Morning Commentary: Tenet offers $4.2 billion notes; junk slips as global downturn eyed

By Paul A. Harris

Portland, Ore., Aug. 12 – In an otherwise quiet primary market Tenet Healthcare Corp. appeared Monday morning with a supersized $4.2 billion offering of senior secured first-lien notes (existing ratings Ba3/BB-) in two tranches.

The Barclays-led deal, staging as a drive-by, features 6.3-year notes with initial talk of 4¾% to 5%, and 8.2-year notes with initial talk of 5% to 5¼%. Tranche sizes are to be determined.

The Dallas-based health care company plans to use the proceeds to redeem senior secured first-lien notes maturing in 2020 and 2021.

Tenet had the new issue spotlight to itself Monday morning.

Although the active forward calendar opened the week empty, issuers are expected to appear, pending market conditions.

However, the present week is apt to be the last reasonably active one of the summer, with new issue activity expected to fall off in the run-up to the extended Labor Day holiday weekend, set to get underway following the Friday, Aug. 30 close, market sources say.

Junk slips

Against a backdrop of lower stock prices, junk bonds were down 1/8 point to ¼ point on Monday, according to a New York-based bond trader.

Apprehensions concerning the global economy, fed by a fusillade of erratic remarks on global trade emanating from the executive branch of the U.S. government, appeared to be the corrosive forces at work on investor sentiment, as the markets moved into the often-sluggish mid-August period.

High-yield ETF share prices were lower at mid-morning.

The iShares iBoxx $ High Yield Corporate Bd (HYG) share price was down 14 cents, or 0.16%, at $86.11 per share.

Bonds priced Friday by Clear Channel Outdoor Holdings, Inc. were unchanged in active Monday trading, according to a New York-based bond trader, who marked the Clear Channel Outdoor 5 1/8% senior secured notes due August 2027 (B1/B+) at par 1/8 bid, par 5/8 offered.

The $1.25 billion issue priced at par, at the tight end of the revised 5 1/8% to 5¼% yield talk. That talk had tightened from earlier official talk of 5¼% to 5½%. Early guidance was in the mid-5% area.

Elsewhere a pair of new issues that came Friday from Zurich-based Swissport Group Sarl – the 5¼% five-year senior secured notes (B3/B-) and the 9% 5.5-year senior unsecured notes (Caa2/CCC) – were trading at modest premiums to their par new issue prices on Monday morning, according to a buyside source in Europe.

The Swissport deal may have wrapped up major activity in the new issue market in Europe for the summer, a London-based debt capital markets banker said.

Meanwhile as crude oil prices continued to whipsaw on Monday, the California Resources Corp. 8% senior secured second-lien notes due December 2022, a big liquid issue employed by high-yield bond investors for the purpose of tracking crude oil prices, were down ¼ point at 56 bid, the New York trader said.

That paper was 74½ bid, 75 offered on July 3, according to a market source.

Although the barrel price of West Texas Intermediate crude for September 2019 delivery opened lower on Monday, it was staging a modest recovery at mid-morning, up a dime, or 0.18%, at $54.60.

Friday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Friday, according to a market source.

High-yield ETFs saw $285 million of inflows on the day.

Actively managed funds saw $50 million of inflows on Friday, the source said.

Last Thursday the market heard that the combined junk funds saw $4.07 billion of net outflows in the week to the Wednesday, Aug. 7 close, according to Lipper US Fund Flows.

It was the biggest weekly outflow since last October and the eighth biggest weekly outflow on record, the market source said.

© 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.