HCA, BMC, Marriott, Herbalife price; HCA gains; WellCare active; Rite Aid dominates

By Paul A. Harris and Abigail W. Adams

Portland, Me., Aug. 9 – Thursday marked one of the busiest days of the quarter for the high-yield primary market with $4.63 billion pricing in four deals in a week that has already seen $4.1 billion in new issuance.

HCA Inc. priced $2 billion of senior bullet notes (Ba2/BB-) in two tranches in a drive-by. BMC Software priced two tranches of eight-year senior notes (Caa2/CCC+), which included a $1,475,000,000 tranche and a €301,500,000 tranche.

Marriott Vacations Worldwide Corp. priced a $750 million issue of eight-year senior notes (S&P: BB-) and Herbalife Nutrition Ltd. priced a $400 issue of eight-year senior notes (B1/BB-) at par to yield 7¼%.

While most deals priced late in the day, Herbalife’s new notes saw high-volume activity after breaking for trade with the notes up more than 1 point.

As the primary market readied a new offering from HCA, the operator of health care facilities’ outstanding bonds were in focus and making gains in active trading.

The 7 1/8% senior notes due 2026 (B1/B+) from OneMain Holdings Inc.’s Springleaf Finance Corp. subsidiary were volume leaders on Thursday after Springleaf priced a $700 million add-on on Wednesday.

WellCare Health Plans, Inc.’s newly priced 5 3/8% senior notes due 2026 (Ba2/BB) remained active although with little change to their previous levels in the secondary space.

However, trading of the new paper did not come close to the frenzy surrounding Rite Aid Corp.’s 6 1/8% senior notes due 2023.

The notes dropped up to 8 points in the fury of activity after Rite Aid and Albertsons Cos., Inc. announced the termination of their proposed merger.

Meanwhile, high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall liquidity trends in the junk market – saw inflows for the second consecutive week, adding $828 million for the week ended Aug. 8, according to fund-flow statistics generated by AMG Data Services Inc.

HCA $2 billion drive-by

HCA Inc. priced $2 billion of senior bullet notes (Ba2/BB-) in two tranches in a quick-to-market trade on Thursday.

The deal included $1 billion of eight-year notes that priced at par to yield 5 3/8%, The yield printed at the tight end of yield talk in the 5 ½% area and inside of initial guidance in the 5 5/8% area

HCA also priced $1 billion of 10-year notes at par to yield 5 5/8%.

The yield printed at the tight end of yield talk in the 5 ¾% area and inside of initial guidance in the 5 7/8% area.

The deal was said to be “massively oversubscribed” with order 4 times the book size, sources said.

Goldman Sachs was the left bookrunner.

The Nashville, Tenn.-based for-profit operator of health care facilities plans to use the proceeds to redeem all $1.5 billion of its outstanding 3 ¾% senior secured notes due 2019.

Proceeds will also be used for general corporate purposes which may include funding of all or a portion of previously announced acquisitions.

BMC prices dollars, euros

BMC Software priced two tranches of eight-year senior notes (Caa2/CCC+).

The deal included $1,475,000,000 of notes which priced at par to yield 9¾%. The yield printed at the wide end of yield talk announced in the 9 5/8% area and in the middle of initial guidance set in the 9 ¾% area.

BMC Software also priced €301.5 million of notes at par to yield 8 3/8%. The yield came in the middle of the 8¼% to 8½% yield talk and at the wide end of initial talk that was set in the 8¼% area.

The deal underwent covenant changes bearing primarily upon how the company may disburse cash and incur additional debt.

Goldman Sachs was the left bookrunner for the LBO financing.

Marriott Vacations comes inside of talk

Marriott Vacations Worldwide priced a $750 million issue of eight-year senior notes (S&P: BB-) at par to yield 6 ½%.

The yield came 12.5 basis points inside of the tight end of yield talk that was set in the 6¾% area but in the middle of initial price talk set in the 6½% area.

BofA Merrill Lynch, JP Morgan Securities LLC, SunTrust Robinson Humphrey, Deutsche Bank Securities Inc., Wells Fargo Securities LLC and Credit Suisse Securities (USA) LLC were the joint bookrunners.

The Orlando, Fla.-based vacation ownership company plans to use the proceeds, along with new credit facilities and cash on hand, to help fund its acquisition of ILG, Inc., a Miami-based operator of vacation resorts and clubs, and to repay debt under ILG’s revolving credit facility.

Herbalife prices tight

Herbalife Nutrition priced a $400 offering of eight-year senior notes (B1/BB-) at par to yield 7¼%.

The yield printed at the tight end of the 7¼% to 7½% yield talk and tighter than to initial guidance announced in the mid-to-high 7% area.

Jefferies LLC was the left bookrunner. Rabo Securities, Citigroup Global Markets Inc., Citizens Bank, Fifth Third Bank and Mizuho Securities were the joint bookrunners.

The Los Angeles-based nutrition company plans to use the proceeds, along with new term loans A and B, to refinance its existing credit facility.

