HC2 Holdings, LifePoint on tap; Mednax trades up; Party City, Bombardier drop; funds add $1.04 billion

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 8 – Two deals that are expected to clear before the week comes to a close remain on the domestic primary market’s forward calendar.

HC2 Holdings, Inc. was expected to price its restructured $535 million offering of three-year senior notes during Thursday’s session. However, the deal had not priced as of press time.

RegionalCare Hospital Partners Holdings, Inc. and LifePoint Health, Inc. set price talk for their $1,575,000,000 offering of eight-year senior notes (Caa1/CCC+) with the deal expected to clear the market on Friday.

In the European primary market, Verisure and International Design Group SpA circulated talk for their euro-denominated offerings.

Groupe Ecore Holding SAS (Luxembourg) also joined the forward calendar with plans to start a roadshow Friday for a €255 million offering of five-year senior secured floating-rate notes.

The Canadian primary market also saw one deal price during Thursday’s session.

Parkland Fuel Corp. priced an upsized C$300 million issue of 8.2-year senior notes (S&P: BB/DBRS: BB).

Meanwhile, the secondary space was soft on Thursday after firming earlier in the week.

The energy sector remained under pressure as crude oil futures dropped into bear market territory and nearly wiped out their gains for the year.

However, Mednax, Inc.’s newly priced split-rated 6¼% senior notes due Jan. 15, 2027 (Ba2/BBB-) were putting in a strong performance in the secondary space with the notes trading above their issue price.

Earnings-related news continued to dominate trading activity in the secondary space with several names declining in high-volume activity.

Bombardier Inc.’s 7½% senior notes due 2025 were volatile during Thursday’s session. While trading up early, the notes stood poised to close the day at their lowest levels year-to-date.

Party City Holdings Inc.’s junk bonds were also down in active trading, shaving off more than 1 point after an earnings miss.

Meanwhile, high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw $1.04 billion in inflows for the week ended Nov. 7, according to fund-flow statistics generated by AMG Data Services Inc.

The weekly inflow nearly wiped out losses from the outflow of $1.043 billion that left the space in the week ended Oct. 31 and came after one of the largest daily inflows for high-yield ETFs on record.

RegionalCare/LifePoint talk 9% to 9¼%

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

Official talk came 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 Friday.

HC2 Holdings was expected to price its restructured $535 million offering of three-year senior secured notes (Caa1/B-) on Thursday.

However, the deal, which has had an extended stay in the market, had not priced as of press time.

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

The HC2 Holdings notes were talked Wednesday with an 11½% coupon at a reoffer price of 98.75 to yield 12%.

Verisure, IDG on deck

In the European primary market, Verisure set price talk on its €1,012,000,000 secured loan and notes debt package.

A €300 million tranche of 4.5-year senior secured notes (B1/B) is talked in the 3¾% area.

A €712 million term loan B (B1/B) is talked at a 325 basis points to 350 bps spread to Euribor, a 0% Euribor floor, at 99.75 to par.

The bonds and loan are both being issued by Verisure Holding AB and are set to price Friday.

International Design Group SpA circulated initial price talk in its €720 million two-part offering of seven-year senior secured notes (B2/B/B+).

The deal is coming in tranches of fixed-rate notes with initial price talk in the low-to-mid 6% area and floating-rate notes with initial talk that would bring the rate 50 bps inside that of the fixed-rate notes.

Tranche sizes remain to be determined.

The buyout deal is expected to price Friday.

Ecore roadshow

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 sole 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.

Parkland Fuel upsizes

The Canadian dollar-denominated high yield primary market generated news on Thursday.

Parkland Fuel Corp. priced an upsized C$300 million issue of 8.2-year senior notes (S&P: BB/DBRS: BB) at par to yield 6½%.

The issue size was increased from C$250 million.

The debt refinancing deal priced at talk, a market source said.

NBF and CIBC World Markets were the bookrunners.

