Allen Media, Parsley Energy, Builders FirstSource, Match Group price; Asbury, Uniti trade up

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 6 – The domestic high-yield primary market continued to churn out deals at an active pace with five deals pricing during Thursday’s session.

Builders FirstSource Inc. priced an upsized $500 million issue of 10-year senior notes (B3/BB-).

Match Group priced a $500 million issue of 4 1/8% 10.5-year senior notes (expected ratings Ba3/BB).

Shea Homes priced an upsized $450 million issue of eight-year notes (B1/BB-).

Parsley Energy LLC priced a $400 million issue of eight-year senior notes (Ba3/BB/BBB-).

And Allen Media, LLC priced a $300 million issue of eight-year senior notes (Caa1/B-).

Meanwhile, it was a lackluster day in the secondary space with the market flat for the majority of the session, a market source said.

New paper remained in focus although with mixed performances.

Asbury Automotive Group, Inc.’s recently priced tranches (B1/BB) were putting in strong performances with the longer duration notes an outperformer.

Uniti Group Inc.’s 7 7/8% senior notes due 2025 (Caa1/CCC/B) were also trading well above their issue price although there was some caution around the name.

However, Centene Corp.’s newly priced split-rated 3 3/8% senior notes due 2030 (Ba1/BBB-/BB+) fell flat in secondary market activity with the tight pricing of the notes leaving them little room for movement, a source said.

Primary powers on

The white-hot high-yield primary market continued to generate news at a heavy volume on Thursday, as issuers upsized deals, priced them tight, and in some cases accelerated timing.

Builders FirstSource's deal came Thursday morning with a timeline that initially had it in the market until Friday.

However, the upsized $550 million issue of 10-year senior notes morphed into a drive-by early Thursday afternoon.

It priced at par to yield 5%, upsized from $500 million.

The yield printed at the tight end of the 5% to 5¼% yield talk, and tighter than the 5¼% to 5½% initial guidance.

It was heard to be five-times oversubscribed late Thursday morning, a trader said.

Match Group launched and priced a $500 million issue of 4 1/8% 10.5-year senior in a quick-to-market Thursday trade.

Initial price talk had the deal coming to yield in the 4½% area.

Match Group was driven by reverse inquiry that approached half the size of the $500 million offer, a trader said on Thursday morning.

Shea Homes priced an upsized $450 million issue of eight-year notes at par to yield 4¾% in a Thursday drive-by, according to a market source.

The issue size increased from $375 million.

The yield printed well inside of the 5% to 5¼% initial guidance.

The deal was heard to have been driven, in part, by $175 million of reverse inquiry, a trader said.

Parsley Energy priced a $400 million issue of eight-year senior notes at par to yield 4 1/8% in a Thursday drive-by, according to market sources.

The coupon and reoffer price came on top of talk which had been revised from yield talk in the 4 3/8% area. Initial guidance was in the mid-4% area.

Thursday's sole roadshow deal came from Allen Media which priced a $300 million issue of eight-year senior notes at par to yield 10½%.

The yield printed in the middle of yield talk in the 10½% area, and at the wide end of initial price talk which had the deal coming to yield in the low-to-mid 10% area.

The offering also underwent document changes, primarily bearing upon how the issuer may disburse cash and incur additional debt.

The new 10½% notes were performing well after breaking for trade. They were seen at 101 bid, 101½ offered with more than $17 million in reported volume by the late afternoon.

Friday

The active forward calendar features just one deal expected to clear ahead of the coming weekend.

Husky III Holding Ltd. is on deck with the market's boldest structure, a PIK toggle holdco note (Caa2/CCC) backing a dividend, sources say.

Early talk was in the 12% area; however, discussions have pushed out as high as 12¾%, a trader said on Thursday.

The junk new issue market is currently enjoying fair breezes. However, Husky is pointed notably high into that wind, sources say.

Asbury jumps

Asbury Automotive’s two tranches of senior notes were putting in strong performances in the secondary space.

However, the longer duration notes were the outperformers.

Asbury’s 4½% senior notes due 2028 were marked at 101 bid, 101½ offered in high-volume activity on Thursday.

The 4¾% senior notes due 2030 were changing hands in the 102 to 102¼ context, a source said.

Sources attributed the strong aftermarket performance of the notes to the name being a solid credit with an okay coupon.

“At least they had 4-handles,” a market source said.

The Duluth, Ga.-based auto dealership chain priced a $1,125,000,000 two-tranche senior notes offering on Wednesday.

The deal included a $525 million tranche of the 4½% senior notes and a $600 million tranche of the 4¾% notes, both of which priced at par.

The 4½% notes priced at the tight end of the 4½% to 4¾% yield talk.

The 4¾% notes came on top of talk, which had the 10-year notes trailing the eight-year notes by 25 bps.

Uniti Group trades up

Uniti Group’s 7 7/8% senior notes due 2025 were putting in a solid performance in high-volume activity in the secondary space.

The 7 7/8% notes were changing hands in the 101 to 101¼ context on Thursday – a level they maintained for the majority of the session, which was largely a product of a sidewise day in the secondary space, a source said.

While several higher-coupon names to price in recent weeks have traded up to a 103 handle, Uniti Group maintained a 1-handle in the aftermarket – a reflection that there may be some caution around the name, a source said.

Uniti priced an upsized $2.25 billion issue of the 7 7/8% notes at par on Wednesday. Pricing came at the tight end of yield talk in the 8% area.

The initial size of the deal was $1.75 billion.

The deal was heard to have been driven to the market by $1 billion in reverse inquiry, sources said.

Uniti Group was formed through a spinoff of telecommunications company Windstream Corp.’s wire and fiber optic cable business.

A holder of Windstream’s junk bonds challenged the spinoff of Uniti and Windstream’s subsequent lease-back of its fiber optic cables, claiming the lease-back violated a covenant of one of Windstream’s bonds.

The holders’ subsequent victory in court pushed Windstream to file for Chapter 11 bankruptcy in February 2019.

Windstream and Uniti are now heading to court in March over the lease-back arrangement which has Windstream paying Uniti $54 million per month, FierceTelecom reported.

Fitch Ratings downgraded Uniti Group’s long-term issuer default ratings to CCC from B on Wednesday due to a potential adverse outcome from the court proceedings and the potential for future litigation, Prospect News reported.

Centene flat

Centene’s 3 3/8% senior notes due 2030 saw a lackluster reception in the secondary space.

The notes were trading in the par ¼ to par ¾ context for the majority of Thursday’s session, a market source said.

“These priced so tight, they really have nowhere to go,” the source said.

However, the issue was a large, liquid one.

Centene priced a $2 billion issue of the 3 3/8% notes at par on Wednesday.

The notes priced tight to the 3½% to 3¾% yield talk and well inside of initial guidance in the high 3% area.

While the notes saw a lackluster reception in the secondary space, the deal was in high demand during bookbuilding with the order book heard to exceed $6 billion, sources said.

Indexes mixed

Indexes were mixed on Thursday as they have been for much of the week.

The KDP High Yield Daily index was up 8 points to 71.58 with the yield now 4.96%. The index was up 19 bps on Wednesday and 6 bps on Tuesday after opening the week flat.

The ICE BofAML US High Yield index gained 17.3 bps with the year-to-date return now 0.655%.

The index gained 40.4 bps on Wednesday, shaved off 1 bp on Tuesday and gained 7.6 bps on Monday.

The CDX High Yield 30 index dropped 7 bps to close Thursday at 109.30. The index rose 47 bps on Wednesday and 57 bps on Tuesday after a 6 bps drop on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.