New Cedar Fair, recent Ultra Petroleum, Alliance take attention on session; oil, health care, retail trade tight

By Colin Hanner and Paul A. Harris

Chicago, April 10 – There was overwhelming quiet in the high-yield secondary market on Monday, traders said, with recently-priced deals getting the bulk of attention.

“[The high-yield market] is grinding higher,” a trader said. “But like I said, there’s not a lot of notable volume.

“The new [Ultra Petroleum Corp.] and Cedar Fair [LP] deal were the two main things, if anything, that were trading.”

Cedar Fair’s $500 million of 10-year senior notes was the only issue priced Monday.

Another trader said that Monday’s action would likely be the peak of the week, as the Passover holiday, paired with the Easter holiday and late spring vacations, would likely mean a lack of activity for the remainder of the week. Markets will be closed on Friday for Good Friday.

Oil and natural gas operator Ultra Petroleum Corp., which priced $1.2 billion in two regularly scheduled tranches on Friday, was “marginally higher” on the session, a trader said.

And Sandusky, Ohio-based regional amusement-resort operator Cedar Fair LP, which priced a $500 million issue of 10-year senior notes on Monday, was up later in the day.

Though crude oil futures continue to gain, exploration and production companies were largely unaffected by such movement, trading nearly flat in some cases.

Health care and retail sectors were mixed on the session.

Most other issues were trading tight, not going much wider than Phoenix-based pet retailer Petsmart, Inc.’s, which had “heavy volume,” according to a trader.

Cedar Fair drives by

Cedar Fair priced Monday's sole deal, a $500 million issue of 10-year senior notes (B1/BB-) that came at par to yield 5 3/8%.

The yield printed at the tight end of the 5 3/8% to 5½% yield talk and tight to initial guidance in the 5½% area.

JPMorgan, UBS, Wells Fargo, Fifth Third and KeyBanc were the joint bookrunners for the debt refinancing deal.

Endo sets Tuesday call

Meanwhile the stage was set for an active holiday week that's set to wrap up with a recommended 2 p.m. ET close on Thursday.

Endo International plc scheduled an investor conference call at 11 a.m. ET on Tuesday for its $750 million offering of senior secured notes due October 2024 (Ba2/BB).

The debt refinancing deal is expected to price on Wednesday.

Citigroup is the left bookrunner. JPMorgan, Barclays, BofA Merrill Lynch, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and RBC are the joint bookrunners.

Air Methods starts roadshow

Air Methods Corp. started a roadshow on Monday for a $560 million offering of eight-year senior notes.

The buyout deal is set to price Thursday.

Initial guidance has the notes coming to yield 7½% to 7¾%.

Morgan Stanley, RBC, Barclays, Jefferies and Citigroup are managing the sale.

Tutor Perini returns

Tutor Perini Corp. returned on Monday with a $500 million offering of eight-year senior notes, much like the one it pulled last November due to adverse market conditions.

The debt refinancing deal, which is set to roadshow through Wednesday, is whispered in the 7% area and is already believed to be playing to a good book, a trader said on Monday.

Last November's pulled deal had been talked at 7% to 7¼% – talk that had widened from initial guidance of 6% to 6 3/8%.

Goldman Sachs is the left bookrunner for Tutor Perini's return. SunTrust, KeyBanc and Credit Suisse are the joint bookrunners.

Grifols starts roadshow

The European market is also set for an active week.

Grifols SA started a roadshow on Monday for a €1 billion offering of eight-year senior notes (B2/B+) via sole bookrunner Morgan Stanley.

The Barcelona, Spain-based health care company plans to use the proceeds to fund the redemption of $1 billion of its 5¼% of senior notes due 2022 at 103.938 on April 19, 2017.

Burger King three-part deal

Burger King France SAS started a roadshow on Monday for a €555 million three-part offering of senior secured notes (expected ratings B3/B-).

On offer are two tranches of fixed-rate notes and one tranche of floating-rate notes.

The fixed-rate portions include five-year notes and seven-year notes. In addition Burger King France is selling a tranche of five-year floating-rate notes.

Joint global coordinator and joint bookrunner Goldman Sachs will bill and deliver. JPMorgan, BNP Paribas and Credit Suisse are also joint global coordinators and joint bookrunners. SG CIB is a joint bookrunner.

The Paris-based fast food restaurant chain plans to use the proceeds to refinance debt.

Flat flows on Friday

The daily cash flows of the dedicated high-yield bond funds were essentially flat on Friday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs saw $3 million of inflows on the day.

The flows of the actively managed funds were absolutely flat at zero, the trader added.

