Studio City prices; Grief, TransDigm on tap; PG&E improves; HCA, Tenet Healthcare trade up

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 29 – One deal cleared the domestic high-yield primary market during Tuesday’s session with two more on tap for Wednesday.

Meanwhile, the European primary market’s forward calendar continued to build.

Studio City Co. Ltd. priced an upsized $600 million issue of five-year senior notes (B2/B+) at par to yield 7¼%.

TransDigm, Inc. reorganized its $3.7 billion offering (expected rating Ba3/B+/BB), upsizing one tranche and withdrawing another from the market.

Greif Inc. set official price talk for its $500 million offering of eight-year senior notes (B1/BB-).

Both deals are expected to price during Wednesday’s session.

In the European primary market, Parts Europe SA, formerly Autodis, joined the forward calendar with a €175 million amount of non-fungible senior secured floating-rate add-on notes due May 1, 2022 (expected B3/confirmed B).

Meanwhile, the secondary space was up about 1/8 point on Tuesday, which was a strong day for the energy sector with crude oil futures jumping to $53.31, an increase of 2.54%.

Pacific Gas Electric Co.’s senior notes were again in focus in the secondary space with the notes improving after the company filed for Chapter 11 bankruptcy.

HCA Inc.’s recently priced junk bonds were gaining strength on Tuesday after the company announced fourth-quarter earnings.

Tenet Healthcare Corp.’s recently priced 6¼% senior notes due 2027 were also gaining strength on Tuesday after the company announced the completion of the sale of three hospitals.

However, Albertsons Cos., Inc.’s recently priced 7½% senior notes due 2026 (B3/B+) dropped below par in active trading on Tuesday.

Studio City upsized

Studio City Co. launched and priced an upsized $600 million issue of five-year senior notes (B2/B+) at par to yield 7¼%.

The issue size increased from $425 million.

The yield printed tight to the 7¼% to 7 3/8% final price talk. Earlier talk was in the 7½% area.

The deal played largely to Asian investors and was trading just above par late Tuesday afternoon, sources said.

Joint bookrunner Deutsche Bank was the global coordinator. ANZ was also a joint bookrunner.

The Macau-based gaming and entertainment company plans to use the proceeds to help fund the tender offer for its 8½% senior notes due 2020 and for general corporate purposes.

TransDigm rejiggers, talks $3.7 billion

TransDigm talked an upsized $3.7 billion tranche of eight-year senior secured notes (expected rating Ba3/B+/BB) to yield in the 6 3/8% area.

The secured tranche was increased from $2.7 billion. At the same time a proposed $1 billion tranche of eight-year senior subordinated notes was withdrawn from the market.

Books close at 10 a.m. ET Wednesday, and the deal is set to price thereafter.

Morgan Stanley, Credit Suisse, Citigroup, Barclays, RBC, Credit Agricole, KCM, JP Morgan and PNC are joint bookrunners for the acquisition financing.

Greif talks 6½ % to 6¾%

Greif talked its $500 million offering of eight-year senior notes (B1/BB-) to yield 6½% to 6¾%.

Official talk comes tight to initial guidance in the 6¾% to 7% area, a trader said.

The Greif offer is said to be playing to orders four-times deal size, an investor said.

Books close at 5 p.m. ET Tuesday, and the notes are set to price late Wednesday morning.

Wells Fargo s the left bookrunner for the acquisition financing.

Parts Europe €175 FRN

Parts Europe SA, formerly Autodis, is in the market with a €175 million amount of non-fungible senior secured floating-rate add-on notes due May 1, 2022 (expected B3/confirmed B).

The deal, in the market via lead Goldman Sachs and BNP Paribas, is expected to price before the end of the Jan. 28 week.

The notes are co-terminus with the Autodis senior secured floating-rate notes due May 1, 2022. However, the new notes will not become fungible with the existing Autodis notes, the source said.

The Paris-based distributor of aftermarket spare parts for light vehicles plans to use the proceeds to repay bank debt, and redeem existing notes.

Pacific Gas & Electric improves

Pacific Gas & Electric’s senior notes were once again in focus in the secondary space with the notes improving after the company filed for Chapter 11 bankruptcy.

