Tegna prices; CNX adds on; $5.7 billion added to calendar; Tenet below par; GTT soars

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 8 – The domestic high-yield primary market leapt back into action on Tuesday despite continued volatility.

Two deals totaling $770 million priced and $5.7 billion face amount of deals joined the forward calendar.

Tegna Inc. priced an upsized $550 million of 5.5-year senior notes (Ba3/BB-) and CNX Resources Corp. priced a $200 million add-on to its 7¼% senior notes due March 14, 2027 (B3/BB-).

Meanwhile, the forward calendar ballooned with NuStar Logistics, L.P., U.S. Concrete, Inc., Big River Steel LLC, Radiate Holdco LLC and Radiate Finance Inc., Avaya Holdings Corp., and Iamgold Corp. all announcing offerings.

The European primary market was also active with Center Parcs pricing a £250 million issue, Virgin Media Inc. announcing a £2.45 billion equivalent three-tranche offering and Encore Capital Group, Inc. marketing a €300 million offering.

Meanwhile, the secondary space had a slow return from the holiday weekend with volume light on another weak day for markets.

While the secondary space was soft on Tuesday, it was holding up comparatively well amid the sell-off in equities and crude oil futures, a market source said.

The cash bond market was down about ¼ point as the Dow Jones industrial average sank 632 points or 2.25% and WTI crude oil futures dropped more than 7%.

WillScot Mobile Mini Holdings Corp.’s 4 5/8% senior notes due 2028 (B3/B+) were active and trading off alongside the broader market.

Tenet Healthcare Corp.’s 6 1/8% senior notes due 2028 (Caa1/CCC+/B) remained active with the notes sinking below par.

While the overall market was soft, GTT Communications Inc.’s 7 7/8% senior notes due 2024 skyrocketed following news of an asset sale.

Tuesday’s primary

Two dollar-denominated issues totaling $770 million priced on Tuesday.

In Tuesday drive-by action, Tegna came upsized and tight, pricing $550 million (from $400 million) of 4¾% 5.5-year senior notes (Ba3/BB-).

The deal was playing to $1.5 billion of demand at noon Tuesday, a trader said.

The notes were active in the secondary space and trading above par despite a weak day for the market.

The notes were changing hands in the par 1/8 to par ¼ context heading into the market close, a source said.

CNX Resources priced a $200 million add-on to its 7¼% senior notes due March 14, 2027 (B3/BB-) at 103.5, the cheap end of price talk.

The order book ended up around deal size, according to a bond trader.

The forward calendar

The active forward calendar, which was empty heading into the holiday, built up to more than $5.7 billion of dollar-denominated business on Tuesday.

Looking to Wednesday, NuStar Logistics plans to price a $1 billion offering of senior bullet notes (expected ratings Ba3/BB-/BB-) in two tranches: five-year notes with initial talk of 5¾% to 6%, and 10-year notes with initial talk in the 6½% area.

U.S. Concrete plans to price a $300 million offering of senior notes (existing ratings B3/BB-) due March 2029. Initial talk is in the mid-5% area.

The deal was already playing to $850 million of demand at Tuesday's close, a trader said.

Switch, Inc. expects to price a $500 million issue of eight-year senior notes, with initial talk in the low 4% area.

Big River Steel started a Tuesday-Wednesday telephone roadshow for an $875 million offering of senior secured green bonds due January 2029 (existing ratings Caa1/B), with early guidance in the high 6% area.

The deal is heard to be riding $600 million of reverse inquiry, a trader said.

Radiate Holdco began marketing $3.25 billion of notes including $2.25 billion of six-year senior secured notes with initial price talk in the 5% area, and $1 billion of eight-year senior unsecured notes with initial talk of 6½% to 6¾%.

Avaya Holdings started a roadshow for a $750 million offering of eight-year senior first-lien notes, with initial talk in the mid-6% area.

And Iamgold Corp. expects to price $450 million of eight-year senior notes (B2/B+) before the end of the week.

Continued capital markets volatility, which sent the U.S. stock indexes lower for the third consecutive session on Tuesday, could impact the timing of the above deals, a trader said.

The European primary

Meanwhile in Europe, Center Parcs priced a £250 million issue of 6½% class B5 six-year secured notes (B-/B) at the tight end of talk.

Virgin Media disclosed plans to price £2.45 billion equivalent of senior secured notes (expected ratings Ba3/BB-/BB+) in three tranches during the Sept. 7 week.

The deal features 8.3-year sterling-denominated notes, initial talk in the low 4% area, euro-denominated 10.3-year notes, initial talk in the low-to-mid 3% area, and dollar-denominated 10.3-year notes, initial talk in the low 4% area.

The dollar-denominated notes were heard to have generated $225 million of early demand on Tuesday, a trader said.

And Encore Capital Group was scheduled to kick off a €300 million offering of five-year senior secured notes (Ba3/BB+) on Tuesday (see related stories in this issue).

WillScot active

WillScot’s 4 5/8% senior notes due 2028 returned to focus on Tuesday with the notes trading off in high-volume activity.

The 4 5/8% notes were down about ½ point to close the day at 101¼, a market source said.

The bonds had $22 million in reported volume.

The notes were trading off alongside the broader market.

However, the yield on the notes was low for a single-B credit and some holders may have been cashing in on profits, a source said.

WillScot priced a $500 million issue of the 4 5/8% notes at par in early August.

Tenet below par

Tenet’s 6 1/8% senior notes due 2028 sank below par in active trading on Tuesday.

The notes were down ½ point to trade in the 99 3/8 to 99½ context heading into the market close, a source said.

The notes remained active with about $20 million on the tape.

The 6 1/8% notes have been volatile since pricing on Sept. 1.

While the 6 1/8% notes traded up to 101, they closed out last week around par with the broader market soft.

Tenet priced a $2.5 billion issue of the 6 1/8% notes at par on Sept. 1.

It was the largest issue from a CCC credit year to date and one of the only CCC credits to tap the market recently.

GTT skyrockets

While the broader market was down on Tuesday, GTT Communications’ 7 7/8% notes due 2024 skyrocketed following news of a pending asset sale.

The 7 7/8% notes were the largest gainers of Tuesday’s session and jumped more than 13 points to close the day at 50¼, a source said.

The 7 7/8% notes were catapulted higher by a Bloomberg report that the telecommunications and internet company was in talks to sell its European fiber assets to a consortium of investors for more than $2 billion.

The notes tumbled to the low 30s in mid-August after the company delayed the filing of its 10-Q due to discovering some issues related to recording the cost of services and its internal controls, the company announced at the time.

$16 million Friday outflows

The dedicated high-yield bond funds sustained modest net daily outflows of $16 million on Friday, the most recent session for which data was available at press time, a trader said.

Actively managed high-yield funds had $505 million of inflows on the day.

However high-yield ETFs sustained $521 million of outflows on Friday, the source said.

The combined funds are tracking $181 million of net outflows on the week that will conclude with Wednesday's close, according to the market source.

Indexes down

Indexes opened the week with losses.

The KDP High Yield Daily index dropped 23 basis points to close Tuesday at 67.06 with the yield now 5.34%.

The index posted a cumulative gain of 4 bps on the week last week.

The ICE BofAML US High Yield index was down 28.5 bps with the year-to-date return now 0.292%.

The index posted losses of 11.9 bps on the week last week.

The CDX High Yield 30 index sank 80 bps to close Tuesday at 104.89.

The index posted a cumulative gain of 7 bps on the week last week.

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