Primary prices $2.3 billion in five tranches; Bausch + Lomb on deck; broadcasters gain

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 11 – The dollar-denominated primary market saw four high-yield issuers raise a total of $2.35 billion in a combined five tranches on Monday.

It was the first session to top $2 billion in over a month.

Monday’s biggest deal was a $1 billion two-parter from US Foods, Inc.: $1 billion of senior notes (B2/BB-) that came as $500 million of five-year notes priced at par to yield 6 7/8% and $500 million of 8.3-year notes that priced at par to yield 7 ¼%.

Initial talk on the five-year notes was in the low 7% area, while the 8.3-year notes were whispered 3/8% above that.

As talk tightened there were a considerable number of drops, a sellside source said.

All four of Monday’s issuers brought drive-bys. All five of their tranches priced at the tight ends of talk.

One deal upsized.

NFP Corp. priced an upsized $350 million issue (from $300 million) of eight-year senior secured notes (B1/B/BB-) at par to yield 8½%.

Monday was the biggest day in the dollar-denominated new-issue market since June 22, which saw $4.24 billion price in five tranches, which included $2.7 billion from Civitas Resources Inc., and the $800 million Windsor Holdings III, LLC (Univar Solutions Inc.) deal.

The active forward calendar also grew on Monday.

Bausch + Lomb Corp. started a roadshow on Monday for a $1.4 billion offering of Bausch + Lomb Escrow Corp. senior secured notes due 2028, in the market with initial guidance in the high-8% area.

At the time Bausch + Lomb announced the offer the order book was already deal size, a trader said.

Meanwhile, it was a quiet day in the secondary space as market players awaited the deals in the pipeline to break for trade.

While the cash bond market notched nominal gains on Monday, outside of new issues, few were making moves ahead of the release of the Consumer Price Index report on Wednesday, a source said.

Many were awaiting the key piece of inflationary data to gauge the Fed’s data-driven next move.

Topical news remained the driver of activity as the market awaited the slew of drive-by deals to price.

US Foods’ 6¼% senior notes due 2025 (Ba3/BB+) made large gains with the notes trading up to their anticipated takeout price as the company prepped its refinancings.

Broadcasters that were battered over the past week were also on the rise after Charter and Disney resolved their carriage fee dispute.

Gray Television, Inc.’s senior notes (B3/B) and Nexstar Media Group Inc.’s senior notes (B2/BB+) were among the major gainers of Monday’s session as the risk-off sentiment toward the sector subsided.

US Foods in focus

US Foods’ 6¼% senior notes due 2025 were in focus on Monday as the company prepped its new offering to refinance its outstanding notes.

The 6¼% notes jumped 1 3/8 point to close the day wrapped around 101½, a source said.

There was $25 million in reported volume.

The notes were trading up to their expected takeout price with the notes callable at par plus 25% of the coupon, the source said.

Broadcasters gain

It was a strong day for broadcasters following the resolution of Disney’s and Charter’s carriage fee dispute, which rattled the sector and led to heavy selling in certain credits.

Gray Television’s senior notes more than halved their losses after falling 3½ to 4 points the previous week.

The notes bounced 1½ to 3 points during Monday’s session.

Gray’s 4 ¾% senior notes due 2030 were up 3 points to close the day at 66, according to a market source.

The yield was about 12%.

There was $5 million in reported volume.

The 4¾% notes sank 4 points the previous week.

Gray’s 7% senior notes due 2027 were up 1½ points to close the day at 86 with the yield about 11¾%.

The notes sank 3 points the previous week.

Nexstar’s 5 5/8% senior notes due 2027 gained 1½ points to close the day at 91½ with the yield about 8¼%, a source said.

There was $10 million in reported volume.

The notes tumbled about 3½ points the previous week as investors de-risked after the Disney-Charter carriage fee.

However, buyers were returning to the space after Charter and Disney announced they had resolved the dispute and ESPN was restored to Charter subsidiary Spectrum’s customers.

Indexes

The KDP High Yield Daily index added 2 basis points to close Monday at 50.3 with the yield 7.55%.

The index was down 26 bps on the week last week.

The ICE BofAML US High Yield index gained 13.1 bps with the year-to-date return now 7.018%.

The index was down 31.3 bps on the week last week.

The CDX High Yield 30 index was up 20 bps to close Monday at 102.83.

The index was down 40 bps on the week last week.

Fund flows

The dedicated high-yield bond funds sustained $158 million of net daily cash inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $143 million of outflows on the day.

Actively managed high-yield funds sustained $15 million of outflows on Friday, according to them market source.

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