Centene, Uniti, Asbury Automotive, VodafoneZiggo megadeals price; Innophos, Arconic skyrocket

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 5 – A white hot high-yield primary market saw $5.88 billion of issuance clear in a Wednesday session that saw some deals upsizing, some pricing through talk and some pricing on foreshortened timelines.

At least two of Wednesday's deals came with schedules for brief roadshows. However, during the course of the session they morphed into drive-bys.

Uniti Group Inc. priced an upsized $2.25 billion issue of five-year senior secured notes (Caa1/CCC/B).

Centene Corp. priced a $2 billion issue of 10-year senior notes (Ba1/BBB-/BB+).

Asbury Automotive Group, Inc. priced $1,125,000,000 of senior notes (B1/BB) in two tranches.

And VodafoneZiggo priced approximately €1.35 billion equivalent of Ziggo Bond Co. BV 10-year senior notes (expected ratings B3/B-/B-) in two tranches.

Meanwhile, the secondary space continued to firm as equity markets once again brushed against record levels and crude oil futures rebounded.

New paper was the driving force of trading activity with several recent deals putting in strong performances in the secondary space despite pricing tight.

While the deal was small, Innophos Holdings Inc.’s 9 3/8% senior notes due 2028 (Caa1/B-) were active with the notes skyrocketing in the secondary space.

Arconic Inc.’s 6 1/8% senior notes due 2028 (Ba3/B+/BB+) also shot several points above their issue price in high volume activity.

Griffon Corp.’s 5¾% senior notes due 2028 (B2/B+/B+) and Banijay Group’s 5 3/8% senior notes due 2025 were putting in strong performances in the aftermarket with the notes more than 1 point above their issue prices.

While the market awaited Centene’s megadeal to price, the insurance company’s 4 5/8% senior notes due 2029 were active and coming in slightly.

Megadeals on the march

Uniti Group priced an upsized $2.25 billion issue of five-year senior secured notes (Caa1/CCC/B) at par to yield 7 7/8% on Wednesday, according to market sources.

The issue size increased from $1.75 billion.

The yield printed at the tight end of yield talk in the 8% area.

The deal's timeline was foreshortened. When announced, it had been scheduled to remain in the market until Friday.

The deal was said to have been driven into the market by $1 billion of reverse inquiry, a trader said.

Centene Corp. priced a $2 billion issue of 10-year senior notes (Ba1/BBB-/BB+) at par to yield 3 3/8%.

The notes priced 12.5 basis points inside of the 3½% to 3¾% yield talk, and well inside of initial guidance in the high 3% area.

The deal was a blowout, according to a bond trader who added that the market heard the order book for Centene's new 3 3/8% notes due 2030 exceeded $6 billion.

Asbury Automotive Group priced $1,125,000,000 of senior notes (B1/BB) in two tranches.

The deal included $525 million of eight-year notes, which priced at par to yield 4½%. The yield printed at the tight end of the 4½% to 4¾% yield talk.

Asbury Automotive also priced $600 million of 10-year notes at par to yield 4¾%. The yield came on top of talk that had the 10-year note coming 25 bps behind the eight-year notes.

Books for each tranche contained in excess of $1 billion, a trader said.

VodafoneZiggo priced approximately €1.35 billion equivalent of Ziggo Bond Co. BV 10-year senior notes (expected ratings B3/B-/B-) in two tranches on Wednesday, according to market sources.

The deal included a €900 million tranche of notes, which priced at par to yield 3 3/8%, at the tight end of yield talk in the 3½% area.

It also included a $500 million tranche of notes which priced at par to yield 5 1/8%. The yield printed 12.5 bps inside of yield talk in the 5 3/8% area.

Timing on the deal was accelerated. When announced, it had been scheduled to remain in the market until Thursday.

The order book for the dollar-denominated tranche was playing to $900 million of demand from real money accounts and some overseas investors, a trader said.

The Thursday session

A prematurely cleared deal calendar was left only a couple of offerings in the wake of Wednesday's torrid session.

Allen Media set price talk for its $300 million offering of eight-year senior notes (B-) in the 10½% area, and brought document changes on Wednesday, according to market sources.

Official talk came at the wide end of initial price talk which had the deal coming to yield in the low-to-mid 10% area.

