Morning Commentary: Dealers set stage for big Thursday in primary; New RIG paper improves

By Paul A. Harris

Portland, Ore., June 28 – Junk was softer and in general lagging equities at mid-morning on Thursday, a trader said.

High-yield ETFs were lower on the morning. The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 30 cents, or 0.35%, at $85.22 per share.

Meanwhile dealers were setting the stage for a big Thursday in the new issue market.

CHS oversubscribed

CHS/Community Health Systems is in the market with $1,027,000,000 of 5.5-year senior secured notes that were talked to yield in the 8¾% area on Wednesday and set to price on Thursday.

Orders are heard to be 1.5-times to 2-times book size, with at least $300 million of reverse inquiry, sources said on Thursday morning.

Nationstar price talk

Nationstar Mortgage Holdings Inc. set price talk in its $1.7 billion offering of senior notes (B2) in two tranches.

The deal features five-year notes, which are callable after two years at par plus 50% of the coupon, talked in the 8% area, and eight-year notes, which are callable after three years at par plus 50% of the coupon, talked in the 8¼% area. The deal is expected to price Thursday.

Superior Plus talk 7% area

Superior Plus Corp. talked its $350 million offering of eight-year senior notes (Ba3/BB) to yield in the 7% area.

Official talk comes at the slightly wide end of initial price talk in the high 6% area.

Books close at 2 p.m. ET on Thursday, and the deal is set to price thereafter.

Add to those the Stars Group Holdings BV $750 million eight-year senior notes (Caa1/B-/B-), talked earlier in the week in the 7% area.

The deal is playing to a book that is four-times oversubscribed and appears to be coming at 6 7/8%, according to a trader, who added that the bonds might upsize dramatically and a downsize in the loan could follow.

AmWINS Group, Inc. could price its $300 million of eight-year senior notes (S&P: B-) on Thursday. Early guidance was in the low 7% area, but most orders are coming in wide of 8%, a trader said.

PHI Inc. is out there with a downsized $300 million (from $500 million) offering of five-year senior secured notes (B3/B/B+). Price talk is 9¾% to 10%, up from earlier guidance in the 9¾% area and initial talk in the mid 8% area to 9%.

Enterprise Development ($440 million secured notes) and LGI Homes, Inc. ($400 million unsecured) are also possible Thursday business, sources say.

Meanwhile in the crossover market, Charter Communications, Inc. subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. are in the market with a two-part offering of senior secured notes, which are being talked at Treasuries plus 195 basis points for the fixed-rate tranche and at the Libor equivalent of Treasuries plus 195 bps for the floaters. The deal is expected to play to a mix of high grade, crossover and high-yield accounts, sources say.

New RIG trades higher

Bonds priced Wednesday by Transocean Guardian Ltd., also known as RIG, traded higher in the secondary.

The 5 7/8% notes due January 2024 were 99 5/8 bid, 99¾ offered and traded as high as 99 7/8, a trader said.

The $750 million issue of 5 7/8% 5.5-year senior secured notes (B1/BB-) priced at 99 to yield 6.234%.

Elsewhere in the secondary market, bonds of Rite Aid Corp. traded down on the expectation that the drugstore business is in the gunsights of Amazon.com Inc. Amazon is working on a deal to acquire online pharmacy PillPack.

The Rite Aid 6 1/8% senior notes due 2023 were down ¼ point to ½ point on the morning, at 101¼ bid, a trader said.

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