Mednax trades up

Mednax’s newly priced 6¼% senior notes due 2025 were performing well on a soft day in the secondary space.

While the notes came in from Wednesday’s closing price of par 5/8, they were still trading above their issue price in active trading.

The notes were poised to close Thursday’s session at par 3/8, a market source said.

More than $24 million of the bonds were on the tape by the late afternoon.

Mednax priced a downsized $500 million issue of the 6¼% notes at par in a Wednesday drive-by.

The deal was decreased from the initially planned amount of $750 million.

The yield printed on top of yield talk but wide of initial guidance that was set in the 6% area.

Bombardier volatile

Bombardier’s 7½% senior notes due 2025 were in focus in the secondary space with the notes dropping below par for the first time in 2018.

The notes “were all over the place,” in active trading on Thursday, a market source said.

The notes traded as high as 101 7/8 early in the session but had dropped as low as 98 5/8 by the afternoon.

The notes stood poised to close the day at 99 1/8, sources said.

They closed Wednesday at 101.

More than $36 million of the bonds were on the tape during Thursday’s session.

While the Montreal-based plane and train manufacturer more than doubled its EBIT in the third-quarter, the notes were under pressure on lowered cash flow projections.

Bombardier is cutting jobs and selling its Q Series turboprop program and business-jet flight and technical training activities, Bloomberg reported.

However, the company projects it will break even in 2018 and will break even plus or minus $250 million in 2019, stifling optimism about a turnaround.

Party misses

Party City’s junk bonds were also under pressure on Thursday after a third quarter earnings miss.

The party supply retailer’s 6 5/8% senior notes due 2026 (B1/B-) were second only to Bombardier’s notes in trading volume.

The 6 5/8% notes traded down 1 1/8 point to close the day at 95 7/8, a market source said. More than $34 million of the bonds were on the tape by the late afternoon.

Thursday marked the lowest level for the notes since they hit the market.

Party City priced a $500 million issue of the 6 5/8% notes at par in late July.

The notes traded as high as 101 the first days of October. However, they steadily traded down throughout the month.

Party City’s 6 1/8% senior notes due 2023 also shaved off 1 1/8 point in active trading. The notes dropped below par to 99 3/8, according to a market source.

More than $20 million of the bonds were on the tape by the late afternoon.

Party City missed across the board in its third quarter earnings report with guidance also coming in below expectations.

The company reported third quarter earnings of 8 cents a share versus analyst expectations for earnings of 17 cents per share.

The company reported revenue of $553 million versus analyst expectations for revenue of $591.8 million.

Party City also lowered its guidance for 2018. It is now expecting earnings per share of $1.60 to $1.65 on revenue of $2.43 billion to $2.46 billion.

Analysts were expecting earnings per share of $1.83 on revenue of $2.48 billion.

Big ETF inflow on Wednesday

High-yield ETFs saw a massive $1.09 billion inflow of cash on Wednesday, according to a 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.

The combined funds saw $1.04 billion of net inflows in the week to Wednesday's close, according to Lipper US Fund Flows.

Indexes mixed

Indexes were mixed on Thursday after all posted gains for the three previous sessions.

The KDP High Yield Daily index was up 3 bps to close Thursday at 69.42 with the yield now 6.24%.

The index was up 12 bps on Wednesday, 9 bps on Tuesday and 8 bps on Monday.

The index dropped 13 bps on the week last week after a 60 bps drop during the Oct.22 week.

The ICE BofAML US High Yield index was up 4.7 bps with the year-to-date return now 1.513%.

The index was up 28.8 bps on Wednesday, 11.4 bps on Tuesday and 5.8 bps on Monday.

The index gained 24.4 bps on the week last week after a 74.5 bps slide the week before.

The CDX High Yield 30 index dropped 24 bps to close Thursday at 106.22.

The index gained 37 bps on Wednesday, 18 bps on Tuesday and 23 bps on Monday. The index climbed 89 bps last week after a 92 bps drop the week before.

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