Junk: CHS/Community Health, VistaJet price; Southwestern weakens; Nordstrom pressured

By Paul A. Harris and Abigail W. Adams

Portland, Me., Jan. 20 – Six issuers priced single-tranche, junk-rated, dollar-denominated deals in the Thursday primary market session.

While the primary market continued to churn out new offerings, the volatility continued in the secondary space.

While the cash bond market again launched the day strong, late-day selling pressure erased early gains and again drove the market into negative territory.

While the market was up 1/8 to ¼ point early in the session, it closed the day down another ¼, sources said.

Southwestern Energy Co.’s 4¾% senior notes due 2032 (Ba3/BB/BB) continued to weaken in active trading alongside natural gas futures.

Nordstrom, Inc.’s junk bonds were also under pressure as investors turn negative on the retail sector.

Meanwhile, high-yield mutual and exchange traded funds saw another multibillion outflow with $2.139 billion leaving the space through Wednesday’s close, according to the Refinitiv Lipper US Fund Flow report.

After launching the year with inflows of $584 million, funds had outflows of $2.236 billion the previous week.

VistaJet lifts off

In the Thursday primary market, executions appeared unscathed by ongoing turbulence in the stock market.

Timing on three deals was accelerated. They had been flagged as Friday business when they were announced, but ended up pricing Thursday, instead.

Of the five deals for which information was widely available, all priced either inside of talk, at the tight ends of talk or in the middle of talk.

The session's marquee deal, from VistaJet, came upsized, and priced inside of talk on an accelerated timeline.

VistaJet priced an upsized $1 billion issue (from $800 million) of 6 3/8% eight-year senior notes (Caa1/B-/BB-) at par.

The deal attracted $4 billion of orders, and was heard to be completely circled up in reverse inquiry at its original $800 million size, sources said.

The bonds were trading at par 1/8 bid, par 3/8 offered, late Thursday, a trader said, adding that in early trading among Thursday's new issues VistaJet's new paper appeared the strongest.

CHS/Community Health Systems, Inc. priced the session's biggest deal, a $1.535 billion issue of 5¼% senior secured notes due May 15, 2030 (B2/B/BB-) at par, at the tight end of talk.

The deal was heard to be two-times oversubscribed early Thursday afternoon.

The notes were wrapped around the issue price going out on Thursday, a trader said, adding that people thought the deal looked cheap at 5 3/8%, which was the middle of final price talk.

Southwestern sputters

Southwestern Energy’s 4¾% senior notes due 2032 continued to weaken on Thursday with selling activity in the name increasing.

The 4¾% notes were off another ½ point to close the day at 103. There was $25 million in reported volume.

The notes have shaved off more than 1 point over the past week. They closed the previous week on a 104-handle.

The natural gas exploration and production company’s senior notes were coming in alongside natural gas futures.

Natural gas futures settled at $3.80, a decrease of 23 cents or 5.68%.

Nordstrom under pressure

Nordstrom’s senior notes were under pressure on Thursday as investors turned sour on the retail sector.

The luxury department store chain’s 5% senior notes due 2044 fell 2 points to 89½.

The 4 3/8% senior notes due 2030 traded down 1 5/8 points and stood poised to close the day at 97.

Nordstrom stock had its price target cut on Thursday.

Investors are heading into earnings season with low expectations for the retail sector, a source said.

Bed Bath & Beyond Inc.’s junk bonds nosedived following its third-quarter earnings report in early January.

Several other retailers have seen their stock downgraded or price target cut in anticipation of lower earnings.

Indexes

The KDP High Yield Daily index was again unchanged and closed Thursday at 64.87. However, the yield regained 1 basis point to close the day at 4.31%.

The index was also unchanged on Wednesday after falling 34 points on Tuesday.

The CDX High Yield 30 index shaved off another 27 basis points to close Thursday at 107.59. The index was down 15 bps on Wednesday and 37 bps on Tuesday.

© 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.