Baldwin caps junk market’s busiest week of year; LifePoint dips; Staples in focus

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 10 – Baldwin Insurance Group Holdings, LLC brought down the curtain on the biggest week, year to date, in the high-yield primary market.

The Tampa-based company priced an upsized $600 million issue, lifting the week’s issuance total to $14.3 billion, making the May 6-10 week 2024’s biggest to date.

Meanwhile, the secondary space closed a largely sideways week on soft footing with the market slightly weaker as Treasury yields rose 5 basis points across the curve, a source said.

However, the market remained new issue focused with the majority of deals to clear the primary over the past week trading up in the aftermarket.

Fortress Intermediate 3, Inc.’s 7½% senior secured notes due 2031 (B2/B), which priced in support of CD&R’s acquisition of a majority ownership position in Presidio, Inc., continued to add after a strong break.

However, there were exceptions to the trend of strong performances with some recent deals falling below issue prices.

LifePoint Health, Inc.’s new 10% senior notes due 2032 (Caa2/CCC+) joined the ranks of deals that have struggled with the notes dipping below par in heavy volume.

Outside of recent issues, Staples’ senior notes were in focus as the market digested a new exchange offer for its 10¾% senior notes due 2027 (Caa2/CCC) with another first-lien refinancing deal expected.

Earnings-related news also continued to drive large price movements in the space with selling accelerating in MultiPlan Corp.’s senior notes after earnings were released earlier in the week.

Baldwin caps busiest week of year

Baldwin priced an upsized $600 million issue (from $500 million) of seven-year senior secured notes (B2/B-) at par to yield 7 1/8%, at the tight end of talk, on Friday.

It was heard to be playing to demand in excess of $2 billion on Friday morning, a trader said.

In the early aftermarket, the notes improved to par ½ bid, 101 offered, another source said.

“It’s trading well given the current market,” the source said.

Baldwin took the week’s issuance total to $14.3 billion, making the May 6-10 week 2024’s biggest to date.

Borrowing a predicate with lot of recent tread wear, the past week handily eclipses the new runner-up, the week beginning Jan. 29 which put up $12 billion.

And for those pining for just one more eclipse, Staples cast its umbra over all other Friday chatter about what’s in store for the primary market in the week ahead.

The Massachusetts-based office supply retailer, whose name has been echoing along the high-yield halls since mid-April, is expected to bring new first-lien bond and bank issuance, in order to partially address its $6 billion-plus of debt.

The bank loan portion is expected to kick off Monday, with the bonds to follow, sources say.

On Thursday, Staples announced an exchange deal for $949,564,000 of its 10¾% senior notes due 2027 for new 12¾% junior lien secured notes due 2030 plus cash.

The new issue market figures to remain active, as green lights continue to shine along the tracks ahead, sources say.

Presidio adds

Presidio’s 7½% senior secured notes due 2031 continued to add after a strong break despite a soft day for the broader market.

The 7½% notes were up ¼ to 3/8 point in heavy volume.

The were trading in the par 5/8 to 101 context throughout the session, a source said.

There was $72 million in reported volume.

Fortress Intermediate 3 priced an upsized $750 million, from $500 million, issue of the 7½% notes at par on Thursday.

The yield printed at the tight end of the 7½% to 7¾% yield talk.

Proceeds, alongside a concurrent term loan, will be used to finance CD&R’s acquisition of a majority ownership position in Presidio from BC Partners LLP, which will retain a minority stake.

LifePoint struggles

LifePoint Health’s new 10% senior notes due 2032 struggled in the aftermarket with the notes dropping below par in heavy volume.

The notes traded as high as par 3/8 during Friday’s session but settled into a range of 99 5/8 to 99 7/8 heading into the market close, a source said.

While a chunky yield, LifePoint is a weak credit and the notes priced tight, a source said.

LifePoint priced a downsized $800 million, from $900 million, issue of the 10% notes at par in a Thursday drive-by.

