Alliance Data, Bausch Health, Qorvo add-on price; Archrock in focus; oil patch firms

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 17 – The domestic high-yield primary market continued to roll out the new deals with two new deals and one add-on pricing on Tuesday.

In drive-by action, Bausch Health Cos. Inc. priced an upsized $2.5 billion amount of senior notes (B3/B/B) and Qorvo priced an upsized $200 million add-on to its 4 3/8% senior notes due Oct. 15, 2029 (existing ratings Ba1/BB+).

In a deal that was in the market overnight, Alliance Data Systems Corp. priced an upsized $850 million issue of five-year senior notes.

Meanwhile, the secondary space saw another firm day although activity was beginning to slow down, a market source said.

Archrock Partners, LP and Archrock Partners Finance Corp. 6¼% senior notes due 2028 (B2/B+) were in focus with the notes trading well above their issue price.

Among recent issues, CenturyLink, Inc.’s 5 1/8% senior notes due 2026 (B2/B+/BB) and Amsted Industries Inc.’s 4 5/8% senior notes due 2030 (Ba3/BB) saw renewed attention in the secondary space although with little movement in price.

Tuesday was another strong day for the oil patch with several energy names again trading up as crude oil futures improved.

Three deals upsized and tight

An active mid-December Tuesday saw three issues clear the market in razor sharp executions, with all three deals upsizing and pricing tight and rich to talk.

Bausch Health priced an upsized $2.5 billion amount of senior notes (B3/B/B) in a drive-by.

The deal included $1.25 billion of notes due Jan. 30, 2028, which priced at par to yield 5%. The yield printed at the tight end of the 5% to 5¼% yield talk.

Bausch Health also priced $1.25 billion of notes due Jan. 30, 2030 at par to yield 5¼%. The yield printed at the tight end of the 5¼% to 5½% yield talk.

The overall amount of issuance doubled from the $1.25 billion two-part deal that the company announced early Tuesday morning.

In a deal that was in the market overnight, Alliance Data Systems priced an upsized $850 million issue of five-year senior notes at par to yield 4¾%.

The issue size increased from $600 million.

The yield printed at the tight end of the 4¾% to 5% yield talk. Initial guidance had the deal coming to yield in the 5% area.

The new paper was hovering around its issue price after breaking for trade. The 4¾% notes were seen changing hands in the par to par ¼ context, a source said.

In a quick-to-market execution, Qorvo priced an upsized $200 million add-on to its 4 3/8% senior notes due Oct. 15, 2029 (existing ratings Ba1/BB+) at 104.50.

The issue size increased from $100 million.

The price came at the rich end of the 104 to 104.5 price talk.

The Tuesday session likely concluded new issue activity for 2019, said an investment banker who professed no visibility on any additional high-yield new issue business before January.

Archrock in focus

Archrock’s newly priced 6¼% senior notes due 2028 were in focus in the secondary space with the notes trading well above their issue price.

The 6¼% notes were changing hands in the 102 to 102¼ context with $44 million in reported volume by the late afternoon, according to a market source.

The performance of the notes was attributed to their coupon.

“Yield is something no one has, so people are buying it up,” a source said.

Archrock Partners priced an upsized $500 million issue of the 6¼% notes at par in a Monday drive-by.

The yield printed in the middle of yield talk in the 6¼% area and tight to early guidance in the low-to-mid 6% area.

The issue size increased from $400 million.

Recent issues

Several recent issues saw renewed attention in the secondary space although with little movement in price.

Amsted Industries 4 5/8% senior notes due 2030 again saw active trading.

The notes were changing hands at par ¾ bid, 101 offered with about $15 million in reported volume, according to a market source.

The notes have largely traded in the par ¾, 101 context since they hit the secondary space.

Amsted Industries priced a $400 million issue of the 4 5/8% notes at par on Dec. 9.

CenturyLink’s 5 1/8% senior notes due 2026 were also active with the notes trading up slightly.

The notes were up ½ point to close Tuesday at 102 3/8.

There was more than $17.5 million on the tape during the session, according to a market source.

CenturyLink priced a $1.25 billion issue of the 5 1/8% notes at par on Dec. 9.

The oil patch

Tuesday was another strong day for the oil patch with several names in the energy sector again trading up.

Whiting Petroleum Corp.’s junk bonds were on the rise in active trading.

The 6 5/8% senior notes due 2026 rose more than 3 points to a 70 handle, a market source said.

The notes stood poised to close the day at 70½.

The 6¼% senior notes due 2023 were also up about 3½ points to close the day at 83½.

The notes were posting gains despite S&P revising its outlook for the company to negative from stable.

While the outlook was revised, S&P affirmed its BB+ rating on Whiting’s senior secured debt and BB- rating on unsecured debt, Prospect News reported.

Tuesday was also a strong day for several CCC credits in the energy space.

Transocean Ltd.’s senior notes due 2031 gained 1¼ point to close Tuesday at 78½.

Crude oil futures were again on the rise on Tuesday with the barrel price of WTI crude for January delivery settling at $60.94, an increase of 73 cents or 1.2%.

The energy sector will be one to watch in the coming year.

While several energy names remain firmly in distressed territory the sector as a whole has improved in January.

“It’ll be interesting to see where they go,” a market source said.

Funds see $202 million Monday inflows

The dedicated high-yield bond funds saw $202 million of daily net inflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $152 million of inflows on the day.

Actively managed high-yield funds saw $50 million of inflows on Monday, the source said.

In the first three days of the current five-day reporting period that concludes with Wednesday's close, the combined funds are tracking $1 billion of inflows, the source added.

Indexes gain

Indexes continued to gain on Tuesday after starting the week on firm footing.

The KDP High Yield Daily index rose 7 points to close Tuesday at 71.51 with the yield now 4.93%. The index was up 9 bps on Monday.

The ICE BofAML US High Yield index was brushing against 14% returns. The index climbed another 23.2 bps with year-to-date returns now 13.913%.

The index was up 23.1 bps on Monday.

The CDX High Yield 30 index was up 4 bps to close Tuesday at 109.30. The index gained 30 bps on Monday.

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