Diamond Resorts, Blue Yonder, Empire Resorts on tap; Charter, MasTec, Clear Channel trade up

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 22 – The domestic high-yield primary market was relatively quiet on Wednesday with no deals clearing the market.

Diamond Resorts International Inc. pushed the timing of its $525 million offering of six-year senior secured notes (B3/B-) to Thursday with the deal initially slated to price on Wednesday.

Blue Yonder is also expected to price a $500 million offering of 5.5-year senior secured notes and Surgery Center Holdings, Inc. plans to price a $115 million add-on to its 10% senior notes due April 15, 2027 on Thursday.

Empire Resorts Inc. is in the market with $475 million of five-year senior secured notes (B+/B+), which is expected to price by Friday.

Meanwhile, the secondary space continued to grind tighter on Wednesday with the market well-bid and substantial inflows continuing, a source said.

New paper remained in demand.

Charter Communications Inc. subsidiaries CCO Holdings LLC/CCO Holdings Capital Corp.’s 4¼% senior notes due Feb. 1, 2031 (B1/BB) were among the most actively traded issues in the secondary space following a massive add-on.

The notes were trading with a healthy premium to their reoffer price.

MasTec, Inc.’s newly priced 4½% senior notes due 2028 (Ba3/BB) and Clear Channel International BV’s 6 5/8% senior secured notes due 2025 (B2/B) were both well above their issue prices in active trading.

Outside of recent issues, Bombardier Inc.’s senior notes saw renewed attention with the notes up 2 to 5 points following reports of improved liquidity.

Wednesday’s primary

The pace of the primary market remained relatively light on Wednesday.

Diamond Resorts International talked its $525 million offering of six-year senior secured notes to yield in the 9½% area, on top of initial guidance.

The deal was expected to clear the market in a Wednesday drive-by trade, but was pushed back to Thursday, a trader said.

Despite riding a wave of reverse inquiry amounting to two-thirds of the deal size, the order book remained below deal size late Wednesday, the trader added, noting that there were sizable orders for the notes wide of the price talk.

Blue Yonder is shopping a $500 million offering of 5.5-year senior secured notes on a Wednesday-Thursday roadshow.

Initial guidance has the deal coming to yield 5% to 5¼%, a bond trader said.

The offer is set to price Thursday.

Surgery Center Holdings plans to price a $115 million fungible add-on to its 10% senior notes due April 15, 2027 on Thursday. The deal will be shopped to investors by means of a Thursday morning conference call.

Empire Resorts is expected to price $475 million of five-year senior secured notes before the end of the week.

Early guidance has the deal coming to yield 8% to 8¼%.

In Europe, British pub operator Stonegate is in the market with a two-part offering of five-year senior secured notes (B3/B+) including £950 million of fixed-rate notes and €300 million of floating-rate notes.

Where's the calendar?

Given positive cash flows and a supportive capital markets backdrop, investors are beginning to complain about the lack of a new issue calendar, a trader said on Wednesday.

An earnings blackout, a period during which issuers are constrained from bringing bond deals until they report fresh earnings numbers, is presently upon the market, sources say.

Late in June some market watchers expected a sizable July. not as big as June's record-setting $58.24 billion, but chunky nonetheless – something in the vicinity of $35 billion to $40 billion, or a $10 billion-per-week run-rate factoring in the extended Independence Day holiday weekend, and the slow week leading up to it, a syndicate banker recounted on Wednesday.

There was the sense that issuers would attempt to get into the market before the July blackout took hold.

However, those attempts really never materialized, the banker said.

July issuance at Tuesday's close was $16.1 billion in 27 junk-rated, dollar-denominated tranches, according to Prospect News data.

Charter in focus

Charter’s 4¼% senior notes due 2031 were among the most actively traded issues in the secondary space on Wednesday following a massive add-on.

The notes were trading at a healthy premium to their reoffer price.

The 4¼% notes closed Wednesday at 102¾ bid, 103¼ offered, a source said.

The bonds had more than $90 million in reported volume during Wednesday’s session.

Charter priced a massively upsized $1.5 billion add-on to the 4¼% notes at 102 to yield 4.015% in a Tuesday drive-by.

The deal tripled in size with the initial offering $500 million.

The issue price came on top of talk.

MasTec gains

MasTec’s 4½% senior notes due 2028 were on the rise in active trading on Wednesday.

The 4½% notes were changing hands around 101 5/8 early in the session but rose to a 102-handle as the session progressed.

They closed Wednesday at 102 bid, 102½ offered, a source said.

There was more than $40 million on the tape heading into the market close.

The deal was heavily oversubscribed and demand for the notes followed them into the secondary space.

“It was a good deal. People were looking to get more,” a source said.

MasTec priced an upsized $600 million issue of the 4½% notes at par on Tuesday.

The yield printed at the tight end of yield talk in the 4 5/8% area.

The deal size increased from $400 million.

Clear Channel trades up

Clear Channel’s new 6 5/8% senior notes due 2025 were also putting in a strong performance in the secondary space.

The 6 5/8% notes were changing hands in the 101 7/8 to 102 3/8 context throughout Tuesday’s session, a source said.

They were marked at 101¾ bid, 102¼ offered at Wednesday’s close.

The notes were active despite the small size of the issue with $63 million in reported volume heading into the market close.

Clear Channel priced an upsized $375 million issue of the 6 5/8% notes at par in a Tuesday drive-by.

The deal priced tighter than talk in the 7% area and was upsized from $350 million.

Bombardier gains

Bombardier’s senior notes “were on a tear,” on Wednesday after the company reported improved liquidity, a source said.

The plane and train manufacturer’s 7½% senior notes due 2025 were up 3½ points to close Wednesday at 75½ bid, 76½ offered.

The issue was the most active in the capital structure with $27 million in reported volume heading into the market close.

The 6% senior notes due 2022 were up 5 points to close Wednesday at 87 bid, 89 offered, a source said.

There was more than $25 million in reported volume heading into the close.

The overall structure was up 2 to 5 points with the short end of the curve seeing the most dramatic gains.

Bombardier reported on Wednesday that it had secured a new $1 billion three-year senior secured term loan from funds and accounts managed by HPS Investment Partners LLC.

The company also reported that its second-quarter cash usage was $500 million better than expected.

The company’s liquidity at the end of June was north of $2 billion. “All good news there,” a source said.

$1.18 billion Tuesday inflows

The dedicated high-yield bond funds had $1.18 billion of net daily inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw a big $967 million burst of inflows on the day.

Actively managed high-yield funds had $210 million of inflows on Tuesday, the source said.

With Wednesday's daily fund flows numbers remaining to go into the tally the combined funds are tracking $3.12 billion of inflows for the week to Wednesday's close, which would be the biggest weekly inflows since the $3.1 billion inflows for the week to June 10, according to the market source.

Indexes gain

Indexes continued their upward momentum on Wednesday.

The KDP High Yield Daily index rose 19 points to close Wednesday at 66.48 with the yield now 5.95%.

The index gained 33 bps on Tuesday and was up 13 bps on Monday.

The ICE BofAML US High Yield index was up 26 bps with the year-to-date return now negative 1.227%.

The index jumped 64.6 bps on Tuesday and was up 44.8 bps on Monday.

The CDX High Yield 30 index gained 17 points to close Wednesday at 101.97. The index rose 22 bps on Tuesday.

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