EquipmentShare.com, Vital Energy price; Syneos on deck; Worldpay joins calendar

By Paul A. Harris and Abigail W. Adams

Portland, Me., Sept. 18 – Dealers barged into the high-yield new-issue market on Monday with approximately $2.9 billion equivalent of senior secured notes due Jan. 15, 2031 (Ba3/BB/BBB-) backing GTCR’s acquisition of a majority stake in Worldpay.

The deal, which has been telegraphed to the market since late summer, includes $2 billion of notes via issuing entity GTCR W-2 Merger Sub LLC, in the market with initial guidance in the high-7% area, and £700 million of notes via GTCR W Dutch Finance Sub BV, with initial guidance in the high-8% area.

Pricing is expected Wednesday.

Two dollar-denominated issuers priced a combined three tranches Monday for a daily issuance total of $1.3 billion.

Vital Energy, Inc. priced an upsized $900 million amount (from $800 million) of senior notes (B3/B) in two tranches.

The deal includes an upsized $400 million add-on (from $300 million) to the company’s 10 1/8% senior notes due 2028 that priced at 101.0 to yield 9.617%, on top of final price talk.

It also included a $500 million issue of new 9¾% seven-year notes that priced at 98.742 to yield 10%, at the tight end of the revised talk.

Timing was accelerated. Original timing had the deal remaining in the market until Tuesday.

Elsewhere EquipmentShare.com Inc. priced an upsized $400 million add-on (from $300 million) to its 9% senior secured second lien notes due May 15, 2028 (B3/B-) at 97.75 to yield 9.605%, at the rich end of talk.

The issue was heard to be four times oversubscribed, market sources said.

On deck for Tuesday is Star Parent, Inc. (Syneos Health Inc.) with a downsized $1.2 billion offering of seven-year senior secured notes (B1/B), talked to yield 9¼% to 9½%, wide to initial guidance in the 9% area.

The deal was downsized from $1.7 billion, with the $500 million of proceeds shifted to the concurrent term loan, which increased to $2.5 billion from $2 billion.

Beyond Syneos sits a sizable active deal calendar, most of which is expected to clear by Friday’s close, sources say.

All told, with supportive conditions the market could see a total of $7 billion to $9 billion of issuance during the Sept. 18 week, a trader said.

A debt capital markets banker, noting that market conditions presently are supportive, said that issuance volume could remain at or above the elevated levels seen last week, which, at $9.5 billion, was the biggest week for issuance since November 2021.

Meanwhile, it was a quiet and flat day in the secondary space as market players await a fresh wave of new issuance and the Federal Open Market Committee’s Wednesday announcement.

While activity surrounding the onslaught of new paper that priced the previous week tempered, Freedom Mortgage Corp.’s two tranches of senior notes (B2/B/B+) remained active with their spectacular gains continuing.

The majority of deals to clear the primary market in recent weeks have largely traded flat to a slight premium with tight pricing leaving little room for movement in the aftermarket.

However, Freedom Mortgage’s senior notes have been the clear outperformer with the notes now trading 3 to 4 points above their discounted issue price.

With most new deals leveling off, topical news was the driver of activity in the space.

Aramark Services, Inc.’s 6 3/8% senior notes due 2025 were active with the notes trading up to their redemption price following news the company would call the notes in full.

Medical Properties Trust Inc.’s 5% senior notes due 2027 (Ba1/BB+) were under pressure in active trade as the company’s stock hit a 52-week low.

Freedom Mortgage gains continue

Freedom Mortgage’s two tranches of senior notes continued to log strong gains in active trade with both tranches jumping another 1 point to 1.5 points.

Freedom Mortgage’s 12¼% senior notes due 2030 traded up to a 101-handle with the notes trading in the 101¼ to 101¾ context heading into the market close, a source said.

There was $8 million in reported volume.

The 12% senior notes due 2028 were slightly stronger, trading in the 101½ to 102 context heading into the market close, according to a market source.

There was $14 million in reported volume.

In a heavily oversubscribed offering, Freedom Mortgage priced an upsized $800 million, from $600 million, tranche of the 12% senior notes and a $500 million tranche of the 12¼% senior notes at 98 on Sept. 14.

The notes outperformed with both trading up to a par-handle on the break.

The notes priced cheap with the hefty yield hard to ignore, a source said.

Aramark’s call

Aramark’s 6 3/8% senior notes due 2025 saw heavy volume on Monday, jumping to their redemption price following news the company would call the notes.

The 6 3/8% notes gained 1 point to close the day wrapped around 101½, a source said.

There was $22 million in reported volume.

Aramark announced late Friday that it would redeem the full $1.5 billion outstanding amount of the 6 3/8% notes at a redemption price of 101.594 on Oct. 2.

The redemption of the notes is conditional upon the successful spinoff of Aramark’s uniforms and workplace supplies business.

However, the market was showing little doubt about the spinoff, a source said.

Medical Properties under pressure

Medical Properties’ 5% senior notes due 2027 were under pressure in heavy volume on Monday as stock hit a 52-week low.

The 5% notes were down 1 point to close the day at 74½ with the yield 13 3/8%, according to a market source.

There was $20 million in reported volume.

S&P recently flagged the notes for a downgrade with the rating agency changing their outlook from stable to negative.

S&P cited the $1.4 billion that will come due annually in 2025 through 2027 as the reason for its changed outlook with the REITs plunging stock price increasing its refinancing risk.

Medical Properties’ stock hit a 52-week low of $6.09 on Monday.

The REIT space in general has fallen out of favor with investors, a source said.

However, a slew of topical news has further pressured the credit.

The 5% notes have been on a steady downtrend since mid-August when the Wall Street Journal reported a financing transaction with its third largest tenant was in jeopardy.

Indexes

The KDP High Yield Daily index shaved off 5 basis points to close Monday at 50.19 with the yield 7.6%.

The index was down 4 bps on the week last week.

The ICE BofAML US High Yield index fell 6.4 bps with the year-to-date return now 7.035%.

The index was up 21.4 bps on the week last week.

The CDX High Yield 30 index shaved off 4 bps to close Monday at 102.83.

The index added 24 bps on the week last week.

Fund flows

The dedicated high-yield bond funds sustained $597 million of net daily cash outflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $441 million of outflows on the day.

Actively managed high-yield funds sustained $156 million of outflows on Friday, according to the market source.

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