Morning Commentary: LifePoint talked 9%-9¼%; HC2 on deck; Mednax trades to premium

By Paul A. Harris

Portland, Ore., Nov. 8 – The high-yield new issue market generated a modicum of news on Thursday.

RegionalCare Hospital Partners Holdings, Inc. and LifePoint Health, Inc. talked a $1,575,000,000 offering of eight-year senior notes (Caa1/CCC+) to yield 9% to 9¼%.

Official talk comes tight to earlier guidance in the 9¼% area.

The merger financing deal, which is being helmed by left lead bookrunner Barclays, is set to price on Friday.

Meanwhile HC2 Holdings, Inc. is on deck with a $535 million offering of five-year senior secured notes (Caa1/B-) that have had an extended stay in the market.

The deal, via bookrunner Jefferies, was announced on Oct. 22 and set to price in the week of Oct. 29.

The HC2 Holdings notes were talked on Wednesday with an 11½% coupon at a reoffer price of 98.75 to yield 12% and are scheduled to price Thursday afternoon.

In the European primary market, Groupe Ecore Holding SAS (Luxembourg) plans to start a roadshow on Friday for a €255 million offering of five-year senior secured floating-rate notes.

Barclays is the bookrunner.

The France-based recycling company plans to use the proceeds, together with a new factoring facility and cash on its balance sheet, to fund a distribution to its shareholders, repay its existing factoring facility and repay existing bank loans.

Ecore climbs aboard an active euro-denominated calendar that includes Verisure, in the market with €1,012,000,000 of debt coming in the form of a bank loan and high-yield notes, which it is bringing in order to refinance debt and fund a dividend, and International Design Group SpA with a €720 million two-part offering of seven-year senior secured notes backing the buyout of the company.

Roadshows for both of those deals are set to wrap up on Friday.

Mednax trades to premium

Against a backdrop of weaker stock prices, high-yield bonds opened unchanged on Thursday, sources said.

High-yield ETF share prices were flat at mid-morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was down a penny, or 0.01%, at $85.04 per share.

Split-rated bonds priced Wednesday by Mednax, Inc. were trading at a modest premium to the new issue price on Thursday morning, a trader said.

The Mednax 6¼% senior notes due January 2017 (Ba2/BBB-) were par 3/8 bid at mid-morning after trading as high as par 5/8 earlier in the session.

The downsized $500 million (from $750 million) issue priced at par.

Elsewhere, ongoing weakness in oil prices continued to pressure junk bonds in the energy sector, sources said.

The Transocean Inc. (RIG) 7¼% senior guaranteed notes due November 2025 were 96½ bid, 97¼ offered on Thursday morning, a hedge fund manager said.

Those bonds were 97 bid, 97½ offered on Wednesday, the source added.

The $750 million issue priced at par on Oct. 22.

The Hilcorp Energy Co. 6¼% senior notes due 2028 (Ba2/BB+) were 96¾ bid, 97½ offered, unchanged.

The $600 million issue priced at par on Oct. 1.

The California Resources Corp. 8% senior secured second-lien notes due December 2022, said by some market watchers to be a tracking bond for the performance of the high-yield energy sector, were 88¾ bid, 89½ offered on Thursday morning.

Those bonds were 90 bid, 90¾ offered on Wednesday, the manager said.

Big ETF inflow

High-yield ETFs saw a massive $1.09 billion inflow of cash on Wednesday, according to trader, who added that it is one of the largest daily inflows to the junk ETFs on record.

Actively managed high-yield funds saw $15 million of inflows on Wednesday, the trader added.

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