The yield printed inside of yield talk in the 10¼% area.

Staples in focus

Staples’ senior notes were in focus on Friday as the market digested an exchange offer for the 10¾% senior notes due 2027 with more refinancing deals expected in the coming week.

The 10¾% senior notes due 2027 jumped 2 points to trade on a 92-handle, a source said.

There was $34 million in reported volume.

The 7½% senior secured notes due 2026 were up 1 point with the notes wrapped around 99 heading into the market close.

There was $53 million in reported volume.

The notes were in focus as the market digested an exchange deal for the 10¾% notes with a first-lien refinancing deal expected in the week ahead.

While Staples’ 10¾% notes were up on Friday, they jumped as high as a 95-handle in late April as news of a potential first-lien refinancing deal circulated the market.

As the 10¾% notes rallied on Friday with the exchange and expected first-lien bonds good news, market players were still digesting the information and weighing options.

Holders are now questioning whether to participate in the exchange, or wait on the new first-lien paper, which will come with ironclad documents and a hefty double-digit yield, which could possibly be as high as 14%, a source said.

Staples announced late Thursday that it was initiating an exchange offer and consent solicitation for $949,564,000 of 10¾% senior notes due 2027 for new 12¾% junior lien secured notes due 2030 issued by Staples and guaranteed by Arch Parent Inc. and, if elected, cash.

Holders will have the option to exchange $1,000 in principal of the 10¾% notes for cash and new notes equal to $1,000 minus the cash consideration or $1,000 in principal of the new notes.

“It is a fat coupon and higher up,” a source said.

Staples is also expected to launch first-lien refinancing transactions in the week ahead with a bank loan expected on Monday and bonds to follow.

MultiPlan for sale

Selling in MultiPlan’s senior notes accelerated on Friday with the notes under pressure since releasing earnings earlier in the week.

MultiPlan’s 5½% senior secured notes due 2028 (B1/B-) dropped 2 points to a 75-handle in active trade.

They were wrapped around 75½ with a yield of 13 1/8% heading into the market close, a source said.

There was $17 million in reported volume.

The notes have dropped more than 4½ points on the week.

They were trading on an 80-handle heading into the company’s earnings call on Wednesday.

The 5¾% senior notes due 2028 (Caa1/CCC+) were also down 2 points to trade at 65 with a yield of 17 3/8% in the late afternoon.

Volume in the name has steadily increased over the past week, a source said.

“There are sellers in the market,” the source said.

Hudson still good

Hudson Automotive Group’s 8% notes due 2032 continued to do well in the secondary market on Friday, after pricing on Tuesday.

The notes traded Friday at 102¼ bid, 102½ offered.

“That priced a little behind the index and it’s traded well,” a source said.

The company priced $675 million of eight-year notes at par.

Fund flows

The dedicated high-yield bond funds had $443 million of net daily cash inflows on Thursday, the most recent session for which data was available at press time, according to a market source.

High-yield ETFs had $408 million of inflows on the day.

Actively managed high-yield funds had $35 million of inflows on Thursday, the source said.

News of Thursday’s daily cash flows follows a Thursday afternoon report that the combined funds had $2.351 billion of net inflows on the week to the Wednesday, May 8 close, according to market sources who were referring to information reported by fund-tracker Refinitiv Lipper.

That’s the largest weekly inflow since November, according to the market source.

Indexes

The KDP High Yield Daily index was off 8 basis points to close Friday at 49.48 with the yield now 7.01%.

The index was up 8 bps on Thursday, was down 13 bps on Wednesday and 2 bps on Tuesday and up 7 bps on Monday.

The index posted a cumulative loss of 8 bps on the week.

The CDX High Yield 30 index was off 7 bps to close Friday at 106.73.

The index was up 6 bps on Thursday, down 5 bps on Wednesday, was unchanged on Tuesday and up 17 bps on Monday.

The index posted a cumulative gain of 11 bps on the week.

Cristal Cody contributed to this story.

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