Gray, Roblox price new junk paper; Netflix active on IG upgrade; Oasis jumps on buyout

By Paul A. Harris and Abigail W. Adams

Portland, Me., Oct. 26 – In the high-yield primary market on Tuesday, Gray Television, Inc. and Roblox Corp. sold $2.3 billion of new junk paper between them.

Meanwhile, the secondary space was firm on Tuesday as the 10-year Treasury yield continued to tick lower and earnings reports continued to best expectations.

While new issues have been a focal point for trading activity, ratings upgrades and merger and acquisition news sparked activity in outstanding issues on Tuesday.

Netflix Inc.’s unsecured senior notes were active with the notes shifting hands after S&P Global Ratings boosted the notes to investment grade.

Oasis Midstream Partners LP’s 8% senior notes due 2029 (B2/B) surged in active trading following news Crestwood Equity Partners LP would buy out the company.

While volume in the name was light, Oasis Petroleum Inc.’s 6 3/8% senior notes due 2026 were also lifted as a result of the deal.

Gray and Roblox

Two big dollar-denominated single-tranche deals that were introduced into the market on Monday priced during Tuesday's session in the high-yield primary market.

Gray Television, Inc. priced an upsized $1.3 billion issue (from $1.125 billion) of 5 3/8% 10-year senior notes (B3/B/BB-) at par, at the tight end of talk.

It was heard to be more than three-times oversubscribed.

And Roblox Corp. priced a $1 billion issue of 3 7/8% 8.5-year senior notes (Ba2/BB) at par, in the middle of talk.

Roblox books were heard to have undergone a relatively slow build, with some investors professing reticence with pricing below 4%, a trader said.

However sufficient interest ultimately took hold, with the deal playing to as much as $1.8 billion of orders at the close of books, the source added.

Meanwhile there was news on a buyout transaction that some accounts have taken to calling “the deal of the week.”

CA Magnum Holdings talked its $1.01 billion offering of five-year senior secured notes (B1//BB-) to yield 5½% to 5¾%, tight to initial guidance.

The notes offer, backing the buyout of India-based Hexaware Technologies by Carlyle Group, is heard to be going very well, a trader said.

Early Tuesday the CA Magnum books already contained orders in excess of four-times deal size, the source added (see stories on all of Tuesday's new issue action in this issue).

Finally, there were rumblings Tuesday on the Monitronics International, Inc. (Brinks Home) $1.1 billion first-lien notes offer (Caa1/B-), a deal that ran a roadshow in mid-October before going quiet, with no official price talk, but with initial guidance in the 10% area.

That deal is heard to still be alive, a trader said on Tuesday, and added that price discovery on Monitronics' offer is apparently underway.

Netflix active

Netflix’s senior notes were active on Tuesday with the notes shifting hands after S&P boosted the streaming behemoth to investment grade.

Netflix’s 4 7/8% senior notes due 2030 were changing hands around 118 in the late afternoon, a source said.

There was $37 million in reported volume.

While active, there was little movement in the price.

Netflix’s 5 3/8% senior notes due 2029 continued to trade around 121 with about $19 million in reported volume.

The 5 3/8% notes climbed 1 point on Monday.

S&P boosted Netflix’s credit rating and its rating on its unsecured debt to BBB from BB+ on Monday.

The upgrade was the result of the rating agency’s improved view of Netflix’s business strength with its risk profile now viewed as strong and its adjusted leverage of 1.4x below that of its peers, Prospect News reported.

Oasis Midstream surges

Oasis Midstream’s 8% senior notes due 2029 surged in active trading on Tuesday following news of its acquisition.

The 8% senior notes climbed more than 4 points to close the day at 109.5, according to a market source.

There was more than $10 million in reported volume.

The notes jumped following news Crestwood Equity Partners would acquire Oasis Midstream in an equity and cash deal with an enterprise value of $1.8 billion.

Crestwood will acquire Oasis Midstream’s $660 million in outstanding debt as part of the transaction.

The deal also lifted Oasis Petroleum’s 6 3/8% senior notes due 2026, which rose about 5/8 point to close the day at 105¾.

Oasis Petroleum is Oasis Midstream’s sponsor.

Oasis Petroleum will receive $150 million in cash plus 21 million of Crestwood’s common units in exchange for its 33 million common units of Oasis Midstream.

In addition, Oasis Petroleum will receive an extra $10 million in cash and the right to appoint two directors to Crestwood’s board.

$174 million Monday outflows

The dedicated high-yield bond funds sustained $174 million of net outflows on Monday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFS saw $144 million of outflows on the day.

Actively managed high-yield funds sustained $30 million of outflows on Monday, the source said.

The combined funds are tracking $871 million of net inflows for the week that will conclude with Wednesday's close, according to the market source.

Indexes

The KDP High Yield Daily index shaved off 1 point to close Tuesday at 69.31 with the yield now 3.88%. The index slid 5 points on Monday.

The CDX High Yield 30 index rose 14 bps to close Tuesday at 109.21.

The index gained 2 bps on Monday.

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