Euro junk primary on fire; Iliad strong on break; U.S. Acute Care, Harvest Midstream fade

By Abigail W. Adams

Portland, Me., April 30 – While the domestic high-yield primary market was quiet on Tuesday, the European market continued to unleash offerings with four deals pricing during Tuesday’s session and two more joining the forward calendar.

Iliad Holding SAS’ two-tranche, dual currency offering of seven-year senior secured notes (B2/B+/BB-) was among the deals pricing Tuesday, with the deal playing to strong demand.

The dollar-denominated tranche had a strong break despite a rough day for the market.

The heavy market conditions on Tuesday may have put a damper on domestic dealmaking with the market weak on the eve of the Federal Open Market Committee’s Wednesday announcement.

The cash bond market was off ¼ point with bids-wanted-in-competition lists outpacing offers-wanted-in-competition lists at a four-to-one ratio, a source said.

Selling pressure was setting in with the market expecting a hawkish tone from the Fed and bracing for a higher-for-longer rate environment.

The deals to price during Monday’s session faded under the heavy market conditions.

However, Harvest Midstream I, LP’s new 7½% senior notes due 2032 (B1/BB-/BB-) and U.S. Acute Care Solutions LLC’s 9¾% senior secured notes due 2029 (B3/B-) were still holding a nominal premium to their issue prices in active trade.

Iliad in demand

Iliad Holding priced a two-tranche offering of dollar-denominated and euro-denominated seven-year senior secured notes on Tuesday.

The deal played to strong demand with the euro tranche upsizing and both tranches coming tight to talk.

The deal consisted of a $750 million tranche, which priced at par to yield 8½%, and an upsized €600 million tranche, which priced at par to yield 6 7/8%.

The dollar-denominated tranche priced at the tight end of talk for a yield of 8½% to 8¾%, which was on top of early guidance.

The euro-denominated tranche was upsized from €500 million and priced at the tight end of talk for a yield in the 7% area.

The dollar-denominated tranche was in focus in the secondary space after breaking for trade and broke above a par-handle on debut.

The notes were trading in the par 7/8 to 101 1/8 context in heavy volume heading into the market close, a source said.

Fading

Harvest Midstream’s 7½% senior notes due 2032 and U.S. Acute Care Solutions’ 9¾% senior secured notes due 2029 gave back some gains from strong breaks the previous session.

However, the notes continued to hold a nominal premium to issue price despite the heavy market conditions on Tuesday.

Harvest Midstream’s 7½% senior notes due 2032 were off about ¼ point alongside the broader market.

They were trading in the par to par ¼ context heading into the market close, a source said.

There was $30 million in reported volume.

Harvest Midstream priced a $500 million issue of the 7½% notes at par in a Monday drive-by.

Pricing came at the tight end of talk for a yield of 7½% to 7 5/8%.

U.S. Acute Care’s 9¾% senior secured notes due 2029 fell ½ to ¾ point.

The notes were trading in the 98 to 98¼ context heading into the market close, a source said.

There was $79 million in reported volume.

The notes traded as high as 99 on the break.

U.S. Acute Care priced an $800 million issue of the 9¾% notes at 98.071 to yield 10¼%.

Pricing came on top of talk for a discounted offer price of 2 points and at the wide end of talk for a yield of 10% to 10¼%.

Indexes

The KDP High Yield Daily index fell 18 basis points to close Tuesday at 49.58 with the yield now 7.24%. The index gained 14 bps on Monday.

The CDX High Yield 30 index sank 52 bps to close Tuesday at 105.84.

The index inched up 8 bps on Monday.

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