USA Compression prices; Springleaf, Antero gain; Windstream, Uniti in focus; funds gain

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 21 – While new deal volume remained light on Thursday, the drive-thru window again opened with one deal pricing.

USA Compression Partners, LP priced an upsized $750 million issue of 8.5-year senior notes (B3/B+/BB-) at par to yield 6 7/8% in a Thursday drive-by.

Meanwhile, the high-yield secondary space remained strong despite a dip in equities and Treasuries.

On Thursday, spreads reached their tightest levels across ratings in 15 weeks with the high-yield market well bid, a source said.

New paper continued to perform well in the secondary space.

Springleaf Finance Corp.’s 6 1/8% senior notes due 2024 (Ba3/BB-) and Antero Midstream Partners LP’s 5¾% senior notes due 2027 (Ba3/BB+/BBB-) were trading at a premium to their issue price in the secondary space.

Windstream Corp.’s and Uniti Group Inc.’s junk bonds remained major volume movers in the secondary space with both structures trading down as bankruptcy chatter increases.

Meanwhile, high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw inflows of $284 million for the week ended Wednesday, according to fund-flow statistics generated by AMG Data Services Inc.

USA Compression upsizes

USA Compression Partners priced an upsized $750 million issue of 8.5-year senior notes (B3/B+/BB-) at par to yield 6 7/8% in a Thursday drive-by.

The issue size was increased from $500 million.

The yield printed at the tight end of yield talk in the 7% area.

J.P. Morgan Securities LLC, RBC Capital Markets LLC, Regions Securities and Wells Fargo Securities LLC were the joint bookrunners.

The Austin, Texas-based provider of natural gas compression services plans to use the proceeds to pay down its asset-based revolving credit facility.

Slow, but not that slow

Although new issue business seems slow in the dollar-denominated market, appearances can be deceiving, a debt capital markets banker said on Thursday.

February 2019 to Thursday's close has generated new issue volume higher than that of the entire month of February 2018, the source said.

Prospect News data bears this source out.

February 2019 to the Thursday, Feb. 21 close has seen $13.7 billion of junk-rated, dollar-denominated issuance.

That tops the $12.4 billion seen in the entire month of February 2018.

Of course, the February 2019 total swelled prodigiously on Feb. 7 when Altice USA (CSC Holdings, LLC), CommScope Finance LLC, and Clear Channel Worldwide Holdings Inc. priced a combined total of $6.24 billion on the biggest day in nearly two years.

Springleaf gains

Springleaf’s 6 1/8% senior notes due 2024 were trading up in high-volume activity on Thursday.

The 6 1/8% notes were trading in the par ½ context after breaking for trade on Wednesday.

They were quoted at par 3/8 bid, par 5/8 offered on Thursday and rose to par ¾ in the late afternoon, according to a market source.

“They did well,” a market source said.

Springleaf priced an upsized $1 billion issue of 6 1/8% notes at par to yield 6.123% in a Wednesday drive-by.

The issue size doubled from $500 million.

The yield printed slightly inside of the 6 1/8% to 6¼% yield talk.

Antero Midstream trades up

While less active, Antero Midstream’s 5¾% senior notes due 2027 were also trading at a premium to their issue price in the secondary space.

The notes were quoted at par 5/8 bid, par 7/8 offered, according to a market source. They were trading in the par ½ area in the late afternoon.

More than $14 million of the bonds were on the tape by the late afternoon.

Antero Midstream priced an upsized $650 million issue of the 5¾% notes at par in a Wednesday drive-by.

The issue size increased from $600 million.

The yield printed at the tight end of the 5¾% to 5 7/8% yield talk.

Bankruptcy chatter

Windstream’s and Uniti Group’s junk bonds remained major volume movers in the secondary space on Thursday with both structures trading down.

Windstream’s 8 5/8% senior notes due 2025 dropped 3 points to 87¾ with more than $20 million of the bonds changing hands, according to a market source.

The 9% senior notes due 2025 dropped 5¾ points to 49¼ with more than $14 million of the bonds changing hands.

The 10 ½% notes due 2024 dropped 7½ points to 52½.

Windstream’s junk bonds rebounded on Wednesday with the notes rising 2 to 6 points after tanking 10 to 20 points on Tuesday.

Uniti Group’s junk bonds were also trading down in high-volume activity. The 8¼% senior notes due 2023 dropped 3¾ points to 75¾ in high-volume activity, a market source said.

More than $50 million of the bonds were on the tape by the late afternoon.

Uniti’s 6% senior notes due 2023 dropped 2¾ points to 88½. More than $27 million of the bonds changed hands during Thursday’s session.

The 7 1/8% senior notes due 2024 dropped 6 points to 72.

There has been widespread chatter about Windstream filing for bankruptcy possibly as early as next month, a market source said.

There is concern that if Windstream seeks bankruptcy protection, Uniti may follow.

Windstream and Uniti have been in focus since a federal court ruling in favor of Aurelius Capital Management’s challenge of Windstream’s spinoff of Uniti.

Aurelius claimed Windstream’s spinoff of its wire and fiber-optic cable business into real estate investment trust Uniti and the subsequent lease-back to Windstream of those assets violated the covenants of Windstream’s 6 3/8% senior notes due 2023, of which Aurelius was a majority owner.

While there is concern the ruling may result in Windstream’s bankruptcy, the situation has a lot of moving parts and it’s too early to tell the outcome, a market source said.

Indexes mixed

Indexes were again mixed on Thursday as they have been throughout the week.

The KDP High Yield Daily index dropped 3 basis points to 69.85 on Thursday. However, the yield remained flat at 6.10%.

The index rose 13 bps on Wednesday and 3 bps on Tuesday after a cumulative gain of 24 bps on the week last week.

The ICE BofAML US High Yield index shaved off 1.7 bps on Thursday with the year-to-date return now 5.799%. The index gained 15.3 bps on Wednesday after a 10.5 bps increase on Tuesday.

The index saw a cumulative gain of 64 bps on the week last week.

The index shot past 5% returns on Feb. 12 after sinking below the 5% threshold Feb. 7.

The index initially crossed the 5% threshold on Feb. 5 after surpassing 4% year-to-date returns on Jan.30.

The CDX High Yield 30 index dropped 13 bps to close Thursday at 106.22. The index was down 1 bp on Wednesday and 7 bps on Tuesday after a cumulative gain of 78 bps on the week last week.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.