Antero Midstream prices; secondary rally continues; funds lose $2.21 billion

By Abigail W. Adams

Portland, Me., Nov. 5 – The domestic high-yield primary market broke its silence on Thursday with one drive-by offering pricing.

Antero Midstream Partners LP and Antero Midstream Finance Corp. priced an upsized $550 million issue of long five-year senior notes (B3/B).

The deal was in demand during bookbuilding with the offering the only deal in the market as high yields continued to rip, sources said.

While votes are still being counted, new deal activity is expected to pick up on the back of Antero’s successful offering and the projected outcome in Washington, which is a good one for capital markets.

Meanwhile, the secondary space continued to be bid up.

With large inflows to ETFs, buyers were outnumbering sellers.

“Things are printing at stupid high levels, there’s no supply of bonds,” a source said.

Several recent deals that dropped below par improved in active trading on Thursday.

MultiPlan’s 5¾% senior notes due 2028 (B3/B-) popped above par after sinking below in last week’s sell-off.

Restaurant Brands International Inc.’s 4% senior secured second-lien notes due 2030 (B2/B+) were also on the rise with the notes jumping to a 101-handle.

While the tide has turned with money piling into dedicated bond funds, high-yield mutual and exchange-traded funds still logged a multibillion-dollar weekly outflow through Wednesday’s close.

Funds saw $2.21 billion leave the space through Wednesday’s close, according to the Refinitiv Lipper Fund Flow Report Newsline.

Antero upsizes

Antero Midstream priced an upsized $550 million offering of long five-year senior notes (B3/B) at par to yield 7 7/8% in a Thursday drive-by.

Pricing came at the midpoint of talk for a yield of 7¾% to 8%. Initial guidance was in the low 8% area.

The deal was initially launched as a $400 million offering.

The offering was in demand during bookbuilding with the deal providing a good value to investors, a source said.

The offering was also the only deal in the market on a strong day.

Antero Midstream broke the primary market’s recent silence.

It was the first deal to price since Monday with the uncertainty surrounding the election keeping potential issuers at bay.

While the broader market has been focused on Washington, the projected outcome of the election – a Biden administration in the White House and Republican control of the Senate – is a good scenario for the high-yield market, a source said.

The pace of new issuance is expected to increase on the heels of Antero’s successful offering and the anticipated outcome of the election.

Improved

Several recent deals improved in active trading on Thursday with the overall space continuing to be bid up.

MultiPlan’s 5¾% senior notes due 2028 (B3/B-) topped par on Thursday after sinking well below it in last week’s sell-off.

The 5¾% notes stood poised to close Thursday at par 5/8, a source said.

There was more than $19 million of the bonds on the tape heading into the market close.

The notes closed out the previous week on a 98-handle.

Multiplan priced a $1.3 billion issue of the notes at par on Oct. 27.

Restaurant Brands’ 4% senior secured second-lien notes due 2030 (B2/B+) jumped to a 101-handle in active trading.

The notes were changing hands in the 101¼ to 101½ context heading into the market close, a source said.

There were more than $20 million of the bonds on the tape.

The notes started the week on a 99-handle but have risen alongside the broader market.

Restaurant Brands priced a $1.5 billion tap of the 4% notes at par on Oct. 14 after pricing the $1.4 billion issue at par on Sept. 16.

Indexes gain

Indexes posted their fourth consecutive day of gains on Thursday.

The KDP High Yield Daily index jumped another 45 bps to 67.15 with the yield now 5.19%.

The index was up 45 bps on Wednesday, 14 bps on Tuesday and 5 bps on Monday.

The ICE BofAML US High Yield index topped 2% year-to-date returns on Thursday.

The index jumped 64.3 bps with year-to-date returns now 2.387%.

The index gained 90.3 bps on Wednesday, 43.4 bps on Tuesday and 23.9 bps on Monday.

The CDX High Yield 30 index rose 98 bps to close Thursday at 106.21.

The index was up 83 bps on Wednesday, 76 bps on Tuesday and 14 bps on Monday.

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