Merlin, Speedway price; new Charter notes rise; pharma names lifted; Sprint, T-Mobile higher

By James McCandless

San Antonio, Oct. 16 – The Wednesday high-yield primary market generated a steady flow of news as the European new issue market continued to wind its way through a big week, while the secondary market gave the majority of its attention to new issuance and pharma names.

Merlin Entertainments plc priced $410 million and €370 million of eight-year notes.

In a straight-up dollar-denominated trade from an issuer based in the United States Speedway Motorsports, LLC priced an upsized $350 million issue of eight-year senior notes.

In the secondary, two new notes from Charter Communications, Inc. were free to trade on Wednesday, both seeing higher results.

News of more settlements in the pharma industry spurred gains for Mallinckrodt plc’s and Teva Pharmaceutical Industries Ltd.’s notes.

Telecom names Sprint Corp.’s and T-Mobile US Inc.’s paper moved higher after the Federal Communications Commission approved their merger.

Merlin, Speedway price

England-based Merlin Entertainments plc saw razor-sharp executions on both tranches of its approximately £635 million equivalent of eight-year senior notes (B3/B-).

The deal included $410 million of notes that priced at par to yield 6 5/8%, 37.5 basis points inside of the low end of the 7% to 7¼% price talk.

The family entertainment company also priced €370 million of the notes at par to yield 4½%, again 37.5 bps inside of the tight end of price talk in the 5% area.

Meanwhile in a straight-up dollar-denominated trade from an issuer based in the United States Speedway Motorsports priced an upsized $350 million issue of eight-year senior notes (B1/BB+) at par to yield 4 7/8%.

The issue size was increased from $300 million.

The active forward calendar continued to regenerate with the addition of a deal in two benchmark tranches from Netherlands-based cable operator VodafoneZiggo, in the market with 10.25-year senior secured notes (expected ratings B1/B+/BB) in dollar- and euro-denominated tranches.

Although official tranche sizes and talk are pending, the market is looking for €1 billion-plus of euro-denominated notes to price in the low-3% area and $500 million to $700 million of dollar-denominated notes to come in the low-5% area, a bond trader said (see related stories in this issue).

Tuesday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Tuesday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw a whopping $838 million of inflows on the day.

Actively managed high-yield funds saw $25 million of inflows on Tuesday, the source said.

Charter rises

Two new notes from Charter were spotted rising, traders said.

The Stamford, Conn.-based telecommunications and mass media company’s new $500 million add-on to its 4¾% senior notes due 2030 ticked up ¼ point to close at 101¾ bid.

About $38 million of the notes traded.

The deal was priced at 101.25 to yield 4.597% in a quick-to-market Tuesday trade.

The reoffer priced above price talk of 101.

Meanwhile, the company’s new $1.5 billion 4.8% senior secured notes due 2050 moved up to 100¼ bid.

The concurrent deal came to market on Tuesday at 99.436 to yield 4.836%.

The deal was placed via subsidiaries Charter Communications Operating, LLC and Charter Communications Operating Capital Corp.

Pharma names gain

Amid more shifting ground in the industry, pharma names like Mallinckrodt’s issues were gaining, market sources said.

The 5.5% senior notes due 2025 added ¾ point to close at 31½ bid. The 5¾% senior notes due 2022 rose ½ point to close at 38 bid.

The Staines-upon-Thames, England-based drugmaker’s two tranches combined to see about $49 million trading by the end of the day.

On Wednesday, industry peer Johnson & Johnson announced that it is offering $4 billion to settle all opioid-related claims against the company.

At the same time, three drug distributors are planning to propose a settlement of up to $50 billion.

A number of drug makers are exploring ways to either propose their own blanket settlements against varying claims or take part in Purdue Pharma’s active case.

“Anything they can do to mitigate the damage will be seen as a win in the market’s eyes,” a trader said.

Also on Wednesday, Petach Tikva, Israel-based generic producer Teva offered to donate $15 billion in generic drugs over a 10-year period as part of a potential settlement package.

Its 2.2% senior paper due 2021 gained ¾ point to close at 94 bid. The 6¾% paper due 2028 also improved by ¾ point to close at 88 bid.

Sprint, T-Mobile higher

In telecom, Sprint’s notes were seen moving higher, traders said.

The 7 7/8% senior notes due 2023 picked up ½ point to close at 111½ bid.

About $20 million of the notes changed hands.

News broke on Wednesday that the FCC voted to approve the Overland Park, Kan.-based mobile phone network provider’s merger with sector peer T-Mobile after months of deliberation.

The timeline of approval briefly came into doubt last month after the government opened an investigation into the company over alleged abuse of government subsidies.

The Department of Justice approved of the $26.5 billion merger in July, though it still faces a multi-state lawsuit that alleges that the deal would lead to a blanket rise in prices for consumers.

Bonn, Germany-based T-Mobile’s 6% senior notes due 2023 improved by ¼ point to close at 102¼ bid.

Indexes better

Three high-yield indexes closed the session on better footing.

The KDP High Yield Daily index shifted up 7 bps on Wednesday to close at 71.23 with the yield reducing to 5.55%.

The index added 5 bps on Tuesday, shot up 11 bps on Friday and tacked on 1 bps on Thursday.

The ICE BofAML US High Yield index added 9.1 bps with the year-to-date return now at 11.660%

The index gained 15.2 bps on Tuesday, improved by 22.8 bps on Friday and rose 6.4 bps on Thursday.

The CDX High Yield 30 index was positive by 34.04 bps to 107.0964.

The index picked up 34.15 bps on Tuesday, gained 34.82 bps on Friday and moved up 35.83 bps on Thursday.

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