C&S Wholesale, Nationstar Mortgage price; Artera adds on; H&E gains; LifePoint flat

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 1 – The domestic high-yield primary market cleared three deals during Tuesday’s session.

In a heavily oversubscribed offering, Nationstar Mortgage Holdings Inc. (Mr. Cooper Group) priced a $650 million issue of 10-year senior notes (B2/B).

C&S Group Enterprises LLC priced an upsized $400 million issue of eight-year senior notes (B2/B).

And Artera Services, LLC priced a $250 million add-on to the PowerTeam Services, LLC 9.033% senior secured first-priority notes due Dec. 4, 2025 (B3/B-).

Meanwhile, the secondary space continued to grind tighter as equity benchmarks again broke out to all-time highs.

The cash bond market was up ¼ to 3/8 point with no signs of weakness, sources said.

New paper remained in focus with the majority of deals continuing to perform well.

H&E Equipment Services, Inc.’s 3 7/8% senior notes due 2028 (B2/BB-) were gaining momentum in high-volume activity.

However, LifePoint Health, Inc.’s 5 3/8% senior notes due January 2029 (Caa1/CCC+) saw a lackluster reception in the secondary space with the notes falling flat after a decent break.

Tuesday’s primary

A trio of mid- and low single-B issuers priced deals on Tuesday.

Nationstar Mortgage Holdings priced a $650 million issue of 5 1/8% 10-year senior notes (B2/B) at par, at the tight end of talk.

The deal was heard to have played to a massive $3 billion book and the notes were seen opening at par ½ bid, 101 offered.

C&S Group Enterprises priced an upsized $400 million issue (from $300 million) of 5% eight-year senior notes (B2/B) at par, at the tight end of talk.

Order books were heard to be two-times oversubscribed at the final deal size, late Tuesday morning.

The notes also saw a strong break and traded up to 101¼ heading into the close.

And Artera Services priced a $250 million add-on to the PowerTeam Services, LLC 9.033% senior secured first-priority notes due Dec. 4, 2025 (B3/B-) at 108, at the rich end talk (see related stories in this issue).

The post-Thanksgiving week is off to a slow enough start in the primary market, with at least one trader noting that secondary market trading volume has also been thin.

Chalk that up to the ongoing Bank of America Securities Virtual 2020 Leveraged Finance Conference, which got underway on Monday, a syndicate banker said.

Watch for business to ramp up, the source advised, noting that as far as issuers are concerned the high-yield market is constructive, yields are tight and there is cash to put to work.

This banker continues to look for a $10 billion to $12 billion per week run rate, closing in on Christmas, with market activity continuing to crank until at least the early to middle part of the Dec. 14 week.

H&E gains

H&E Equipment’s 3 7/8% senior notes due 2028 were gaining momentum in active trading on Tuesday.

The notes rose to a 101-handle and were marked at 101 bid, 101¼ offered heading into the close, a source said.

The 3 7/8% notes closed the previous session at par 3/8 bid.

While the notes priced tight, the deal was heavily oversubscribed with investors still chasing higher quality credits.

The heavy equipment manufacturing and services company priced a $1.25 billion issue of the 3 7/8% notes at par in a Monday drive-by.

Pricing came at the tight end of talk for a yield in the 4% area.

The deal was heard to be playing to $2.4 billion in orders.

LifePoint flat

LifePoint’s 5 3/8% senior notes due 2029 were coming in from their highs in active trading on Tuesday.

While the overall market continued to grind tighter, the 5 3/8% notes shaved off ½ point.

They were marked at par bid, par ¼ offered heading into Tuesday’s close, a source said.

The notes traded up to par ½ bid, par ¾ offered after breaking for trade the previous session.

The notes priced tight for a triple-C credit and investors remain cautious of the lower credit tier, sources said.

LifePoint priced a $500 million issue of the 5 3/8% notes at par in a Monday drive-by.

Pricing came at the tight end of yield talk in the 5½% area. Initial guidance was in the high 5% to 6% area.

While the deal fell flat in the aftermarket, it was heard to be heavily oversubscribed during bookbuilding.

$832 million Monday outflows

High-yield ETFs sustained a chunky $832 million of daily cash outflows on Monday, according to a market source.

Actively managed high-yield funds were positive on the day, posting $55 million of inflows on Monday, the source added.

The combined funds are tracking $1.2 billion of net outflows for the week that will conclude with Wednesday's close, the market source said.

Indexes mixed

Indexes were mixed on Tuesday.

The KDP High Yield Daily index gained 14 points to close the day at 68.07 with the yield now 4.75%. The index shaved off 1 bp on Monday.

The ICE BofAML US High Yield index gained 23.3 bps with the year-to-date return now 4.413%.

The CDX High Yield 30 index shaved off 6 bps to close Tuesday at 108.94.

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