LifePoint prices; Ardagh Packaging dominates; Tenet Healthcare gains; Continental Resources jumps

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 6 – The domestic high-yield primary market launched the new week with another new deal clearing the market.

LifePoint Health, Inc. priced an upsized $600 million issue of five-year senior secured notes (B1/B) in a Monday drive-by.

It is the sixth deal junk-rated deal to price since last the primary market returned to action last week.

Meanwhile, it was a strong day for the secondary space with the market, in general, up 2 to 3 points.

However, there continued to be dramatic price swings in certain names, a byproduct of the lack of liquidity in the space, a market source said.

With the primary market once again active, new paper was the focus of trading activity.

Ardagh Packaging’s newly priced 5¼% senior secured notes due 2025 (B1/BB/BB+) dominated activity in the secondary space with the notes trading at a premium to their issue price.

Tenet Healthcare Corp.’s recently priced 7½% first-lien senior secured notes due 2025 (B1/BB-/B+) continued their upward momentum in active trading.

Continental Resources Inc.’s junk bonds were among the major gainers of Monday’s session.

Sinclair Broadcast Group Inc.’s two tranches of senior notes issued by Diamond Sports Group LLC and Diamond Sports Finance Co. dropped in active trading with broadcasters, in general, expected to take a hit due to a decrease in advertising revenue.

LifePoint, a blowout

As equities staged a massive Monday rally, with the Dow Jones industrial average advancing 7¾%, LifePoint Health had the new issue stage to itself.

The Brentwood, Tenn.-based health care provider priced an upsized $600 million issue of five-year senior secured notes (B1/B) at par to yield 6¾% in a drive-by.

The issue size increased from $500 million.

The yield printed 12.5 basis points inside of yield talk in the 7% area.

Initial guidance was in the mid 7% area, according to bond trader who added that the quick-to-market Monday deal was a blowout, playing to an order book that ended up being oversubscribed by as much as five times the size of the offer.

LifePoint Health is the sixth issuer to price speculative grade notes since the high-yield primary reopened after massive volatility closed it in early March, and kept it closed for nearly a month.

All six deals have come with five-year maturities.

All six have been priced in drive-bys.

All six issuers are well-known to the high yield investment community.

Five of the six deals have come in the form of secured paper.

All six of the issuers saw substantial increases to the costs of capital they might have incurred had they come to market in late 2019, sources say.

Ardagh dominates

Ardagh Packaging’s 5¼% senior notes due 2025 dominated activity in the secondary space with the notes trading at a large premium to their issue price.

The notes were changing hands around par ½ early in the session but continued to gain strength as the day progressed.

The notes were wrapped around 101 heading into the market close, a market source said.

With more than $65 million in reported volume, the notes were the most actively traded during Monday’s session.

Ardagh priced a $500 million issue of the 5¼% notes at par in a Friday drive-by.

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

Tenet gains

Tenet Healthcare’s recently priced 7½% first-lien senior secured notes due 2025 continued their upward momentum in active trading on Monday.

The 7½% notes rose 1¼ points to close Monday at 102¾ with more than $22.5 million in reported volume, a market source said.

The notes were gaining alongside the broader market, a source said.

They have performed well since breaking for trade, which sources attributed to the high coupon for the secured paper.

Tenet priced an upsized $700 million issue of the 7½% notes at par last Thursday.

Continental Resources gains

Continental Resources senior notes were among the major gainers of Monday’s session.

The 4 3/8% senior notes due 2028 were the most active in the capital structure.

The notes gained more than 10 points to close the day at 60 1/8, according to market source.

While volume was light, the 5% senior notes due 2022 rose 7½ points to 75½ and the 3.8% senior notes due 2024 rose 6½ points to 61½.

The Oklahoma City-based oil and natural gas production company was gaining even as crude oil futures sank with a meeting between OPEC and Russia was pushed to later in the week.

The barrel price of WTI crude oil for May delivery sank to $26.08, a decrease of $2.26 or 7.97%.

However, Continental Resources announced in mid-March that it was slashing its capital budget by 55% and reducing its rigs in response to depressed commodity prices.

The company announced that it expects to be cash flow neutral with WTI under $30 per barrel.

Diamond Sports drops

Diamond Sports junk bonds dropped in active trading on Monday.

Diamond Sports 6 5/8% senior unsecured notes due 2027 were down 6½ points to 50.

The 5 3/8% senior secured notes due 2026 dropped 3¼ points to 70¾, a source said.

The 6 5/8% senior notes due 2027 are a high beta name that typically trades with the market.

However, Diamond Sports’ secured and unsecured tranches were both posting losses, despite the gains in the broader market, as broadcasters brace for declining revenue due to a reduction in advertising, a source said.

The Sinclair Broadcasting subsidiary will be particularly hard hit due to the cancellation of public sporting events due to the coronavirus pandemic.

Indexes gain

Indexes launched the week on firm footing after all posted cumulative losses the previous week.

The KDP High Yield Daily index was up 17 basis points to close Monday at 60.25 with the yield now 8.4%.

The index posted a cumulative loss of 32 bps on the week last week.

The ICE BofAML US High Yield index gained 32.9 bps with year-to-date returns now negative 14.906%.

The index posted a cumulative loss of 114.8 bps on the week last week.

The CDX High Yield 30 index gained 283 bps to close Monday at 91.95.

The index posted a cumulative loss of 584 bps on the week last week.

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