Southwestern sells upsized junk issue; SeaWorld under water; AdaptHealth, MultiPlan down

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 16 – For the first time in four weeks Monday high-yield new issue volume dropped below $2.5 billion.

New bonds from Southwestern Energy Co. represented roughly half of that total.

Meanwhile, the secondary space launched the week on soft footing although liquidity issues prevented any major price movement in the space, sources said.

SeaWorld Entertainment, Inc.’s 5¼% senior notes due 2029 (Caa1/B-) were struggling in the aftermarket with the notes closing the day under water.

AdaptHealth LLC’s 5 1/8% senior notes due 2030 (B1/B) gave back all of their gains after a decent break and returned to par.

MultiPlan Corp.’s 5¾% senior notes due 2028 (B3/B-) were selling off on the heels of the company’s latest offering.

Primary Monday

Three drive-by issuers priced a respectable $1.93 billion face amount of junk in three tranches, to get the Aug. 16 week underway.

One of the three deals upsized.

Executions were solid, with two of the three offers coming at the tight- or rich ends of talk, while the third came on top of talk.

Southwestern Energy was the session's biggest issuer, pricing an upsized $1.2 billion issue (from $1 billion) of 5 3/8% 8.5-year senior notes (Ba3/BB-/BB) at par, at the tight end of talk.

The deal was heard to play to $2.3 billion of orders (see related stories in this issue).

Average issuance on the previous three Mondays was $3.81 billion, with the biggest amount in that series, $5.25 billion, coming on Monday, Aug. 2.

At long last the primary market may be assuming its more traditional late-summer aspect, with market participants taking vacation time in the runup to Labor Day, the traditional Summer-Fall terminus in the bond market, sources said on Monday.

Recent strong issuance takes little account of a whopping $60 billion September shadow calendar, sources say.

At Monday's close three issues remained on the active calendar for the Aug. 16 week.

MuliPlan is set to price a $775 million offering of seven-year senior secured notes (existing ratings Ba3/B+) on Tuesday. The deal, which officially kicked off Monday, is in the market with initial guidance in the mid-5% area.

Cooke Aquaculture Inc. was scheduled to wrap up a roadshow for its $580 million offering of eight-year senior notes (Caa1/CCC+) on Monday.

Initial guidance is in the high 5% to 6% area.

The book is not yet done, according to a bond trader.

And Sylvamo is in the market with a $500 million offering of eight-year senior notes, initial guidance high 5% area, on a timeline that has it pricing Thursday.

SeaWorld under water

SeaWorld’s 5¼% senior notes due 2029 were struggling in the aftermarket with the notes closing the day under water.

The 5¾% notes were changing hands in the 99¾ to 99 7/8 context heading into the market close, according to a market source.

There was more than $72 million in reported volume.

While the deal was heard to be heavily oversubscribed, the trading level did not come as a surprise to some sources.

SeaWorld was not a great credit prior to the pandemic. With the strength of the reopening trade beginning to wane due to the Delta variant, the notes were expected to struggle.

SeaWorld priced a downsized $725 million, from $825 million, issue of the 5¼% notes on Friday.

Early guidance was in the low- to mid-5% area.

The deal was heard to have played to $2 billion in orders.

AdaptHealth returns to par

AdaptHealth’s 5 1/8% senior notes due 2030 gave back all of their early gains with the notes returning to par during Monday’s session.

The 5 1/8% notes were marked at 99 7/8 bid, par 1/8 offered heading into Monday’s close, according to a market source.

There was more than $21 million in reported volume.

The notes shaved off ½ point from Friday’s close. They traded as high as 101 after breaking for trade on Aug. 12.

MultiPlan down

MultiPlan’s 5¾% senior notes due 2028 were under pressure on Monday as the company prepared a new offering of secured notes.

The 5¾% notes fell 1½ points in active trading. They closed the day at 95¼, according to a market source.

The notes were trading down as the company prepared a new offering of seven-year secured notes, which is being guided in the mid-5% area.

The new offering pushes MultiPlan’s outstanding 5¾% notes further down the capital structure.

Indexes

The KDP High Yield Daily index shaved off 1 basis point to close Monday at 69.83 with the yield now 3.81%.

The index posted a cumulative loss of 18.05 bps on the week last week.

The CDX High Yield 30 index fell 12 bps to close Monday at 109.37.

The index posted a cumulative gain of 5 bps on the week last week.

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