered on Monday, the source said.

Away from GFL sharp executions were obtained.

Two of Monday's issuers announced schedules, early in the session, that would have had their deals in the market until Tuesday.

However the issuers in question ATS Automation Tooling Systems and Ascent Resources Utica Holdings LLC accelerated timing and completed their deals as Monday drive-bys.

Meanwhile, in what is expected to be the final busy week (some say the final /active/week) of 2020, the active forward calendar built to $2.75 billion.

Most of that business is expected to clear on Tuesday.

$262 million Friday inflows

The dedicated high-yield bond funds saw $262 million of net inflows on Friday, the most recent session for which data was available at press time, according to a Prospect News analysis of that data.

High-yield ETFs saw $167 million of inflows on the day, according to a market source.

Actively managed high-yield funds saw $95 million of inflows on Friday, the source added.

Community Health in focus

Community Health’s recently priced tranches of senior notes were both trading with a large premium in the secondary space.

The company’s 5 5/8% senior notes due 2027 closed the day at 101¾, according to a market source.

The 6% senior notes due 2029 closed the day at 101 5/8.

The new paper was trading well, although some sources were less than enamored with the offering.

“You’re getting less than 6% for a triple C,” a market source said.

While some did not feel it was appropriate compensation for the risk, it was indicative of how tight the market has become.

And some expect it to continue to grind tighter into the new year.

Community Health priced a massively upsized $2.8 billion, from $1.05 billion, two-tranche offering Friday.

The deal included a $1.9 billion tranche of the 5 5/8% notes due 2027 and a $900 million tranche of the 6% notes due 2029, both of which priced at par.

The 5 5/8% notes priced tight to talk in the 5¾% area.

The 6% notes priced in the middle of talk for a yield in the 6% area.

The eight-year tranche was added after the deal launch.

The offering was heard to have played to $5 billion in orders.

Genesis improves

Genesis Energy’s 8% senior notes due 2027 improved in active trading on Monday.

The notes returned to a 101-handle after closing out the previous session on a par handle.

The 8% notes were changing hands in the 101 5/8 to 101 7/8 context throughout Monday’s session.

There was $34.5 million on the tape heading into the market close.

The notes were gaining ground as crude oil futures again improved.

WTI crude oil settled at $46.99, an increase of 42 cents, on Monday.

Genesis Energy priced a $750 million issue of the 8% notes at par on Dec. 10.

The notes saw a strong break, climbing to a 102-handle shortly after freeing for trade.

Indexes gain

Indexes opened the week with nominal gains.

The KDP High Yield Daily index rose 7 points to close Monday at 68.54 with the yield now 4.53%.

The index posted a cumulative loss of 3 points on the week last week.

The ICE BofAML US High Yield index gained 13.4 bps with the year-to-date return now 5.3%.

The index posted a cumulative gain of 12.8 bps on the week last week

The CDX High Yield 30 index was up 1 bps to close Monday at 108.85.

The index posted a cumulative loss of 43 bps on the week.

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