Midday Commentary: Tenet megadeal plays to $10 billion book; shorter maturities outperforming

By Paul A. Harris

Portland, Ore., Sept. 13 - High-yield bonds were unchanged Friday morning, according to a trader.

"Secondaries are super quiet," said the source. "ETFs should be looking to buy today.

"And we have $4 billion of deals that are expected to price before we close."

Among recently priced issues, shorter-dated paper tends to be outperforming notes with longer maturities, sources say.

The shorter-dated Activision Blizzard, Inc. 5 5/8% senior notes due Sept. 15, 2021 (Ba2/BB+) were par 3/8 bid, par 7/8 offered, a trader said. The $1.5 billion issue priced at par on Thursday.

Activision also priced $750 million of longer-dated 6 1/8% notes due 2023 (also Ba2/BB+) on Thursday. It was trading 99 7/8 bid, 101 1/8 offered on Friday morning.

The Silgan Holdings Inc. 5½% senior notes due Feb. 1, 2022 (Ba2/BB-) were 98 bid, 98½ offered on Friday. The $300 million issue came at par on Sept. 4.

An exception to the lagging longer-dated paper trend is Oasis Petroleum Inc.'s new 6 7/8% senior notes due March 2022 (B3/B), which were trading at 102¾ bid, 103 1/8 offered Friday morning.

The $1 billion issue came at par on Tuesday.

Tenet sees $10 billion book

Meanwhile, a big Friday new deal calendar is headed up by a $4.6 billion two-part whopper from Tenet Healthcare Corp.

On Thursday Tenet talked a $1.8 billion tranche of seven-year senior secured notes (Ba3/B+/BB) to yield 6% to 6¼% and a $2.8 billion tranche of 8.5-year senior unsecured notes (B3/CCC+/B-) to yield 8% to 8¼%.

The deal, via left bookrunner BofA Merrill Lynch and joint bookrunners Barclays, Citigroup Global Markets Inc. and Wells Fargo Securities, is playing to a $10 billion order book, a trader said.

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