Blackboard, LPL, Wesco deals eyed; Grubhub declines; Community Health mixed

By Cristal Cody and James McCandless

Tupelo, Miss., Oct. 31 – Thursday was quiet for new paper in the high-yield market with earnings blackout periods in force, but there is promise of more new paper entering the space soon.

This week is the busiest week of the third-quarter reporting season with nearly 200 companies reporting results, a market source said.

However, Blackboard Inc., LPL Financial Holdings Inc. and Wesco Aircraft Holdings, Inc. were all being actively marketed.

Week to date, $4.5 billion of new junk bonds have priced.

In that new paper, recently priced notes by Ford Motor Credit Co. LLC, Royal Bank of Scotland Group plc and TransDigm Inc. were all heavily traded.

Food delivery name Grubhub Inc.’s issues declined after receiving a ratings downgrade amid doubts cast on its profitability.

Hospital operator Community Health Systems, Inc.’s paper varied in direction as its ratings were lowered.

On Thursday, Lipper US Fund Flows reported high-yield funds had inflows of $940 million for the past week ended Wednesday.

Deals being marketed

Several high-yield issuers marketed new bond deals on Thursday.

Blackboard Inc. is expected to price $243 million of second-lien notes (Caa2/CCC) and a $500 million bank loan.

Price talk on the notes is in the low 10% original issue discount area, a source said on Thursday.

Recent talk had the bonds coming with an 11%-handle yield.

Also in the marketing stage is an issue of $400 million of senior notes due 2027 from LPL Financial Holdings Inc.

In addition, Wesco Aircraft Holdings, Inc. is offering $1,575,000,000 of high-yield notes that includes $1 billion of seven-year senior secured notes (B3/B) and $575 million of eight-year senior unsecured notes (Caa2/ CCC+) in a roadshow set to continue through Friday.

Early guidance on the seven-year notes is in the high 7% area, while early guidance on the eight-year senior unsecured notes is in the 350-basis points area behind the secured notes.

Split-rated recent issues

In the secondary market, Royal Bank of Scotland Group plc’s $750 million of split-rated fixed-to-fixed-rate reset subordinated notes due Nov. 1, 2029 (Baa3/BB+/A-) remained better than issuance, a source said.

The notes were said to close at 101 bid.

Royal Bank of Scotland Group priced the notes on Tuesday at par to yield a spread of 210 bps over Treasuries.

The notes had settled at 100½ bid after entering the secondary market on Tuesday.

Ford Motor Credit Co. LLC’s $1.5 billion of 4.063% notes due Nov. 1, 2024 traded wrapped around issuance, a market source said.

The notes landed at 100½ bid.

The company (Ba1/BBB-/BBB) sold the notes on Tuesday at par to yield a spread of 240 bps over Treasuries.

TransDigm in secondary

Cleveland-based aircraft component producer TransDigm’s new 5½% senior subordinated paper due 2027 held level in the 99¾ area.

The upsized $2.65 billion Tuesday drive-by priced at par.

Grubhub declines

Meanwhile, Grubhub’s notes saw declines, market sources said.

The 5½% senior notes due 2027 shed ½ point to close at 93¾ bid.

On Thursday, S&P Global Ratings issued a downgrade for the Chicago-based food delivery company.

The agency lowered its overall rating to B+ from BB and also lowered the rating on its senior notes, saying that the name’s financial credit measures will weaken in the coming year and the downgrade reflects the current uncertainty around its profitability.

While the company met analyst expectations in its third-quarter earnings report with a 27 cents per share profit, it revised its guidance to reflect its expectation that future growth would be weaker than previously thought.

Community Health flat, down

Health care name Community Health’s issues varied in direction, traders said.

The 6 7/8% senior notes due 2022 held level at 77¾ bid. The 8 1/8% senior secured notes due 2024 shed ¼ point to close at 76¾ bid.

S&P Global Ratings issued a downgrade for the Franklin, Tenn.-based hospital operator on Thursday.

The agency lowered the company to CC from CCC+ in reaction to the name’s announcement that it wants to exchange $2.6 billion of notes for 8% senior secured notes due 2027 and 6.875% senior unsecured notes due 2028.

The ratings on the notes were also lowered to CC.

Indexes lose

Two high-yield indexes showed sharp declines on Thursday.

The KDP High Yield Daily index dropped 24 basis points on Thursday, finishing the session at 70.96 with the yield rising to 5.47%.

The index dived 17 bps on Wednesday, tacked on 2 bps on Tuesday and picked up 3 bps on Monday.

The CDX High Yield 30 index shaved off 33.81 bps to end 107.1617.

The index fell 33.33 bps on Wednesday, dropped 33.23 bps on Tuesday and garnered 33.02 bps on Monday.

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