Altice/CSC Holdings levels off in junkland; Staples, Adept Health up on earnings

By Paul A. Harris and Abigail W. Adams

Portland, Me., Feb. 27 – It was “crickets” in the high-yield primary market on Tuesday, although there was a press release concerning a $200 million tap of Hamilton, Bermuda-based Borr Drilling Ltd./Borr IHC Ltd.’s 10% senior secured notes due Nov. 15, 2028.

As to why the market went generally quiet after Monday’s $2.75 billion burst of drive-by action, a trader pointed to the J.P. Morgan 2024 Global High Yield & Leveraged Finance Conference, underway through Wednesday in Miami, which always commands a good deal of the market’s attention.

However, in the past JPMorgan left-books drive-by deals have actually surfaced during the conference.

In any case, the session closed with just one dollar-denominated offer on the active calendar.

Clear Channel Outdoor Holdings, Inc. is marketing $865 million of six-year senior secured notes (B1/B) with initial guidance of 8¼% to 8½%.

The deal is expected remain in the market into the week ahead.

There is also one euro-denominated deal in the market.

Germany-based travel group TUI AG is shopping a €300 million offering of five-year sustainability-linked notes (B1/B+) whispered in the high-6% area, and on a roadshow expected to wrap up Wednesday.

A London-based market source, who characterized TUI as the week’s sole straight high-yield corporate deal, said that there is a substantial March euro-denominated deal pipeline.

Meanwhile, it was another sideways day in the secondary space with the cash bond market either side of unchanged as market players eyed the pending GDP print on Wednesday and the Consumer Price Expenditure report on Thursday.

While the deals to price the previous session fell flat in the aftermarket, topical and earnings-related news continued to spark large price movements.

From recent deals, Wesco Distribution, Inc.’s two tranches of senior notes (Ba3/BB/BB+) and Builders FirstSource, Inc.’s 6 3/8% senior notes due 2034 (Ba2/BB-) were wrapped around their issue prices in heavy volume with the tight pricing leaving the notes little room for movement.

Reacting to topical news, Altice USA Inc. subsidiary CSC Holdings LLC’s senior notes were finding their levels in active trade on Tuesday after surging the previous session on news Charter Communications was considering a takeover bid.

Earnings also sparked large movements to the upside with AdaptHealth LLC’s 5 1/8% senior notes due 2030 (B1/B) jumping 4 points and Staples Inc.’s senior notes adding 1 to 4 points on positive results.

Flat

The recent deals to hit the secondary market fell flat on Tuesday with the tight pricing leaving little room for movement.

Wesco’s 6 3/8% senior notes due 2029 and the 6 5/8% senior notes due 2032 were both stuck in the par to par 3/8 context in heavy volume.

“They’re not going anywhere,” a source said.

The notes dominated activity with $77 million and $55 million in reported volume respectively.

Wesco priced an upsized $900 million, from $750 million, tranche of the 6 3/8% notes and an $850 million tranche of the 6 5/8% notes at par in a Monday drive-by.

The 6 3/8% notes priced at the tight end of yield talk in the 6½% area; the 6 5/8% notes priced at the tight end of yield talk in the 6¾% area.

Builders FirstSource’s 6 3/8% senior notes due 2034 were wrapped around issue price with the notes trading in a tight range in the 99 7/8 to par 1/8 context throughout the session, a source said.

There was $47 million in reported volume.

Builders FirstSource priced an upsized $1 billion, from $600 million, issue of the 6 3/8% notes at par in a Monday drive-by.

The yield printed in the middle of yield talk in the 6 3/8% area.

CSC rally continues

Altice USA subsidiary CSC Holdings’ senior notes were finding their levels in active trade on Tuesday after surging following news Charter was considering a takeover bid for the company.

CSC Holdings’ most recently priced 11¾% senior guaranteed notes due 2029 (B2/B) were the most active in the debt stack.

The notes leveled off on a 104-handle and were trading in the 104 to 104½ context heading into the market close, a source said.

There was $57 million in reported volume.

The notes shot as high as 105 the previous session.

The telecom priced the $2.05 billion issue at par on Jan. 18.

CSC Holdings’ 4 5/8% senior notes due 2030 (Caa2/CCC) climbed 3 points to level off on a 55-handle.

The notes were trading in the 55¼ to 55¾ context throughout the session with the yield 15½%.

There was $27 million in reported volume.

The notes jumped as high as 57 after the Charter news hit the market but closed the day in the 52½ to 53 context.

The notes opened Monday on a 44-handle.

The 7½% senior notes due 2028 launched Tuesday wrapped around 71 but continued to weaken as the session progressed, a source said.

The 7½% notes were trading in the 69¼ to 70¼ context heading into the market close with the yield over 18%.

There was $24 million in reported volume.

The notes jumped 12 points to trade as high as 74 the previous session.

The 4½% senior guaranteed notes due 2031 (B2/B-) reclaimed their previous heights to trade on a 74-handle.

The notes were changing hands in the 74¼ to 74¾ context with the yield about 9 1/8%, a source said.

The notes traded as high as 74 after the Charter news but closed the day in the 72½ to 73 context.

They opened Monday on a 68-handle.

News that Charter was considering a takeover bid for Altice USA hit the market midsession Monday and sent Altice USA’s capital structure soaring.

CSC Holdings’ unsecured notes jumped double digits while its guaranteed notes also logged strong 3 to 5 point gains.

However, the merger chatter is preliminary with Altice USA yet to hear from Charter, a source said.

Earnings

Positive earnings results sparked large movements to the upside in outstanding issues on Tuesday.

Adapt Health’s 5 1/8% senior notes due 2030 jumped 4 points to an 84-handle in heavy volume.

The notes closed the day in the 84 to 84 3/8 context with the yield about 8½%, a source said.

There was $16 million in reported volume.

The notes jumped after the company reported a revenue and EBITDA beat although guidance was slightly below estimates, a source said.

Staples’ senior notes also made large gains after the office supply retailer pre-released earnings.

Staples’ 10¾% senior notes due 2027 (Caa2/CCC) climbed almost 4 points to close the day wrapped around 88, a source said.

The yield was 15¾%.

There was $11 million in reported volume.

The 7½% senior secured notes due 2026 (B3/B) added 1 point to close the day wrapped around 96 with the yield 9 5/8%, a source said.

There was $15 million in reported volume.

The notes attracted strong buying interest after the company released earnings which reflected a strong uptick in revenue and EBITDA.

Indexes

The KDP High Yield Daily index was down 4 basis points to close Tuesday at 50.38 with the yield 6.99%.

The index was down 12 bps on Monday.

The ICE BofAML US High Yield index shaved off 6.9 bps with the year-to-date return now 0.229%.

The index inched up 2.8 bps on Monday.

The CDX High Yield 30 index was up 16 bps to close Tuesday at 106.38.

The index was down 14 bps on Monday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.