Nathan’s prices, pops, dollar primary otherwise quiet, euro market busy; hospitals mostly off; SuperValu gyrates

By Paul Deckelman and Paul A. Harris

New York, Oct 18 – The high-yield dollar-denominated market saw its third relatively quiet session in as many days on Wednesday, as only one single-tranche offering priced, the same as happened on Monday and again on Tuesday.

This time it was fast-food restaurateur Nathan’s Famous, Inc., which priced $150 million of eight-year secured notes in a regularly scheduled forward calendar transaction.

Traders said that the investors greeted the new deal from the hot dog and French-fry emporium operator with considerable relish, as the new bonds shot up in active aftermarket dealings.

With the dollar market otherwise muted, the spotlight shifted to the euro-denominated sphere, with French vehicle-rental company Europcar pricing a €950 million two-part offering of secured and unsecured notes, while Italian telecommunications operator WindTreSpA began shopping around a €7.3 billion equivalent behemoth of a multi-tranche deal, which will include both euro-and dollar-denominated components.

Back among the purely dollar-denominated credits, traders said that hospital names such as Community Health Systems, Inc. and Tenet Healthcare Corp., up over the past two days after having been battered on Friday, were mostly back on the downside on Wednesday. But HCA Inc. seemed to be holding its own.

SuperValu, Inc.’s notes were gyrating around – first moving higher but then ending the day lower, as the supermarket operator and grocery wholesaler announced fiscal second-quarter results and an acquisition in the wholesale area.

Statistical market performance measures were higher across the board for a second consecutive session on Wednesday; those indicators had firmed on Tuesday for the first time in a week, improving after having been mixed on Friday and again on Monday, which followed a lower session all around last Thursday.

Wind roadshows €7.3 billion

The European primary market took the spotlight on Wednesday as Wind Tre SpA started a roadshow for a whopping €7.3 billion equivalent amount of senior secured notes (B1/BB-/BB).

The debt refinancing deal is coming in five benchmark sized tranches:

• Euro-denominated five-year fixed-rate notes with two years of call protection;

• Euro-denominated seven-year fixed-rate notes with three years of call protection;

• Dollar-denominated eight-year fixed-rate notes with three years of call protection;

• Euro-denominated six-year floating-rate notes with six months of call protection; and

• Dollar-denominated five-year floating-rate notes with one year of call protection.

The European roadshow wraps up on Friday.

A roadshow in the United States is set to begin on Monday and run through Wednesday, Oct. 25.

Further timing remains to be announced.

Joint global coordinator Deutsche Bank will bill and deliver for the euro-denominated notes.

Joint global coordinator BofA Merrill Lynch will bill and deliver for the dollar-denominated notes.

HSBC is also a joint global coordinator.

Europcar €950 million inside of talk

Elsewhere in the European market Europcar priced €950 million of high-yield notes in secured and unsecured tranches, both of which blew through talk.

EC Finance plc (Fleetco) priced €350 million of five-year senior secured notes (B1/BB) at par to yield 2 3/8%. Yield printed 50 basis points inside of yield talk in the 2¾% area. Joint global coordinator and joint bookrunner BNP Paribas will bill and deliver. HSBC is also a joint global coordinator and joint bookrunner.

Proceeds of the tranche will be used to refinance €350 million of EC Finance notes due 2021.

Europcar Drive DAC (EGSA) priced €600 million of seven-year senior unsecured notes (B3/B-) at par to yield 4 1/8%. The yield printed 12.5 bps inside of the 4¼% to 4½% yield talk. Joint global coordinator and joint bookrunner Deutsche Bank will bill and deliver for the unsecured notes. Credit Agricole and BofA Merrill Lynch are also joint global coordinators and joint bookrunners.

Proceeds will be used to finance the acquisition of smart car rental company Goldcar.

Nathan's Famous prices tight

In the dollar-denominated primary market Nathan's Famous, Inc. priced a $150 million issue of eight-year senior secured notes (B3/B-) at par to yield 6 5/8%.

The yield printed at the tight end of yield talk in the 6¾% area.

Jefferies was the sole bookrunner.

The Jericho, N.Y.-based company plans to use the proceeds to refinance its 10% notes due 2020, as well as to fund a dividend, and for general corporate purposes.

Activity in the dollar-denominated market remained muted on Wednesday, as it has throughout the Oct. 16 week, with sources attributing the thin news volume to earnings blackouts, on the part of some prospective issuers, and to the deadlocked American League pennant race between the Houston Astros and the New York Yankees, said to be commandeering a sizable portion of market participants' attention.

New Nathan’s better

In the secondary realm, traders saw the new Nathan’s Famous 6 5/8% senior secured notes due 2025 having firmed smartly after pricing at par off the forward calendar.

One trader initially saw the bonds in a 100¾ to 101¾ bid context on the break.

Other traders saw the bonds improve beyond those levels, with one pegging the notes at 102 bid, and a second seeing them between 102 and 102½, with over $18 million traded.

A trader noted that weighing in at $150 million, “it’s a smallish deal – so anything is going to move that around a little bit.”

Recent issues active

Among recently priced issues, Charter Communications Inc.’s 5% notes due Feb. 1, 2028 improved by 3/8 point on Wednesday to finish at 99 5/8 bid, with over $29 million having changed hands.

The bonds had also been busy on Tuesday, when over $37 million had traded and the issue finished up 1/8 point on the day.

Stamford, Conn.-based cable, broadband and telephone service provider Charter priced a $1 billion add-on to its existing 5% notes on Oct. 10, with the bonds coming to market at 98.5 to yield 5.189%.

The add-on was part of a quick-to-market two-part deal totaling some $1.5 billion, including $500 million of 4% notes due March 1, 2023, which priced at par.

