Gogo, Natural Resource, Melco, Vizient price; Vizient trades up; Sprint, HCA Healthcare under pressure

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 17 – The domestic high-yield primary market saw an active session on Wednesday with the forward calendar clearing prior to the holiday weekend.

Gogo Inc. priced a $905 million issue of 9 7/8% five-year senior secured notes (B3/CCC+) at 99.512 to yield 10%.

Natural Resource Partners LP priced an upsized $300 million issue of six-year senior notes (Caa1/BB-) at par to yield 9 1/8%.

Melco Resorts & Entertainment Ltd. priced a $500 million issue of senior notes due 2026 (Ba2/BB) at par to yield 5¼%.

And Vizient, Inc. priced a $300 million issue of eight-year senior notes (B3/existing B-) at par to yield 6¼%.

With new paper from Vizient breaking for trade in the early afternoon, the new paper dominated activity in the secondary space and soared above its issue price.

Meanwhile, HCA Healthcare Inc.’s senior notes slid in high-volume activity with investors expressing fear over growing traction for Medicare-for-all proposals.

Sprint Corp.’s junk bonds were also under pressure following media reports the merger with T-Mobile was in jeopardy.

Gogo at a discount

Gogo priced a $905 million issue of 9 7/8% five-year senior secured notes (B3/CCC+) at 99.512 to yield 10%.

The yield printed at the wide end of the 9¾% to 10% yield talk. Initial guidance was in the high 9% to 10% area.

Morgan Stanley & Co. LLC and J.P. Morgan Securities LLC were the joint bookrunners.

The Chicago-based provider of in-flight connectivity and wireless entertainment services plans to use the proceeds to fully redeem its 12½% senior secured notes and for general corporate purposes, including the full or partial redemption of its 3¾% convertible notes.

Natural Resource Partners upsizes

Natural Resource Partners priced an upsized $300 million issue of six-year senior notes (Caa1/BB-) at par to yield 9 1/8% on Wednesday, according to market sources.

The yield printed in the middle of the 9% to 9¼% yield talk and in line with initial guidance in the 9% area.

The deal underwent covenant changes bearing upon how the company may incur additional debt.

Citigroup Global Markets Inc. was the sole bookrunner.

The Houston-based master limited partnership plans to use the proceeds to refinance its 10½% senior notes due 2022.

Melco comes tight

Melco Resorts & Entertainment priced a $500 million issue of senior notes due 2026 (Ba2/BB) at par to yield 5¼% on Wednesday, according to market sources.

The yield printed at the tight end of the 5¼% to 5½% price talk.

Deutsche Bank and ANZ were the joint bookrunners.

The Macau-based owner and operator of gaming and resort properties plans to use the proceeds to pay down its revolving credit facility under the Melco Resorts (Macau) Ltd. amended and restated credit agreement.

Vizient comes inside talk

Vizient priced a $300 million issue of eight-year senior notes (B3/existing B-) at par to yield 6¼% on Wednesday, according to market sources.

The yield printed 12.5 basis points inside of yield talk in the 6½% area. Initial guidance was in the high 6% area.

J.P. Morgan Securities LLC, Barclays, BofA Merrill Lynch, Fifth Third, Goldman Sachs & Co., Morgan Stanley & Co., MUFG, SunTrust Robinson Humphrey and Wells Fargo Securities LLC were the joint bookrunners.

The Irving, Tex.-based member-driven health care performance company plans to use the proceeds, along with proceeds from its $500 million term loan, to refinance debt.

Vizient trades up

New paper from Vizient was in focus in the secondary space with the 6¼% notes skyrocketing after breaking for trade.

The notes rose more than 2½ points, a market source said. They were changing hands just north of 102½ in the late afternoon with more than $63 million of the bonds on the tape.

HCA Healthcare slips

HCA Healthcare saw high-volume activity in the secondary space on Wednesday with the notes trading down slightly amid jitters about Medicare-for-all proposals.

HCA’s 5 5/8% senior notes due 2028 slid 3/8 point.

The notes were changing hands at 105½ with about $28 million on the tape by the late afternoon, according to a market source.

HCA’s 5 7/8% senior notes due 2029 slid ¾ point. The notes stood poised to close the day at 106½. More than $28 million bonds were in play on Wednesday.

HCA’s capital structure has been under pressure over the past few days with investors concerned about the impact of Medicare-for-all proposals on the bottom line of hospital operators, a market source said.

Sprint under pressure

Sprint’s junk bonds were under pressure on Wednesday amid concerns about a roadblock in the wireless service provider’s merger with T-Mobile.

While Sprint’s 7 7/8% senior notes due 2023 were largely flat in high-volume activity, its other bonds were taking a hit.

The 7 7/8% notes stood poised to close the day at 104¾ with about $35 million bonds on the tape.

Sprint’s 7 1/8% senior notes due 2024 dropped ¾ point and were changing hands around 101¾ in the late afternoon.

The 6 7/8% senior notes due 2028 dropped 1¾ point to 96¼, according to a market source.

The notes were trading down as news reports surfaced about government pushback to the planned merger of Sprint and T-Mobile.

The Wall Street Journal reported the Department of Justice’s antitrust division would unlikely approve the merger as it is currently structured.

Mixed Tuesday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Tuesday, the most recent session for which data was available at press time, according to an investor.

High-yield ETFs sustained $29 million of outflows on the day.

Actively managed high-yield funds saw $30 million of inflows on Tuesday, the source said.

Indexes dip

Indexes dipped on Wednesday on a soft day for the secondary space.

The KDP High Yield Daily index slid 1 basis point to close Wednesday at 70.58. However, the yield was flat at 5.72%.

The index was flat on Tuesday but gained 5 bps on Monday after a cumulative gain of 18 bps on the week last week.

The ICE BofAML US High Yield index dipped 6.6 bps with the year-to-date return now 8.605%.

The index rose 7.7 bps on Tuesday and was up 1.9 bps on Monday after a cumulative gain of 69.4 bps on the week last week.

The index shot past 8% year-to-date returns on April 8 after only recently surpassing the 7% threshold on March 26 and passing 6% year-to-date returns on March 11.

The CDX High Yield 30 index dropped 9 bps to close Wednesday at 107.56. The index dropped 8 bps on Tuesday after gaining 4 bps on Monday.

The index saw a cumulative gain of 68 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.