Primary prices $4.15 billion in seven tranches; HCA upsizes to $2.7 billion; Sprint skyrockets

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 11 – The domestic high-yield primary market was on fire on Tuesday with six issuers pricing $4.15 billion in seven tranches and one issuer launching a deal that had been upsized by $1.7 billion.

Post Holdings Inc. priced $1.25 billion; Buckeye Partners LP priced $1 billion in two tranches; APX Group, Inc. priced $600 million; LifePoint Health, Inc. priced $600 million; Brookfield Residential Properties, Inc. priced $500 million; and Cimpress plc priced a $200 million add-on.

While final terms were not available as of press time, HCA Healthcare, Inc. launched a $2.7 billion offering that had been upsized from $1 billion.

Meanwhile, the secondary space was firm on Tuesday with new issuance in focus.

While the deals to price during Tuesday’s session were still finding their levels, some saw a strong break while others largely hovered at par.

The deals to price on Monday remained active in the secondary space with Valvoline Inc.’s 4¼% senior notes due 2030 (Ba3/BB) and Block Communications, Inc.’s 4 7/8% senior notes due 2028 (B1/B+) putting in strong performances.

However, United Rentals (North America), Inc.’s 4% senior notes due 2030 (Ba3/BB-) saw a lackluster reception.

While the secondary space was flooded with new issuance on Tuesday, one name overshadowed the new deal activity – Sprint Corp.

Sprint’s junk bonds skyrocketed in high-volume activity on Tuesday with its longer duration notes gaining upwards of 20 points following a court ruling in favor of the T-Mobile/Sprint merger.

Torrid pace in the primary

The pace of the high-yield primary market remained torrid on Tuesday.

Post Holdings priced an upsized $1.25 billion issue of 10.25-year senior notes (B2/B+) at par to yield 4 5/8% in a drive-by.

The issue size increased from $1 billion.

The yield printed in the middle of yield talk in the 4 5/8% area. Initial talk had the deal coming to yield in the 4¾% area.

The offer played to $2 billion-plus of orders, a source said.

While the notes were still finding their levels, they fell flat after breaking for trade, a market source said.

The 4 5/8% notes were marked at par bid, par ½ offered in the late afternoon.

Buckeye Partners priced $1 billion of senior notes (B1/BB/BB) in two bullet tranches.

The deal included $500 million of five-year notes that priced at par to yield 4 1/8%. The yield printed tight to price talk in the 4¼% area. Initial guidance was in the low-to-mid 4% area.

Buckeye Partners also priced $500 million of eight-year notes at par to yield 4½%.

The yield printed at the tight end of the 4½% to 4¾% yield talk, and tight to initial guidance in the mid-to-high 4% area.

The deal was heard to be two-times oversubscribed across both tranches.

The 4 1/8% senior notes due 2025 were marked at par ¼ bid, par ¾ offered after breaking for trade, according to a market source.

The 4½% senior notes due 2028 were seen at par ½ bid, 101 offered.

APX Group, the parent of Vivint Inc., priced an upsized $600 million issue of seven-year senior secured notes (B2/B-) at par to yield 6¾%.

The issue size increased from $500 million.

The yield printed on top of final yield talk and tight to earlier talk of 6¾% to 7%.

The notes saw a strong break and were quoted at 101 bid, 101¼ offered in the late afternoon.

LifePoint Health priced a $600 million issue of seven-year senior secured notes (B1/B+) at par to yield 4 3/8% in a drive-by.

The yield printed at the tight end of yield talk in the 4½% area. Initial guidance had the notes coming to yield 4¾% to 5%.

The deal was six-times oversubscribed at 4¾%, according to a market source. Most investors remained in the deal when the 4½% area price talk came out, the source said.

Brookfield Residential Properties priced a $500 million issue of 10-year senior notes (B1/BB-) at par to yield 4 7/8% in a drive-by.

The yield printed at the tight end of the 4 7/8% to 5% yield talk, and tight to initial talk in the 5% area.

Brookfield Residential Properties was heard to be playing to $1.8 billion of orders, early Tuesday afternoon, according to a trader who added that there was $300 million of reverse inquiry in the deal.

Ireland's Cimpress priced a $200 million add-on to its 7% senior notes due June 15, 2026 (existing ratings B2/B) at 105.25 on Tuesday.

Initial price talk was in the 104.5 area.