The notes are set to price on Thursday.

Meanwhile, Husky III Holding is scheduled to shop a $450 million offering of five-year senior PIK toggle notes through Thursday.

Early guidance is in the 12% area.

Innophos skyrockets

Innophos Holdings’ 9 3/8% senior notes due 2028 skyrocketed in active trading in the secondary space.

After a strong break on Tuesday, the notes continued to rise. They climbed about ¾ point on Wednesday to a 104 handle, sources said.

The 9 3/8% notes stood poised to close the day at 104½.

The bonds saw more than $22 million in reported volume during Wednesday’s session, according to a market source.

Innophos priced a downsized $275 million issue of the 9 3/8% notes at par on Tuesday.

Pricing came at the mid-point of the 9¼% to 9½% yield talk and toward the tight end of the initial 9%-handle guidance.

While the deal was heard to be playing to more than $700 million of demand, the issue size was decreased from $300 million with $25 million shifted to the concurrent bank loan.

Arconic jumps

Arconic’s 6 1/8% senior notes due 2028 also shot up in the aftermarket with the notes trading nearly 4 points above their issue price.

After a strong break on Tuesday, the 6 1/8% notes were up another 1 point on Wednesday, a market source said.

The 6 1/8% notes traded as high as 103 7/8 during Wednesday’s session but closed the day at 103¾.

The lightweight metal manufacturing company priced a $600 million issue of the 6 1/8% notes at par on Tuesday.

Pricing came tighter than the 6¼% to 6½% yield talk. Earlier guidance was in the 6½% area.

Griffon strong

Griffon’s 5¾% senior notes due 2028 were also putting in a strong performance in the secondary space.

The notes were marked at 101 3/8 bid, 101 5/8 offered early in the session, a market source said.

They continued to climb into the afternoon and stood poised to close the day at 101¾.

The notes were among the most actively traded in the secondary space with more than $159 million in reported volume by the late afternoon.

The strong demand for the notes during bookbuilding carried over to the secondary space. The deal was heard to be as much as 2x oversubscribed, a source said.

Griffon priced an upsized $850 million issue of the 5¾% senior notes at par on Tuesday.

The yield printed in the middle of yield talk in the 5¾% area and tight to initial talk in the 6% area.

Banijay level

Banijay’s 5 3/8% senior notes due 2025 were also putting in a strong performance in the secondary space.

After a strong break on Tuesday, the notes continued to trade around 101½ throughout Wednesday’s session, a market source said.

Banijay priced an upsized $403 million tranche of the 5 3/8% senior notes due 2025 as part of a three-tranche dual-currency offering.

Pricing came tighter than the 5¾% area yield talk. The tranche was upsized from $325 million.

The deal also included a €575 million tranche of 3½% senior secured notes due 2025 and a €400 million tranche of 6½% senior unsecured notes due 2026.

Centene active

As the market awaited Centene’s new megadeal to free for trade, the insurance company’s 4 5/8% senior notes due 2029 were active with the notes coming in slightly.

The 4 5/8% notes were down about 1/8 point and stood poised to close the day at 108¼, according to a market source.

The bonds saw more than $37 million in reported volume.

With the yield on the 4 5/8% notes less than 3¼% due to their high dollar-price, holders may have been switching to the new deal, which offered more yield despite its tight pricing.

Tuesday inflows

The dedicated high-yield bond funds saw $325 million of daily net inflows on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $400 million of inflows on the day.

However actively managed high-yield funds were actually negative on Tuesday, sustaining $75 million of outflows on the day, the source said.

With only Wednesday's daily fund flows numbers left to tally, the combined funds were tracking $468 million of net outflows for the week to Wednesday's close, according to the market source.

The weekly funds flows numbers are expected to be reported on Thursday by Lipper US Fund Flows.

Indexes gain

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

The KDP High Yield Daily index was up 19 points to 71.50 with the yield now 5%. The index gained 6 bps on Tuesday after opening the week flat.

The ICE BofAML US High Yield index gained 40.4 bps with the year-to-date return now 0.482%. The index shaved off 1 bp on Tuesday and gained 7.6 bps on Monday.

The CDX High Yield 30 index rose 47 bps to close Wednesday at 109.37. The index was up 57 bps on Tuesday after a 6 bps drop on Monday.

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