Meanwhile the dedicated bank loan funds saw $190 million of inflows on the day, Friday.

Recent issues take volume and movement

The most-actively traded issue of the session was Ultra Petroleum’s 7 1/8% notes due 2025, which priced at 98.507 on Friday.

They were up ¼ point to a 101 3/8 bid, a trader said, nearly 1½ points higher than price talk at the end of Friday’s session.

Cedar Fair’s 5 3/8% notes due 2027 – printing at the tight end of the 5 3/8% to 5½% yield talk and tight to initial guidance in the 5½% area – were up 1¼ point to 101¼.

Tulsa, Okla.-based coal producer Alliance Resource Partners’ $400 million issue of 7½% notes due 2025, which priced Friday, were up “marginally” at 102 3/8, a trader said.

Oil gains, E&P lags

For the fifth-straight session, crude oil future prices were on the rise, though the tandem association between the higher prices and distressed exploration and production gains was fainter.

Oklahoma City, Okla.-based oil and natural gas exploration and production company Chesapeake Energy Corp.’s 8% notes due 2022 were active, though unchanged, at 106¼.

Yet, a market source said Chesapeake’s 6 5/8% notes due 2020 were up 1¼ points to 102.

Plano, Texas-based oil and natural gas exploration and production company Denbury Resources Inc.’s 6 3/8% notes due 2021 were up ½ point to 84¼, a market source said.

And offshore drilling contractor Ensco plc 4½% notes due 2024 were unchanged to 86½.

Retail mixes

It was a mixed bag of movement for the retail sector on Monday, though no particular catalyst drove movement in either direction.

J.C. Penney Co., Inc.’s 5 7/8% notes due 2023 were quoted at par and ¼ point, up 1/8 point on the session.

L Brands, Inc.’s 6 7/8% notes due 2035 were unchanged at 95, though its 6.95% notes due 2033 were down 1/8 point at 94.

And tween retailer Claire’s Stores Inc.’s 9% notes due 2019 were up 1 point to 40.

In health and pharma

As new health care legislation aimed at repealing parts of the Affordable Care Act seems to be all but gaining ground in Congress, hospital groups were nearly flat on the day.

Franklin, Tenn.-based hospital operator Community Health Systems Inc.’s 6 7/8% notes due 2022 were unchanged at 85½, a trader said.

And Dallas-based Tenet Healthcare Corp.’s 8 1/8% notes due 2022 were also unchanged at 103½, though were active, a trader said.

In pharmaceuticals, Endo International plc saw some movement on the day.

Its 6% notes due 2025 were unchanged at 83¾, though its 6% notes due 2023 were up “almost 1” point to 86¾.

On Monday, the Dublin, Ireland-based pharmaceutical company announced the offering of $750 million of secured notes, which is expected to price on Wednesday. Proceeds are planned to refinance debt and for general corporate purposes.

And Valeant Pharmaceuticals International Inc.’s 7% notes due 2024 were up 3/8 point to 102½.

Drugstore Rite Aid Corp.’s 6 1/8% notes due 2023 were up 3/8 point to 101¾.

High-yield roundup

A solid mover on the day, Petsmart Inc.’s 7 1/8% notes due 2023 were down ¾ point to 92¼, a trader said.

Stamford, Conn.-based Frontier Communications Corp.’s 11% notes due 2025 were up ¼ point to 98¼, a trader said.

San Antonio-based broadcasting and outdoor advertising company iHeartCommunications Inc.’s 9% notes due 2021 were up ½ point to 76¾.

Car-rental company Hertz Global Holdings Inc., which was down largely last week, possibly related to the ailing automotive industry figures released last week, was down ½ point in its 6½% notes due 2022.

And Sprint Industrial Holdings, LLC 6% notes due 2022 were up ¼ point to 103 1/8.

Market indexes

The KDP High Yield Daily index was up 3 basis points to 72.04 on Monday, its fourth-straight gain.

On Friday, it edged higher 1 bp. That followed gains of 8 bps on Thursday and 9 bps on Wednesday.

Its yield was up 2 basis points on Monday to finish at 5.23%, breaking three-consecutive sessions of narrowing.

On Friday, its yield came in by 1 bp, ending at 5.21%, its third consecutive narrowing. It had tightened by 2 bps on Thursday and 4 bps on Wednesday.

The Markit CDX Series 28 index was lower for the second-consecutive session on Monday, down 1/16 point to close at a 107.22 bid, 107.28 offer.

Friday had brought a similar narrowing, and on Thursday it had gained around 1/8 point on the day, reversing Wednesday’s 1/8 point loss.

Paul Deckelman contributed to this review

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