If the 105.25 reoffer price was a healthy jump from the 104.5 early talk, the new Cimpress paper made an even bigger bound in late Tuesday trading, according to a New York-based bond trader who saw a late print at 107 bid.

Also on Tuesday, HCA Healthcare was in the market with a big offering of 10.5-year senior bullet notes that upsized to $2.7 billion from $1 billion, and launched at 3½%, at the wide end of the 3¼% to 3½% price talk.

The bonds allocated late Tuesday. However, no final terms had circulated ahead of the market close, a trader said.

Valvoline strong

Valvoline’s 4¼% senior notes due 2030 were putting in a strong performance in the aftermarket on Tuesday.

The notes were marked at 101¾ bid, 102 1/8 offered late Tuesday afternoon. While the bid side may have faded as the session progressed, the notes were still strong, a market source said.

In a deal that was heard to be heavily oversubscribed, the manufacturer and distributor of automotive oil priced an upsized $600 million issue of the 4¼% notes at par in a Monday drive-by.

The yield printed on top of final price talk and tight to earlier talk in the 4 3/8% area.

The issue size increased from $500 million.

The deal was heard to have played to $3.5 billion of demand.

Block Communications trades up

In a deal that was heavily oversubscribed, Block Communications’ 4 7/8% senior notes due 2028 were also in high demand in the secondary space.

After a strong break on Monday and some high trades early in the session, the notes were losing steam heading into the afternoon.

However, they were still changing hands at a large premium to their issue price.

The notes were marked at 101 1/8 to 101¼ bid, and 101 5/8 to 101¾ offered heading into the market close.

They were marked at 101¾ bid early in the session with some sells around 102, a source said.

Block Communications priced a $300 million issue of the 4 7/8% notes at par in a Monday drive-by.

The yield printed at the tight end of talk in the 5% area.

The deal was heard to be playing to $1.5 billion in orders.

United Rentals flat

United Rentals 4% senior notes due 2030 saw a lackluster reception in the secondary space.

The 4% notes started the session with a nominal premium, which faded as the afternoon progressed, a market source said.

The notes were at par ¼ bid early in the session. However, they were marked at 99 7/8 bid, par offered in the late afternoon.

There was a lot of dealer to dealer trading activity in the issue, a source said.

United Rentals priced a $750 million issue of the 4% notes at par in a Monday drive-by.

The yield printed at the tight end of yield talk in the 4% area and tight to the 4% to 4¼% initial talk.

While the notes fell flat in the aftermarket, they were heard to be playing to $1.5 billion of demand during bookbuilding.

Sprint skyrockets

While new paper flooded the secondary space on Tuesday, Sprint was the story of the day. The longer duration notes skyrocketed upwards of 20 points, a market source said.

Sprint’s 8¾% notes due 2032 traded as high as 139 before closing the day at 138¾, sources said.

They were trading at 113 at Monday’s close.

Sprint’s 6 7/8% senior notes due 2028 stood poised to close the day just north of 120. They were changing hands just shy of 102 on Monday.

Sprint’s recently priced 7¼% senior notes due 2028 gained about 1¾ point on Tuesday to change hands at 101.

The 7¼% notes were trading up to their 101 redemption price in the event of a change of control.

Sprint priced a $1 billion issue of the 7¼% notes at 99 on Jan. 30.

Sprint’s junk bonds were in focus after the wireless operator cleared one of the final obstacles to its merger with T-Mobile.

A federal judge ruled in favor of the T-Mobile/Sprint merger in a decision filed on Tuesday, ending the antitrust suit brought by the attorneys general of several states.

The merger now only needs the approval of the California Public Utilities Commission to close.

Funds see $207 million Monday outflows

The dedicated high-yield bond funds sustained $207 million of net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained $247 million outflows on the day.

Actively managed high-yield funds were positive on the day, posting $40 million of inflows on Monday, the source said.

Indexes gain

Indexes were on the rise on Tuesday after a mixed start to the week.

The KDP High Yield Daily index rose 3 points to close Tuesday at 71.57 with the yield now 4.9%. The index shaved off 1 bp on Monday.

The ICE BofAML US High Yield index gained 29.5 bps with the year-to-date return now 0.951%. The index was up 2.3 bps on Monday.

The CDX High Yield 30 index gained 13 bps to close Tuesday at 109.32. The index was up 14 bps on Monday.

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