Two deals price for $975 million; calendar grows; Vericast rockets; Centene gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 29 – Two drive-by issuers priced single tranche dollar-denominated high-yield deals on Tuesday, raising a combined total of $975 million.

Meanwhile, the secondary space continued to firm on Tuesday with the market better bid amid the slowdown in new issuance, a source said.

Centene Corp.’s recently priced 3% senior notes due 2030 (Ba1/BBB-/BB+) continued their upward momentum in active trading on Tuesday.

However, with activity surrounding new issues slowing down, several outstanding issues returned to the spotlight.

Vericast Corp.’s 8 3/8% senior notes due 2022 were among the major gainers of Tuesday’s session following news of an asset sale and a debt exchange.

Sinclair Broadcast Group Inc.’s two tranches of senior notes issued by Diamond Sports Group LLC and Diamond Sports Finance Co. were also on the rise in active trading.

Spirit, Acadia

The high-yield primary focus was on two drive-by issuers on Tuesday, as single tranche dollar-denominated deals priced for a combined total of $975 million.

One of the two upsized.

Both saw razor sharp executions that, in each case, brought home the bacon inside of talk.

Spirit AeroSystems, Inc. executed a one-two punch, pricing its deal upsized and inside of talk.

The $500 million issue (from $400 million) of 5½% senior secured first-lien notes due Jan. 15, 2025 (Ba3/BB-) came 12.5 basis points inside of talk.

The deal was heard to be playing to a $2 billion book late Tuesday morning.

Meanwhile Acadia Healthcare Co., Inc. also priced its $475 million issue of 5% 8.5-year senior notes (B3/B-) 12.5 bps inside of talk, playing to a book that contained $700 million of orders before lunchtime Tuesday.

Calendar builds

The forward calendar built up, heading into the final session of September.

OCI N.V. plans to price about $850 million of five-year senior secured notes (Ba3/BB) in two tranches on Wednesday: €350 million talked to yield in the 3¼% area, versus initial talk of 3¾% to 4%, and $450 million talked to yield 4½% to 4¾%, versus initial talk in the 5% area.

Lithia Motors, Inc. also plans to price its $500 million offering of 10.25-year senior notes on Wednesday.

Later in the week Prime Focus World NV (DNEG plc) plans to price $375 million of senior secured notes due 2025 (//BB-), heard to be playing to $130 million of reverse inquiry, and whispered at 8¼% to 8½%.

Meanwhile Frontier Communications Corp.'s $1.15 billion first-lien senior secured notes due 2027 (B3/B+/BB+), helping to finance the company's exit from bankruptcy, is also heard to be playing to significant reverse inquiry. The deal is whispered in the mid-6% area. The roadshow runs through Thursday (see related stories in this issue).

Centene gains

Centene’s recently priced 3% senior notes due 2030 continued their upward momentum on Tuesday after an initial lackluster reception in the secondary space.

The 3% notes were changing hands in the 101 7/8 to 102 1/8 context heading into the market close, according to a market source.

There was more than $32 million in reported volume during Tuesday’s session.

The notes have jumped over the past two sessions, after closing out the previous week at par ½.

They were making gains alongside the broader market, a source said.

The 3% notes fell flat in the aftermarket after the managed care company priced a $2.2 billion issue of the 3% notes at par on Sept. 23.

The notes were largely wrapped around par their initial days in the secondary space amid the sell-off in risk assets.

Vericast skyrockets

Vericast’s (formerly Harland Clarke Holdings) 8 3/8% senior notes due 2022 were among the major gainers of Tuesday’s session following news of an asset sale and a debt exchange for its notes due in 2021.

The 8 3/8% notes jumped almost 6¼ points to close the day at 96 1/8 with the yield now about 10.4%, according to a market source.

They were active with more than $25 million in reported volume.

The notes skyrocketed after news broke that J2 Global Inc. would buy Vericast subsidiary RetailMeNot Inc. for $420 million.

The company also launched a debt exchange to extend the maturity of its notes coming due in 2021 as part of an ongoing effort to strengthen its balance sheet, Bloomberg reported.

Diamond Sports gains

Diamond Sports’ secured and unsecured notes were on the rise in active trading on Tuesday.

Diamond Sports’ 5 3/8% senior secured notes due 2026 rose 1½ points to close the session at 71¾, according to a market source.

The 6 5/8% senior notes due 2027 gained 2¼ points to close the day at 53¾.

Diamond Sports subsidiary Diamond Sports Financing SPV LLC recently entered into a $250 million accounts receivable securitization facility, which will increase its borrowing capacity, a source said.

$286 million Monday outflows

The dedicated high-yield bond funds sustained $286 million of net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs were squarely in the green, on the day, seeing $104 million of inflows.

However actively managed high yield funds sustained $390 million of outflows on Monday, the source said, adding that those outflows were broad-based.

The combined funds are tracking $2.3 billion of net outflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes mixed

Indexes were mixed on Tuesday after starting the week on strong footing.

The KDP High Yield Daily index rose 6 basis points to close Tuesday at 65.95 with the yield now 5.82%. The index gained 16 bps on Monday after dropping 132 bps on the week last week.

The ICE BofAML US High Yield index gained 8.1 bps with the year-to-date return now negative 0.613%.

The index gained 39.9 bps on Monday after dropping 158 bps on the week last week.

The index turned negative on Sept. 21.

The CDX High Yield 30 index shaved off 39 bps to close Tuesday at 103.96.

The index gained 12 bps on Monday after sinking 104 bps the previous week.

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