Vistra, Matador, ACI price; WellCare, Marriott on tap; SM Energy up; Sanchez Energy clobbered

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 7 – The domestic primary market saw an active session on Tuesday with three issuers pricing upsized offerings and the forward calendar continuing to grow.

Wednesday also promises to be a busy day with two more deals on deck.

In drive-by action, Vistra Energy Corp. priced an upsized $1 billion issue of eight-year senior notes, and Matador Resources Co. priced an upsized $750 million issue of eight-year senior notes.

ACI Worldwide, Inc. also priced an upsized $400 million issue of eight-year senior notes.

The forward calendar continued to build with Frontdoor, Inc. beginning a roadshow for a $350 million offering of eight-year senior notes with pricing expected on Aug. 14.

WellCare Health Plans, Inc. $700 million offering of eight-year senior notes and Marriott Vacations Worldwide Corp.’s $750 million offering of eight-year senior notes are expected to price Wednesday.

Meanwhile, BMC Software is experiencing investor pushback on its $1,825,000,000 equivalent two-part offering of senior notes.

While SM Energy Co.’s newly priced 6 5/8% senior notes due Jan. 2027 (B2/BB-/BB-) put in a strong performance in the secondary space, Intelsat Connect Finance SA’s 9½% notes due 2023 (Ca/CCC-) continued to dominate trading activity.

Sanchez Energy Corp.’s junk bonds were second only to Intelsat in trading volume with the notes dropping about 5 to 7 points after the company reported second-quarter earnings.

Diebold Inc.’s 8½% senior notes due 2024 dropped and Rite Aid Corp.’s 6 1/8% notes due 2023 remained in focus in the secondary space with both notes continuing to lose ground.

Vistra upsizes to $1 billion

Vistra Energy Corp. priced an upsized $1 billion issue of eight-year senior notes (Ba3/BB/BB) at par to yield 5½% in a drive-by.

The issue size increased from $800 million.

The yield printed at the tight end of the 5½% to 5 5/8% yield talk, and tight to initial talk in the high 5% area.

There was no substantial reverse inquiry in the deal, a trader heard.

Citigroup was the lead bookrunner in the debt refinancing.

Matador drives-by

Matador Resources priced an upsized $750 million issue of eight-year senior notes (B2/BB-) at par to yield 5 7/8% in a quick-to-market Tuesday trade.

The issue size was increased from $700 million.

The yield printed at the tight end of the 5 7/8% to 6% yield talk and tight to initial talk in the low 6% area.

BofA Merrill Lynch was the left bookrunner for the debt refinancing.

ACI upsized

In a deal announced on Monday and shopped on an investor call, ACI Worldwide priced an upsized $400 million issue of eight-year senior notes (B2/BB) at par to yield 5¾%.

The issue size was increased from $300 million.

The yield printed in the middle of yield talk in the 5¾% area and tight to initial guidance in the high 5% area to 6%.

BofA Merrill Lynch was the left bookrunner for the debt refinancing. Wells Fargo was the joint bookrunner.

Wednesday

Looking to the Wednesday session, WellCare Health Plans talked its $700 million offering of eight-year senior notes (Ba2/BB) to yield in the 5½% area.

Official talk comes tight to initial guidance in the 5¾% area, a market source said.

The deal is expected to price on Wednesday.

Marriott Vacations Worldwide is also expected to price its $750 million offering eight-year senior notes on Wednesday, a trader said.

As the market awaits official talk initial guidance is in the 6½% area.

BMC sees pushback

BMC Software is getting pushback on the 9¾% area initial talk on the dollar-denominated tranche of its $1,825,000,000 equivalent two-part offering of senior notes (Caa2/CCC+), sources say.

Document changes are possible, according to an investor who passed on the bridge, and is likewise taking a flyer on the bonds.

The deal also features a euro-denominated tranche.

Sizes remain to be announced.

The BMC roadshow is scheduled to wrap up on Wednesday.

Frontdoor starts roadshow

There was one roadshow announcement on Tuesday.

Frontdoor began a roadshow for a $350 million offering of eight-year senior notes which are expected to price on Aug. 14.

JP Morgan, Capital One, FTN, Regions, Credit Suisse, Goldman Sachs and RBC are the joint bookrunners for the spinoff financing.

