Three junk issuers sell $2.18 billion; US Foods in focus; NGL gains; AMC flat

By Paul A. Harris and Abigail W. Adams

Portland, Ore., Jan. 26 – Three issuers crossed the finish line on Tuesday with single-tranche dollar-denominated deals, raising a combined total of $2.18 billion.

Executions continued to be tight, as late into January the primary market has seen few, if any, sloppy 2021 executions.

“Investors continue to have a lot of cash to put to work in high yield,” a senior sellside official said, adding that at present the drive to be invested far outweighs caution, among investors.

Meanwhile, new paper continued to dominate the tape.

NGL Energy Partners’ 7½% senior notes due 2026 (B1) were in focus. While the notes were trading off their highs, they continued to perform well.

US Foods, Inc.’s 4¾% senior notes due 2029 (Caa1/B+) were also up slightly in active trading after a strong break.

AMC Networks Inc.’s 4¼% senior notes due 2029 (Ba3/BB) were trading with a slight premium during Tuesday’s session although they lost momentum as the session progressed and closed the day flat.

Tuesday primary

CHS/Community Health Systems, Inc. returned to the new issue market after just one week, pricing $1.095 billion of 4¾% 10-year senior secured notes (Caa1/B-/B) at par, at the tight end talk.

By noon the deal was playing to a $3 billion order book, according to a trader who added that not a soul made mention of the fact that just one week ago, on Tuesday Jan. 19, CHS/Community Health Systems priced a $1.775 billion issue of 6 7/8% junior-priority secured notes due April 2029 (Caa3/CCC-/CC).

Elsewhere Aethon United BR LP priced a $750 million issue of 8¼% five-year senior notes (B3/B/B) at par, in the middle of downwardly revised talk.

Aethon was heard to be playing to $1.6 billion of interest, most of it from investors who came into the deal by the process of reverse inquiry, a bond trader said.

And HC2 Holdings, Inc. priced an upsized $330 million issue (from $300 million) of 8½% five-year senior secured notes (Caa1/B) at par, at the tight end of talk. The HC2 book was heard to contain around $600 million of orders around 10:45 a.m. ET on Tuesday, the trader said.

The active forward calendar also built up on Tuesday.

Hawaiian Airlines became the latest commercial air carrier to taxi up to the high-yield gate on Tuesday with a junk bond deal backed by assets related to its customer loyalty program, hoping to raise capital to help it weather the catastrophic impact of the Covid-19 pandemic on global travel.

The Honolulu-based carrier announced it would attempt to place $800 million of five-year first-lien senior secured notes (// B+) by means of a global investor conference call on Wednesday morning, hoping to price the deal on Thursday (see related stories in this issue).

NGL in focus

NGL’s 7½% senior notes due 2026 continued to perform well in high-volume activity on Tuesday.

The notes were marked at 101¾ bid, 102 offered heading into the close.

There was more than $51 million in reported volume.

While the notes were up ¼ from Monday’s close, they were coming in from the heights reached in intraday activity when the notes traded as high as 102½, a source said.

NGL priced a $2.05 billion issue of the 7½% notes on Monday.

Pricing came at the tight end of the 7½% to 7¾% yield talk.

US Foods gains

US Foods’ 4¾% senior notes due 2029 were in focus on Tuesday with the notes up slightly after a strong break.

The notes traded up ¼ point to a 101-handle. They were changing hands in the 101 to 101¼ context heading into the market close.

There was more than $135 million during Tuesday’s session.

US Foods priced an upsized $900 million, from $600 million, issue of the 4¾% notes on Monday.

Pricing came at the tight end of the 4¾% to 5% yield talk.

Par handle

AMC Networks’ 4¼% senior notes due 2029 were on a par handle in high-volume activity on Tuesday.

The notes were trading with a slight premium in intraday activity and were marked at par ¼ bid, par ¾ offered.

However, they closed the day wrapped around par, another source said.

There was more than $119 million in reported volume during Tuesday’s session.

AMC priced an upsized $1 billion, from $500 million, issue of the 4¼% notes at par on Tuesday.

The yield printed at the tight end of the 4¼% to 4½% yield talk.

$754 million Monday outflows

The dedicated high-yield bond funds sustained $754 million of net daily outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs sustained big outflows of $864 million on the day.

However, actively managed high-yield funds were positive on the day, with $110 million of inflows, the source said.

The combined funds are tracking around $1 billion of net outflows for the week that will conclude with Wednesday's close, the source said.

Indexes mixed

Indexes were again mixed on Tuesday with one seeing nominal gains and others losses.

The KDP High Yield Daily index shaved off 4 points to close Tuesday at 69.35 with the yield now 4.24%. The index gained 1 point on Monday.

The ICE BofAML US High Yield index gained 2.3 bps with the year-to-date return 0.512%.

The index was up 4.8 bps on Monday.

The CDX High Yield 30 index dropped 15 points to close Tuesday at 108.40.

The index sank 11 points on Monday.

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