Cars.com prices; Cable One, SLM gain; MultiPlan flat; Advantage struggles; Diamond Sports slides

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 27 – The domestic high-yield primary market was relatively quiet on Tuesday with one deal clearing the market.

Cars.com Inc. priced a $400 million issue of eight-year senior notes (B3/B).

However, there is more than $6 billion in deals that is slated to price before the week draws to a close.

Meanwhile, the high-yield secondary space was “treading water,” on Tuesday following Monday’s rout, a source said.

The market tried to break out higher early in the session. However, those efforts failed and the market was largely stagnant.

While the high-yield space has continued to hold up well amid the sell-off in equities, liquidity was becoming an issue.

“We’re seeing a lot of risk aversion,” a source said. “No one wants to step in front of anything. Liquidity is tighter than it normally would be at the end of October.”

New paper continued to dominate the tape. However, the secondary performance of the deals that priced during Monday’s session were mixed.

SLM Corp.’s 4.2% senior notes due 2025 (expected ratings Ba1/BB+/BB+) and Cable One, Inc.’s 4% senior notes due 2030 (B2/BB-) were putting in a strong performance with both trading on a 101-handle.

However, MultiPlan’s 5¾% senior notes due 2028 fell flat (B3/B-) and Advantage Sales & Marketing Inc.’s 6½% senior notes due 2028 (B2/B) dropped further below par.

Outside of the new paper, Diamond Sports Group LLC and Diamond Sports Finance Co.’s senior notes continued their downward spiral in active trading.

Tuesday’s primary

Compared to its recent hectic pace the primary market went largely quiet on Tuesday, as the stock market continued the slide it undertook at the beginning of the week.

Cars.com priced a $400 million issue of 6 3/8% eight-year senior notes (B3/B) at par, tight to talk.

The deal got as good as par ¼ bid, par ¾ offered before falling back to 99 7/8 bid, par 1/8 offered, a bond trader said.

And there was a slight amount of growth to what has become a big-ish new issue calendar.

Franchise Group Inc. began a telephone roadshow for a $650 million offering of five-year senior secured notes (B1/B+), in the market with initial guidance in the 8¼% area.

That pushed the active calendar to $6 billion, all of it moving along timelines that would have the active calendar clearing, in its entirety, by the end of the week.

Trading up

SLM’s 4.2% senior notes due 2025 and Cable One’s 4% senior notes due 2030 were putting in strong performances in the secondary space.

SLM’s 4.2% notes were marked at 101¼ bid, 101¾ offered heading into the market close.

“It’s Sallie Mae,” a source said. “They’re a relatively high-quality credit.”

The deal seemed cheap based on the credit quality of the issuer, a source said.

However, the pricing was most likely the result of market conditions on Monday.

SLM priced a $500 million issue of the 4.2% notes at par in a Monday drive-by, a source said.

The yield printed at the tight end of the 4¼% price talk.

Cable One’s 4% senior notes due 2030 were also trading on a 101-handle on Tuesday with the notes poised to close the day at 101 5/8.

There was more than $60 million of the bonds on the tape during Tuesday’s session.

Cable One priced an upsized $650 million, from $500 million, issue of the 4% notes at par on Monday.

The yield printed tighter than yield talk in the 4¼% area.

Timing was accelerated with the deal initially slated to price on Tuesday.

MultiPlan flat

While the majority of recent deals have put in strong performances in the secondary space, MultiPlan’s 5¾% senior notes due 2028 fell flat.

The notes were wrapped around par in active trading, sources said.

There was more than $21 million of the bonds on the tape during Thursday’s session.

The health care cost management solutions company priced an upsized $1.3 billion, from $1.2 billion, issue of the 5¾% notes at par.

Pricing came at the wide end of revised talk for a yield of 5 5/8% to 5¾%. Initial talk was in the 5¾% area.

The company postponed its planned $2.47 billion term loan on Monday due to pushback from investors who felt the covenants allowed too much first-lien flexibility, a source said.

Advantage struggles

Advantage Sales & Marketing’s 6½% senior notes due 2028 dropped further below par on Tuesday.

The notes were marked at 99¼ bid, 99½ offered heading into the market close.

The notes saw a weak break after pricing on Monday.

While there was some effort by the underwriter to support the deal at par, it quickly dropped to a 99-handle and closed Monday below par.

There has been less support from underwriters recently in the secondary space.

“Because there have been so many deals coming and banks are trying to keep lighter balance sheets, they don’t trade as much,” a source said.

Without as many bids from underwriters in the streets, it has been a less orderly market.

Advantage priced an upsized $775 million, from $500 million, issue of the 6½% notes at par in a Monday drive-by.

Pricing came wider than price talk for a yield in the 6¼% area. Initial guidance was in the high 5% area.

Diamond Sports slide continues

Diamond Sports’ senior notes continued their downward spiral in active trading on Tuesday as holders brace for a possible restructuring.

The sports broadcaster’s 5 3/8% senior secured notes due 2026 traded to a new low of 57¼ in intraday activity, a source said.

However, the notes gained strength into the close, ending the day at 58¾.

There were more than $30 million of the bonds on the tape during Tuesday’s session.

Diamond Sports’ 6 5/8% senior notes due 2027 dropped another 2 points to trade on a 38-handle.

The bonds had more than $15 million in reported volume.

Diamond Sports; senior notes have been in a tailspin since news broke the company may pursue a restructuring of its debt.

While the notes have long struggled, both the secured and unsecured tranches have dropped more than 10 points since news about the possible restructuring broke last week, a source said.

$573 million Monday outflows

The dedicated high-yield bond funds sustained $573 million of net daily outflows on Monday, according to a market source.

High-yield ETFs saw a formidable $873 million of outflows on the day.

Actively managed high-yield funds were positive, seeing $300 million of inflows on Monday, the source said.

The combined funds are tracking $938 million of net outflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes down

Indexes were again down on Tuesday after opening the week with losses.

The KDP High Yield Daily index shaved off 5 points to close Tuesday at 66.63 with the yield now 5.43%.

The index was down 11 points on Monday.

The ICE BofAML US High Yield index slid 8.3 bps with the year-to-date return now 0.876%.

The index dropped 30 bps on Monday.

The CDX High Yield 30 index dropped 16 bps to close Tuesday at 104.92.

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