Lithia Motors, Norwegian Cruise Line, Charter add-on price; Vertiv jumps; Teva, Hess Midstream active

By Paul A. Harris and Abigail W. Adams

Portland, Me., Dec. 2 – The domestic high-yield primary market saw a big start to the week with two new deals and one add-on pricing in drive-by action.

Norwegian Cruise Line Holdings Ltd. priced a $565 million issue of five-year senior notes (Ba2/BB+) and Lithia Motors, Inc. priced a $400 million issue of eight-year senior notes.

Charter Communications priced a $1.2 billion add-on to the CCO Holdings, LLC and CCO Holdings Capital Corp. 4¾% senior notes due March 1, 2030 (B1/BB/BB+).

The calendar also grew with Twitter, Inc. planning to start a roadshow for a $600 million offering of eight-year senior bullet notes on Tuesday.

Meanwhile, trading activity remained subdued in the secondary space with focus on the new deals in the market.

Teva Pharmaceutical Industries’ junk bonds remained active although they were largely trading sidewise after whipsawing between gains and losses last week.

Hess Midstream Partners LP’s 5 1/8% senior notes due 2028 (Ba3/BB+/BB+) also saw a fresh round of trading activity on Monday although with little movement in price.

Vertiv Group’s 9¼% senior notes due 2024 were the outperformers of Monday’s session with the notes jumping on talk of a buyout.

Big Monday kickoff

The new issue market got off to a big start on Monday, a session which saw a steady flow of news from start to finish.

Charter Communications priced a $1.2 billion add-on to the CCO Holdings, LLC and CCO Holdings Capital Corp. 4¾% senior notes due March 1, 2030 (B1/BB/BB+) at 101.125.

The reoffer price came at the rich end of price talk in the 101 area. Initial price talk was 100.875 to 101.875.

Norwegian Cruise Line Holdings priced a $565 million issue of five-year senior notes (Ba2/BB+) at par to yield 3 5/8% in a Monday drive-by, according to market sources.

The yield printed 12.5 basis points inside of price talk in the 3 7/8% area. Initial talk was in the 4% area.

Also in a drive-by, Lithia Motors priced a $400 million issue of 4 5/8% eight-year senior notes (Ba2/BB).

The deal was talked in the 4¾% area.

Away from Monday's drive-bys, Twitter plans to begin a brief roadshow on Tuesday for a $600 million offering of eight-year senior bullet notes.

Teva flat

Teva’s junk bonds remained active on Monday although they were trading sidewise following a week of large swings.

Teva’s recently priced 7 1/8% senior notes due 2025 were among the most active issues in the secondary space.

The notes traded up to a 102 handle early Monday but came in as the session progressed and stood poised to close the day at 101 5/8, according to a market source.

The bonds saw more than $26 million in reported volume.

The notes, which have largely languished at their issue price since hitting the aftermarket, were lifted early last week on news the company was working with the U.S. Department of Justice to resolve a criminal probe of the company for generic drug price-fixing.

The notes traded up to a 101 handle last Monday only to sell-off the following day on news of a new criminal investigation related to the pharmaceutical company’s role in the opioid epidemic.

While the 7 1/8% notes dipped below par, they quickly regained their footing and closed last week at 101¾.

Teva priced a $1 billion tranche of the 7 1/8% notes at par on Nov. 19.

Hess Midstream active

Hess Midstream’s recently priced 5 1/8% senior notes due 2028 were also active during Monday’s session.

However, the notes were largely unchanged in the high-volume activity.

Hess Midstream’s 5 1/8% senior notes due 2028 continued to trade around 101, according to a market source.

The 5 1/8% notes were active with more than $25 million in reported volume by the late afternoon.

The notes saw a strong start out of the gate. They traded up to 101 shortly after pricing, which is where they have remained.

Hess Midstream priced a $550 million issue of the 5 1/8% notes at par on Nov. 25 in a deal that saw a lot of reverse inquiry.

Vertiv jumps

Vertiv’s 9¼% senior notes due 2024 were the major gainers of Monday’s session with the notes jumping due to buyout speculation.

The 9¼% notes jumped 3¼ points to 102 in active trading, a market source said.

The notes were changing hands below par early in the session until news broke that an acquisition company was in talks to buyout Vertiv.

Reuters reported on Monday that GS Acquisition Holdings Corp. was in talks to acquire Vertiv for more than $5 billion including debt.

The infrastructure technologies company is currently owned by Platinum Equity.

$248 million inflows on Friday

The dedicated high-yield bond funds saw $248 million of net inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $153 million of inflows on the day.

Actively managed high yield funds saw $95 million of inflows on the day, the source said.

The combined funds had seen $18 billion of net inflows for the year 2019, to Friday's close, the source added.

Indexes

Indexes opened the week with losses.

The KDP High Yield Daily index dropped 7 basis points to close Monday at 70.83 with the yield now 5.21%.

After surpassing 12% returns at November’s close, the ICE BofAML US High Yield index once again dropped below the 12% threshold.

The index slid 8.7 bps with year-to-date returns now 11.982%.

The CDX High Yield 30 index closed Monday at 107.46.

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