The 6.05% senior notes due 2034 were again the major volume mover in the secondary space.

The notes gained 2 points to close the day at 88 with more than $108 million of the bonds on the tape, according to a market source.

Pacific Gas & Electric’s 3.3% senior notes due 2027 rose ¾ point to 80½. More than $42 million of the bonds were in play during Tuesday’s session.

Pacific Gas & Electric’s 5 1/8% senior notes due 2043 rose 2 points to 82 with more than $22 million of the bonds on the tape by the late afternoon, according to a market source.

PG&E and its primary subsidiary Pacific Gas & Electric filed for Chapter 11 bankruptcy on Tuesday and is seeking court approval for $5.5 million in debtor-in-possession financing. (See related article in this issue).

The bankruptcy filing comes after a consortium of investors proposed a $4 billion financing package that would have included convertible bonds to stave off the bankruptcy.

HCA trades up

HCA’s recently priced junk bonds were trading up after the company reported fourth-quarter earnings on Tuesday.

HCA’s 5 5/8% senior notes due 2028 were quoted at 101¾ bid, 102¼ offered, a market source said.

The notes traded up about 3/8 point to close the day at 102. More than $17 million of the bonds were in play during Tuesday’s session.

The 5 5/8% were quoted at 101 5/8 bid, 102 1/8 offered on Monday.

HCA’s 5 7/8% senior notes were quoted at 102¾ bid, 103¼ offered on Tuesday.

They traded up ¾ point to close the day at 103¼.

More than $13 million of the bonds changed hands during Tuesday’s session.

The 5 7/8% notes were quoted at 102 3/8 bid, 102 7/8 offered on Monday.

The bonds were trading up following a top and bottom line earnings beat.

HCA reported fourth-quarter non-GAAP earnings per share of $2.99 versus analyst expectations for earnings per share of $2.55.

HCA reported revenue of $12.27 billion, which beat analyst expectations for revenue of $160 million.

Adjusted EBITDA for the fourth quarter was $2.508 billion, an increase of 6.2% year-over-year.

HCA priced an upsized $1.5 billion of senior notes in two tranches on Jan. 18, which included a $1 billion issue of the 5 7/8% notes that priced at par and a $500 million add-on to its 5 5/8% senior notes due 2028, which priced at 99 to yield 5.761%.

Tenet Healthcare trades up

Tenet Healthcare’s 6¼% senior notes due 2027 were also gaining strength on Tuesday after the company announced the completion of the sale of some of its assets.

The 6¼% notes rose 5/8 point to par 5/8, according to a market source. More than $26 million of the bonds were on the tape by the late afternoon.

Tenet Healthcare announced that it had completed the sale of three Chicago-area hospitals to Pipeline Health LLC on Tuesday.

The three hospitals were purchased for $70 million, according to an 8-K filing with the Securities and Exchange Commission.

Albertsons below par

Albertsons 7½% senior notes due 2026 dropped below par in active trading on Tuesday.

The notes were down 3/8 point to close the day at 99½, according to a market source.

More than $22 million of the bonds changed hands during Tuesday’s session.

The notes have largely been wrapped around par since pricing on Jan. 22.

Albertsons priced an upsized $600 million issue of the 7½% notes at par.

Monday inflows

The daily cash flows of the dedicated high- yield bond funds were positive on Monday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs saw $191 million of inflows on the day.

Actively managed high- yield funds saw $120 million of inflows on Monday.

Indexes gain

Indexes were on the rise on Tuesday after launching the week with losses.

The KDP High Yield Daily index rose 2 basis points to close Tuesday at 68.79 with the yield now 6.48%.

The index was down 3 bps on Monday after a cumulative drop of 12 bps on the week last week.

The ICE BofAML US High Yield index was up 15.5 bps on Tuesday with the year-to-date return 3.893%.

The index dropped 16.7 bps on Monday after a cumulative 1.5 bps drop on the week last week.

The CDX High Yield 30 index climbed 8 bps to close Tuesday at 105. The index dropped 22 bps on Monday.

The index saw a cumulative gain of 36 bps on the week last week.

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