Lifepoint, HC2 price; Vantage on tap; California Resources in focus; Intelsat drops

By Paul A. Harris and Abigail W. Adams

Portland, Me., Nov. 14 – The domestic primary market saw the two deals that carried over from the previous week price on Wednesday, despite continued volatility in the markets.

RegionalCare Hospital Partners Holdings, Inc. and LifePoint Health, Inc. priced a downsized $1,425,000,000 issue of 9¾% eight-year senior notes (Caa1/CCC+) at par after price talk widened and the deal underwent covenant changes.

HC2 Holdings, Inc. priced a downsized $470 million issue of 11½% senior secured notes (Caa1/B-) at 98.75 to yield 12% after an extended stay in the market.

The new paper was lagging its issue price in secondary trading.

However, the company’s existing 11% senior notes due 2019 jumped in high volume activity after the refinancing deal was secured.

While market conditions continued to impact new deal activity, one deal joined the forward calendar with Vantage Drilling International roadshowing a $300 million offering of five-year senior secured first-lien notes. The deal is expected to price on Friday.

In the European primary market, Groupe Ecore Holding SAS (Luxembourg) set price talk on its €255 million offering of five-year senior secured floating-rate notes (B/BB-) with pricing expected on Thursday.

Meanwhile, the secondary space remained soft on Wednesday although the energy sector saw signs of a reprieve with crude oil futures up slightly.

California Resources Corp. 8% senior secured second-lien notes due December 2022 were in focus in the secondary space and saw a slight rebound after a steep drop on Tuesday.

Intelsat SA’s junk bonds dropped in high volume activity on Wednesday with speculation its C-band proposal is in trouble.

RegionalCare downsized

In Wednesday’s primary market, RegionalCare Hospital Partners Holdings and LifePoint Health priced a downsized $1,425,000,000 issue of 9¾% eight-year senior notes (Caa1/CCC+) at par to yield 9.748%.

The deal was decreased from $1,575,000,000 with $150 million of proceeds shifted to a concurrent term loan, increasing its size to $4.35 billion from $4.2 billion

The yield printed near the wide end of the 9½% to 9¾% yield talk, which had moved out from earlier talk of 9% to 9¼%.

Initial price talk was in the 9¼% area, according to market sources.

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

The bond deal was in good shape all along, a high yield investor said.

It was the bank loan that struggled, the source added, noting that pricing on the concurrent term loan widened and the loan was sweetened with investor friendly tweaks.

Barclays was the left lead bookrunner on the bonds.

Proceeds from the bonds and term loan along with up to $1 billion of sponsor equity from Apollo will be used to fund the merger of RegionalCare Hospital Partners with LifePoint Health.

Downsized HC2 prices

HC2 Holdings priced a downsized $470 million offering of 11½% senior secured notes (Caa1/B-) at 98.75 to yield 12% on Wednesday.

The deal, via sole bookrunner Jefferies, was reduced from $535 million, with $55 million of the proceeds shifted to a concurrent issue of 7½% convertible senior notes due 2022, decreasing the overall amount of the capital markets transaction to $525 million from $535 million.

The coupon, reoffer price and yield all came on top of talk.

The maturity of the senior secured notes decreased to three years from five years. Call protection decreased to 1.5 years from two years.

There were also changes to the minimum collateral coverage, minimum liquidity, maximum net leverage and minimum fixed charge coverage covenants.

Proceeds from the senior secured notes and convertibles will be used to redeem the company’s outstanding 11% senior secured notes due 2019.

Vantage brings $300 million

Vantage Drilling International is marketing a $300 million offering of five-year senior secured first-lien notes on a roadshow set to run through Thursday.

An investor conference call is scheduled to get underway at 10:30 a.m. ET Thursday.

The offer is set to price on Friday.

Credit Suisse is the left bookrunner.

The Houston-based offshore drilling contractor plans to use the proceeds to repay its first- and second-lien debt, and to fund the acquisition of the Soehanah jackup oil rig.

Ecore talks floater

In the European session, Groupe Ecore Holding talked a €255 million offering of five-year senior secured floating-rate notes (B/BB-) with a 625 basis points spread to Euribor, a 0% Euribor floor and an original issue discount price of 98.

The deal, helmed by sole bookrunner Barclays, is set to price on Thursday.

HC2 lags

HC2 Holdings newly priced 11½% senior notes due 2021 saw light trading volume in the secondary space.

However, the notes were lagging their 98.75 issue price, a market source said. The notes were seen trading at 98 with about $10 million of the bonds on the tape in the late afternoon.

While HC2’s newly priced issue was slow to trade, the diversified holding company’s 11% notes due Dec. 1, 2019 were among the most actively traded issues in the secondary space.

More than $46 million of the bonds were on the tape by late afternoon.

The notes traded up to par ¼ on Wednesday. The 11% notes were seen at 99 bid, par offered on Tuesday, a market source said.

There was a certain degree of deal risk involved in HC2 Holdings’ new offering with proceeds to be used to refinance the 11% notes, sources said.

California Resources in focus

California Resources’ 8% senior notes due 2022 again occupied the focus of the secondary space as crude oil futures staged a slight recovery.

The 8% notes were up almost 2 points in early trading on Wednesday. They were seen at 84 3/8 bid, 84¾ offered, a market source said.

However, they came in as the session progressed and closed the day at 83½, about a ½ point increase from Tuesday’s close, according to a market source.

More than $67 million of the bonds were on the tape by late afternoon.

While data supported oversupply fears on Wednesday, the downward spiral of the barrel price of WTI crude oil for December delivery saw a brief reprieve.

Crude oil futures settled at $56.25, an increase of 56 cents or 1%, on Wednesday.

Intelsat drops

Intelsat’s junk bonds were under pressure in high volume activity on Wednesday amid speculation that the C-Band Alliance’s proposal is in jeopardy.

Intelsat Jackson Holdings SA’s 8½% senior notes due 2024 (Caa2/CCC+) dropped 1¼ points to close at 97½ on Wednesday, a market source said.

Intelsat Luxembourg’s 8 1/8% senior notes due 2023 dropped 2¾ points to close the day at 81¾, a source said.

Each issue saw more than $24 million of the bonds in play during Wednesday’s session.

As the Federal Communications Commission zeroes in on rulemaking for opening the C-Band for 5G, there is speculation that the proposal from the C-Band Alliance, of which Intelsat is a part, may be in trouble, a market source said.

The C-Band Alliance reiterated on Tuesday that it is willing to free 200 megahertz of spectrum, which many have argued is not enough.

Tuesday outflows

The daily cash flows of dedicated high-yield bond funds were negative on Tuesday, a trader said.

High-yield ETFs sustained $1.345 billion of outflows on the day, the third largest outflow on record, the source said.

Indexes down again

Indexes posted losses for the third consecutive session on Wednesday.

The KDP High Yield Daily index dropped 20 basis points to close Wednesday at 68.83 with the yield now 6.43%. The index was down 19 bps on Tuesday.

The index dropped 20 bps on Friday while still posting a 12 bps gain on the week last week.

The ICE BofAML US High Yield index continued to trend lower after dropping below the 1% threshold on Tuesday.

The index dropped 34 bps on Wednesday with the year-to-date return now 0.352%.

The index dropped 41.8 bps on Tuesday and fell 40.3 bps on Friday although it still marked a 10.4 bps gain on the week last week.

The CDX High Yield 30 index dropped 32 bps to close Wednesday at 104.54. The index was down 68 bps on Tuesday. The index dropped 78 bps on Friday and was down 24 bps on the week last week.

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