New paper

SM Energy’s 6 5/8% senior notes due Jan. 2027 put in a strong secondary market performance. The notes were seen at par ¾ bid, 101¼ offered on Tuesday, according to a market source.

They were seen trading at 101 with more than $23.5 million of the bonds on the tape by late afternoon.

SM Energy priced a $500 million issue at par in a Monday drive-by.

The yield printed at the tight end of talk for a yield in the 6¾% area and inside initial talk of 6¾% to 7%.

While strong in the secondary market, trading of SM Energy’s new notes paled in comparison to activity surrounding Intelsat’s new 9½% senior notes due 2023.

The 9½% notes continued to rise in the secondary space. One source pegged the notes at par bid, par ¼ offered. They were seen up about ½ point to trade at 99 7/8.

With more than $63 million of the bonds on the tape by late afternoon, Intelsat’s new notes continued to dominate trading activity in the secondary space.

Intelsat priced a $1.25 billion issue of the 9½% notes at 98.25 to yield 10.004% on Aug. 2. The notes have been volume leaders since pricing.

Sanchez Energy clobbered

Sanchez Energy’s 7¾% senior notes due 2021 and 6 1/8% senior notes due 2023 were the next most actively traded issues on Tuesday with the notes getting clobbered in the high-volume activity.

Sanchez Energy’s 7¾% notes were down a little over 5 points to trade at 82 with more than $52 million of the bonds on the tape.

The company’s 6 1/8% notes were seen down more than 5 points early in the session at 63½ bid. They continued to trade down as the day progressed.

They were seen down almost 7 points to 62 3/8 in the late afternoon with more than $46.5 million of the bonds on the tape, according to a market source.

Sanchez saw a large earnings miss in the second-quarter with a loss of 26 cents per share versus analyst expectations for a loss of 6 cents.

The large loss was attributed to its hedging activities.

Sanchez said in an investor presentation that it has more than 20,000 barrels a day of oil hedged in the second quarter at $52.61 a barrel, well below market prices.

The Houston-based company also reported production declines which it attributed to poor well performance and new completion technology.

Diebold drops again

While Sanchez Energy’s junk bonds saw the steepest one-day decline on Tuesday, Diebold’s 8½% senior notes due 2024 continued their downward spiral with the notes now down more than 25 points over the past two weeks.

The notes were seen down about 3 more points to trade at 66 on Tuesday.

They remained in focus with more than $40 million of the bonds on the tape by late in the afternoon.

Moody’s Investors Service downgraded Diebold to B3 from B1 on Tuesday due to its weaker than expected performance, diminished liquidity and continued operating challenges. (See related story elsewhere in this issue.)

The notes have been on a downward spiral since Diebold reported a large earnings miss in its second-quarter report last week and announced that it was negotiating an amendment to its credit agreement with principal lenders.

The notes traded as high as 92 prior to the earnings report.

All eyes on Rite Aid

Rite Aid’s 6 1/8% senior notes due 2023 remained in focus in the secondary space with the notes again down about 1½ points in the run up to the shareholder vote on the Albertsons merger.

The notes were seen at 99 bid, 99¼ offered early Tuesday but steadily traded down as the day progressed.

They were seen trading at 98 in the late afternoon with more than $44 million of the bonds on the tape.

The notes were also active and down a little more than 1 point on Monday after the company reduced its forward guidance.

Independent advisory firms have recommended Rite Aid shareholders vote against the merger. The vote is scheduled for Aug. 9.

Prior to the revised forecast and the pushback on the merger, the 6 1/8% notes were trading at par.

Indexes gain

Three benchmarks for the high-yield secondary market made solid gains on Tuesday after a positive start to the week.

The KDP High Yield Daily index was up 7 basis points to close Tuesday at 70.60 with the yield now 5.78%. The index was up 3 bps on Monday.

The Merrill Lynch High Yield index continued to make large gains on Tuesday.

The index was up 15.9 bps with the year-to-date return now 1.629%. The index was up 9.1 bps on Monday.

The CDX High Yield 30 index was up 10 bps to close Tuesday at 107.24. The index was up 4 bps on Monday.

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