CAM High Yield Weekly Insights

Fund Flows & Issuance: According to a Wells Fargo report, flows week to date were $1.0 billion and year to date flows stand at -$8.1 billion. New issuance for the week was $1.3 billion and year to date HY is at $173 billion.

(Reuters) Bankers work on US$70bn debt for Altice Charter tie-up

• Bankers are working on debt financings of around US$70bn backing a potential offer by Netherlands-based telecom conglomerate Altice NV and its US cable unit for US cable operator Charter Communications Inc, banking sources said on Wednesday.
• A debt deal would be one of the largest acquisition financing packages to date and one of the largest leveraged acquisition financings, the sources said.
• “Even on a conservative level, the debt backing Altice’s Charter bid would be the largest-ever leveraged financing,” a senior banker said.
• Bankers are unwilling to risk missing out on a deal of this size and are actively pitching financing proposals to Altice to back any potential bid, bankers said.
• “The financing would be sizeable so every big bank is around it in some shape or form – all the guys that have led Altice deals in the past,” a second senior banker said.
• “Any bank with any appetite will be in there pitching. No one wants to miss out on the trade,” a third senior banker said.

(Nashville Post) Moody’s cuts Community Health Systems rating

• A Moody’s Investors Service analyst on Tuesday downgraded the debt rating of Community Health Systems, saying the company is unlikely to lower its high debt ratios over the next year and a half despite selling dozens of its hospitals.
• The debt ratings agency said Franklin-based CHS, along with its hospital company peers, faces “operating headwinds” that will keep its ratio of debt to earnings before interest, taxes, depreciation and amortization around 7:1. Moody’s analysts have cut their group rating for CHS as well as its senior unsecured notes, among other things, but have a stable outlook for the company. They say they’ll consider an upgrade if the company’s debt-to-EBITDA ratio climbs to 6:1.
• CHS executives in May renegotiated their main credit agreement to give them more time to lower the company’s debt ratios. In the past year, they have sold or signed agreements to sell 30 hospitals and last month said more deals are likely coming in 2018.

(Industrial Distribution) U.S. Rig Count Snaps 4-Week Slide, Harvey Drives Oil Back Above $48

• The U.S. combined active oil and gas rig count posted its first increase for the first time in five weeks with a modest gain, while the price of oil jumped essentially $2 from the midpoint of last Friday to Tuesday morning.
• Friday’s count provided by oilfield services provider Baker Hughes (Sept. 1) was up by three, snapping a four-week streak of declines. The count hadn’t increased in six of the previous seven weeks. Friday’s total of 943 was up by 89.7 percent year-over-year
• Oil rigs comprised 80.5 percent of Friday’s total.
• The U.S. oil rig count held steady last week at 759. Its count is up 86.5 percent year-over-year and up 140.2 percent since bottoming out at 316 on May 27, 2016.
• The U.S. added three gas rigs last week, moving its current mark to 183. The active gas rig count is up 108.0 percent year-over-year and up by 125.9 percent since bottoming out at 81 on Aug. 5 and Aug. 26, 2016.

(PR Newswire) Steel Dynamics Announces Offering of Notes

• Steel Dynamics, Inc. announced that it plans to sell approximately $350 million aggregate principal amount of debt securities in a transaction exempt from the registration requirements of the Securities Act of 1933, subject to market and other conditions. The Company intends to use the net proceeds of the offering, along with cash on hand, to purchase any and all of its 6.375% Senior Notes due 2022 that are validly tendered in a tender offer commenced on September 6, 2017, and to redeem, repurchase or satisfy and discharge any 2022 Notes not purchased in the Tender Offer, and to pay related fees and expenses.

Additionally, Steel Dynamics was upgraded by Moody’s to a Ba1 credit rating.

(Bloomberg) Distressed Supply Increases in August, Led by Communications

• Distressed supply increased for the third month in a row, raising the question whether another distressed cycle is upon the credit market. In strong credit markets, distressed inventory tends to decline or meander in a trough. The distressed ratio increased to 6% from 5%, as the communications and energy sectors added distressed supply.
• The face value of bonds in the BofA Merrill Lynch U.S. Distressed Index rose $16 billion to $84 billion in August, the third straight gain. Having fallen to $53 billion in February from a $377 billion peak a year earlier, the question is whether supply is set to reverse and increase.