A trader said that West Corp.’s 8½% notes due 2025 “have been fairly active,” seeing them finish up ¼ point on Wednesday around the 98¾ bid mark.

At another desk, though, a market source saw them ease slightly, to around 98 9/16 bid, on volume of over $17 million – still among the day’s Most Actives, although that was down from over $41 million traded on Monday and $26 million of Tuesday.

West, an Omaha, Neb.-based provider of communications and network infrastructure services, priced $1.15 billion of those notes at 98.579 back on Oct. 3, yielding 8¾%.

That regularly scheduled forward calendar offering was downsized from an originally announced $1.3 billion.

A trader said that Beacon Roofing Supply Inc.’s 4 7/8% notes due 2025 “were also pretty busy – but they weren’t really going anywhere,” staying stuck around the101 bid level, with more than $14 million of turnover.

A second market source, though, said the bonds had moved up by 3/8 point on the day to the 101 1/8 bid level.

Herndon, Va.-based Beacon, a maker of roofing products for the residential and commercial construction markets, priced $1.3 billion of the notes at par on Oct. 11 in a regularly scheduled offering.

Hospitals head lower

Away from the new or recently priced issues, traders said that most hospital names were off on Wednesday, some in active trading, breaking a two-session winning streak during which the healthcare names had headed higher following some rocky trading at the tail end of last week.

The sector names have been lately gyrating amid the latest Washington developments on the nation’s Affordable Care Act, popularly known as Obamacare. They fell last week as the Trump administration issued several executive orders forbidding certain reimbursements to insurance companies, while allowing the formation of new groups for the purpose of buying healthcare insurance at presumably better rates.

News Monday and Tuesday of a possible bipartisan compromise on an Obamacare fix, which had helped the hospital names, seemed to fizzle on Wednesday, sending the bonds back down.

“The hospital names were off, with all of this Washington back-and-forth pulling,” one observer declared.

A trader saw Community Health Systems’ 6 7/8% notes due 2022 “off a bit, down ½ to 1 point,” closing around 75½ bid. A second trader called them half-point losers at 75½ bid, with over $29 million traded.

The source saw the Franklin, Tenn.-based healthcare company’s 7 1/8% notes due 2020 doing even worse, dropping down a deuce on the day to end at 87 bid, on over $31 million of volume.

Its 8% notes due 2019 lost 5/8 point, going out at 97¼ bid, with around $12 million having traded.

Dallas-based hospital operator Tent’s 6¾% notes due 2023 ended down 1 point on the day at 94 bid, with over $23 million traded, while its 8 1/8% notes due 2022 “were actually up on the day,” one of the traders said, locating the issue at 101¼ bid, up ¼ point on the day, on volume of about $20 million.

And Nashville-based healthcare industry giant HCA’s 5 7/8% notes due 2026 were also bucking the generally negative trend, seen up 9/32 point on the day at 106 1/16 bid, with over $17 million having traded.

SuperValu volatility

Traders saw SuperValu’s 7¾% notes due 2022 gyrating around, with the bonds having jumped by 2 points early in the session, to highs of around 97½ bid – only to give up those early gains and then some.

“They had been off a little yesterday [Tuesday], ahead of the company’s release of its fiscal second-quarter results,” a trader said.

“Then they rebounded, to around 96½ or 97.”

But by the end of the day, he said, the bonds had fallen back to around 94 bid, which he called down 1 point from Tuesday’s close and down more than 2½ points from their intraday high on Wednesday.

Volume was around $10 million.

The company’s 6¾% notes due 2021 “were at 97 right out of the gate,” another trader said, “but then down 1½ or 2 points or more after that.”

Another trader saw them ultimately ending around the 95 level, “pretty much flat on the day, but not on huge volume.”

Eden Prairie, Minn.-based SuperValu, a retail supermarket operator and wholesale grocery supplier to other supermarket companies, reported quarterly earnings – but while the numbers beat expectations, same-store-sales slid by 3.5% from year-ago levels, indicating continued weakness in the company’s retail operations.

That was also blamed for an 11% plunge in the company’s New York Stock Exchange-traded shares Wednesday.

SuperValu also announced that it had agreed to acquire Associated Grocers of Florida, Inc., a cooperative supplier of groceries to independent retailers in that state, for $180 million, further enhancing its wholesale operations component.

Indicators stay higher

Statistical market performance measures were higher across the board for a second consecutive session on Wednesday; those indicators had firmed on Tuesday for the first time in a week, improving after having been mixed on Friday and again on Monday, which followed a lower session all around last Thursday.

The KDP High Yield Daily Index saw its second gain in a row, firming by 4 basis points to end at 72.46. On Tuesday, the index rose by a robust 8 bps, after two straight losses of 4 bps on Friday and 1 bp on Monday.

Its yield was unchanged Wednesday at 5.16%, after having come in by 3 bps Tuesday – its first such tightening after six straight sessions of having widened out, including by 2 bps on Monday.

The Markit CDX Series 29 High Yield Index was on the plus side for a fourth successive session, edging up by a little more than 1/16 point to finish at 108¼ bid, 108 9/32 offered. The index had also moved up by 3/32 point on both Monday and Tuesday, following a 1/8 point rise on Friday.

And the Merrill Lynch North American High Yield Index improved by 0.076% on Wednesday, its third consecutive advance. It had also firmed by 0.086% on Tuesday and by 0.075% on Monday after two straight sessions during which it was in retreat, losing 0.067% last Thursday and easing by 0.01% on Friday.

The latest gain lifted its year-to-date return to 7.47% from 7.388% on Tuesday, establishing a second straight new 2017 year-to-date peak level.

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