Southeastern Grocers prices; Jaguar on tap; energy sector gains; AMN at a premium

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 6 – The domestic high-yield primary market continued to see a slowdown in activity on Tuesday with one small deal clearing the market.

Southeastern Grocers priced a $325 million issue of eight-year senior secured notes (B2/B+).

However, the forward calendar continued to grow with $4 billion expected to price before the week draws to a close.

Jaguar Land Rover Automotive plc was one of the issuers that joined the forward calendar on Tuesday after previously withdrawing a planned offering in February.

Meanwhile, the secondary space held firm on Tuesday in the face of a dramatic sell-off in the equity markets.

After posting gains for the majority of the session, equities plummeted after President Donald Trump announced an end to stimulus discussions until after the November election.

“That was a very fast turn,” a source said.

While the secondary space closed the day on soft footing due to the news, it paled in comparison to the losses suffered by equities.

Tuesday was a strong day for the energy sector, though, with Occidental Petroleum Corp.’s senior notes among the major gainers of the session due to supply line disruptions caused by Hurricane Delta.

While volume in the small issue was relatively light, AMN Healthcare’s recently priced 4% senior notes due 2029 (Ba3/BB-) were trading with a healthy premium in the aftermarket.

Charter Communications Inc.’s capital structure was active with the market expecting positive third-quarter earnings from the telecommunications company.

Tuesday’s primary

Tuesday's dollar-denominated issuance lagged the $500 million mark, although select issuers continue to see strong demand and receive favorable pricing, sources say.

Southeastern Grocers priced a $325 million issue of eight-year senior secured notes (B2/B+) at par to yield 5 5/8% on Tuesday.

The deal, which printed 12.5 basis points inside of the 5¾% to 6% yield talk, was eight-times to nine-times oversubscribed, half of it spoken for in reverse inquiry, a trader said.

The Jacksonville, Fla.-based food retailer appeared poised to print at 5½%, but capitulated to the higher rate as capital markets in the United States fell off following news that President Trump ordered Treasury Secretary Steven Mnuchin to discontinue negotiations with Congress on economic stimulus until after the election, the trader added.

Meanwhile, the dollar-denominated active forward calendar had a substantial buildup to at least $4 billion, all of it expected to clear ahead of the extended holiday weekend ahead (see related stories in this issue).

One of the prospective issuers stepping forward on Tuesday was Jaguar Land Rover Automotive with a $500 million offering of five-year guaranteed senior notes (B1/B).

Jaguar abandoned its effort to place dollar-denominated notes in February, swept up in the growing coronavirus alarm, which was already impacting the British carmaker's supply chain, a trader recounted on Tuesday.

As with the February deal, BofA Securities Inc. is leading the present effort.

Before it was overtaken by events, the February deal was expected to come with a 7%-handle yield, the trader said.

In the revived deal Jaguar is probably looking at an eight-handle yield, the source added.

Occidental gains

In spite of softness in the broader market following the stimulus negotiations announcement, the energy sector continued to log gains.

Occidental Petroleum’s senior notes were among the major gainers of Tuesday’s session with the notes up 2½ to 3 points.

The oil and natural gas company’s 6 5/8% senior notes due 2030 were the most actively traded of the capital structure.

The notes were up 2½ points to close the day at 94, a source said.

The bonds had $12 million in reported volume during the session.

The 5 7/8% senior notes due 2025 were up 3 points to close the day at 94.

Hurricane Delta was pushing up oil and natural gas prices, a source said.

The storm was shutting down the supply chain with offshore rigs evacuated as the hurricane makes its way to the Gulf Coast.

“Less supply will increase the prices,” the source said.

AMN at a premium

AMN Healthcare’s 4% senior notes due 2029 were trading with a healthy premium in the aftermarket although volume in the small issue was light.

The 4% notes were changing hands in the par ½ to par 3/8 context heading into the market close.

There was $15 million in reported volume during Tuesday’s session.

AMN Healthcare priced an upsized $350 million, from $325 million, issue of the 4% notes at par in a Monday drive-by.

The yield printed at the tight end of yield talk in the 4 1/8% area.

The deal was heard to be as much as 6x oversubscribed.

Charter active

Charter’s senior notes were major volume movers during Tuesday’s session with the notes unchanged to improved in high-volume activity.

Charter’s 4¼% senior notes due 2031 had more than $17 million in reported volume. However, the notes were largely trading sideways and closed the day at 104¼.

The 4½% senior notes due 2030 continued to trade on a 105-handle.

The 3.7% senior notes due 2051 rose 1¼ points to close the day at par 1/8, a source said.

While it is unclear if it was connected to the trading activity, the market is expecting Charter to report positive third-quarter results at the end of October, a source said.

Indexes mixed

Indexes were mixed on Tuesday after all started the week on strong footing.

The KDP High Yield Daily index rose 15 basis points to close Tuesday at 66.42 with the yield now 5.57%. The index was up 12 bps on Monday.

The ICE BofAML US High Yield index continued to gain on Tuesday.

The index was up another 37.7 bps with the year-to-date return now 0.616%.

The index gained 45.9 bps on Monday when it turned positive after slipping into negative territory on Sept. 21.

The CDX High Yield 30 index sank 44 bps to close Tuesday at 104.66.

The index rose 79 bps on Monday.

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