Herbalife breaks

Herbalife’s new 7¼% notes due 2026 was second only to Rite Aid in trading volume on Thursday with the notes up more than 1 point out of the gate.

The notes were seen trading up to 101 1/8 in the high-volume activity, a market source said.

With more than $128 million of the bonds on the tape by late afternoon, more than one quarter of the total issuance was in play in the secondary space.

HCA gains

As the primary market prepared a new offering from HCA as part of a refinancing deal, the company’s outstanding issues were active and seeing gains in the secondary space.

HCA’s 5½% senior notes due 2047 saw the heaviest trading volume and the greatest gains in the company’s structure.

The notes were up 3½ points to trade at 99½ late Thursday with more than $56 million bonds on the tape.

HCA’s 5¼% senior notes due 2026 were up a little more than 1 point to trade up to 103 with about $27 million on the tape by late afternoon.

HCA’s 4½% senior notes due 2027 were up about 1 point to 98¾.

Springleaf active

Springleaf’s 7 1/8% senior notes due 2026 were among the most actively traded of the day after the personal loan provider priced a $700 million add-on on Thursday.

While the notes were trading above the reoffer price of the new paper, they were below their previous levels prior to the add-on.

The notes were largely wrapped around par 5/8 in the high-volume trading, according to a market source. About $62 million of the bonds were on the tape by the late afternoon.

The notes were down about 1/8 point from their previous levels. The notes had traded at par ¾ prior to the add-on.

The $700 million add-on priced at 100.5 to yield 7.039% in a drive-by on Wednesday.

WellCare unchanged

WellCare’s new 5 3/8% senior notes due 2026 remained active in the secondary space although with little change from Wednesday’s levels.

The notes traded up to 101 out of the gate on Wednesday, which is where they largely remained during Thursday’s session, market sources said.

More than $33 million of the bonds were on the tape on Thursday after a high-volume session Wednesday which saw more than $85 million bonds trade.

WellCare priced an upsized $750 million issue of the notes at par to yield 5 3/8% on Wednesday.

The deal was increased from $700 million.

The yield printed at the tight end of yield talk set in the 5½% area and inside of initial guidance announced in the 5¾% area.

Rite Aid’s bombshell

While the secondary space has seen saw a flood of new paper over the past week after a relative drought, no issue saw more activity than an existing name, Rite Aid’s 6 1/8% senior notes due 2023.

The notes plummeted up to 8 points as more than $256 million of the bonds changed hands after Rite Aid and Albertsons announced they were terminating their merger agreement.

The 6 1/8% notes traded in range of 90½ to 91¾ before closing the day around 91, according to a market source.

The notes have steadily traded down since Monday when Rite Aid lowered its forward guidance in the run up to the shareholder vote on the merger, which was scheduled for Thursday.

While the notes started the week above par, they shaved off 2¼ points over the course of the first three days of the week. They were trading at 97¾ at Wednesday’s close, according to Trace data.

However, Rite Aid and Albertsons dropped a bombshell late Wednesday with their announcement that their merger agreement was terminated and that the closely watched and highly anticipated shareholder vote on the merger would not take place.

“While we believed in the merits of the combination with Albertsons, we have heard the views expressed by our stockholders and are committed to moving forward and executing our strategic plan as a standalone company,” said John Standley, Rite Aid chairman and chief executive officer, in the press release.

“We remain focused on leveraging our network of conveniently located retail pharmacies, our EnvisionRxOptions PBM and our trusted brand of health and wellness offerings.”

Independent advisory firms had recommended shareholders vote against the merger.

Mixed Wednesday flows

Daily cash flows for dedicated high-yield bond funds were mixed on Wednesday, a bond trader said.

High-yield ETFS sustained $112 million of outflows on the day.

However actively managed funds saw $38 million of inflows on Wednesday, the trader said.

The daily cash flows came on the heels of the closely watched weekly Lipper Fund Flow report which saw an inflow of $828 million for the week ending Aug. 8.

Combined with the previous week’s inflows of $37 million, the inflows have outstripped the losses seen in late July.

However, the latest inflows continue to pale in comparison to the cumulative outflows for the year, which remain at record levels.

The cumulative outflow for the year now totals about $18.39 billion, according to a Prospect News analysis of the reports by the Arcata, Calif.-based unit of Thomson Reuters Corp’s Lipper analytics division.

Indexes mixed

Three benchmarks for the high-yield secondary market were mixed on Thursday, after closing Wednesday largely flat.

The KDP High Yield Daily index was down 7 basis points to 70.54 with the yield now 5.81%. The index was up 1 bps on Wednesday, 7 bps on Tuesday and 3 bps on Monday.

The Merrill Lynch High Yield index was up 2 bps with the year-to-date return now 1.630%.

The index stands poised to mark another consecutive week of gains. The index was up 1.9 bps on Wednesday, 15.9 bps on Tuesday and 9.1 bps on Monday.

The CDX High Yield 30 index was down 14 bps to close Thursday at 107.1. Thursday marked the index’s first loss of the week. The index was flat on Wednesday, up 10 bps on Tuesday and up 4 bps on Monday.

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