Forward calendar grows; Option Care flat; LABL tranches mixed

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 25 – While only one small add-on priced on Monday, the high-yield forward calendar continued to grow with the primary market setting the stage for another high-volume week.

Gray Television, Inc. plans to price a $1.125 billion offering of 10-year senior notes (existing ratings B3/B/BB-) and Roblox Corp. plans to price a $1 billion offering of 8.5-year senior notes (expected ratings Ba2/BB) on Tuesday.

The two deals join a forward calendar that already had about $3 billion in the market.

Meanwhile, the secondary space remained unchanged, despite a strong day for equities that saw the Dow Jones industrial average and S&P 500 index at another all-time high.

While the 10-year Treasury yield ticked lower to close the day at 1.635%, there remains some apprehension in the market with the sentiment far from risk-on, a source said.

Market players continued to reduce risk with lower quality credits underperforming on Monday.

The sentiment was reflected in the performance of some recent deals.

LABL, Inc.’s secured notes were putting in a strong performance in the secondary space with the notes rising to a 101-handle while the company’s higher coupon, unsecured counterpart, at times, lagged their issue price.

Option Care Health, Inc.’s 4 3/8% senior notes due 2029 (B3/B-) were also stuck at par in active trading.

Monday’s primary

The final week of October in the high-yield primary market got underway with a burst of Monday news.

The session saw one drive-by – a small one – clear the market.

Viking Cruises Ltd. priced an upsized $150 million add-on (from $100 million) to its 7% senior notes due Feb. 15, 2029 (Caa2/CCC) at 99.5 to yield 7.086%.

It came on top of price talk and at the rich end initial talk.

The Tuesday session could be a big one, just in terms of announced business.

There are three deals on timelines that could bring them to the block before Tuesday's close.

Two are acquisition financings.

Gray Television announced plans to price a $1.125 billion offering of 10-year senior notes (existing ratings B3/B/BB-) on Tuesday.

The deal, backing Gray's acquisition of Meredith Local Media Group, is in the market with initial guidance in the 5½% to 5¾% area.

CA Magnum Holdings is scheduled to wrap up its roadshow on Tuesday for a $1.01 billion offering of five-year senior secured notes (B1//BB-) backing the buyout of India-based Hexaware Technologies by Carlyle Group.

The deal, which is being transacted on the U.S. high-yield desk, is in the market with initial guidance of 5¾% to 6%.

Apart from those two acquisition deals online game platform Roblox Corp. expects to price a $1 billion offering of 8.5-year senior notes (expected ratings Ba2/BB) on Tuesday.

The deal, to fund general corporate purposes, is in the market with initial guidance in the high 3% area.

LABL mixed

LABL’s two tranches of senior notes were mixed in active trading on Monday with the secured notes outperforming their higher coupon, lower rated counterpart.

LABL’s 8¼% senior notes due 2029 (Caa2/CCC+) were struggling in the aftermarket with the notes changing hands in the 99 5/8 to par context heading into the market close, a source said.

There was about $16 million in reported volume.

However, LABL’s 5 7/8% senior secured notes due 2028 (B2/B-) were trading at a steep premium to their discounted issue price.

The 5 7/8% notes traded to a low of par 1/8 on Monday but gained strength as the session progressed and rose to a 101-handle.

The notes were changing hands in the 101 to 101¼ context heading into the close.

“There’s not a lot of love for the weaker part of the capital structure,” a source said.

LABL, Inc. priced a $500 million tranche of the 5 7/8% notes at 99.293 to yield 6% and a $460 million tranche of the 8¼% notes at par on Friday.

The leveraged buyout deal, which is backing the acquisitions of Multi-Color Corp. and Fort Dearborn Co. by Clayton Dubilier & Rice, LLC (CD&R), struggled during bookbuilding.

The tranche sizes were downsized, pricing widened and there were covenant changes.

Multi-Color’s latest leveraged buyout deal comes just two years after the company priced a $1.39 billion two-tranche offering backing Platinum Equity’s acquisition of the label maker.

Option Care flat

Option Care’s 4 3/8% senior notes due 2029 fell flat in the aftermarket.

The 4 3/8% notes traded as low as 99¾ during Monday’s session. However, they climbed back to par with the overall market gaining strength as the session progressed.

The notes were changing hands in the par to par ¼ context heading into the close.

Option Care Health priced a $500 million issue of 4 3/8% notes at par on Friday.

The yield printed at the tight end of yield talk in the 4½% area.

$350 million Friday inflows

The dedicated high-yield bond funds saw $350 million of net daily inflows on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs saw $258 million of inflows on the day.

Actively managed high-yield funds saw $92 million of inflows on Friday, the source said.

Indexes

The KDP High Yield Daily index slid 5 points to close Monday at 69.32 with the yield 3.88%.

The index posted a cumulative loss of 8 points the previous week.

The CDX High Yield 30 index gained 2 bps to close Monday at 109.07.

The index fell a cumulative 29 bps the previous week.

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