CAM High Yield Weekly Insights

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were flat and year to date flows stand at -$35.1 billion.  New issuance for the week was $1.4 billion and year to date HY is at $112.7 billion, which is -24% over the same period last year. 

(Bloomberg)  High Yield Market Highlights

• Issuance-starved junk bond investors made a beeline to Party City, the lone new issue yesterday, as the market headed for its slowest month for sales since January 2016. Yields fell to a five-week low across ratings, shrugging off fund outflows.
• Party City got orders of about $1.6b for a $500m offering and priced at the tight end of talk
• YTD supply is $112.7, lowest since 2009, down 24% year-on-year
• CCCs yields dropped to six-month low yesterday
• CCCs continued to beat other fixed-income assets, with a year-to-date return of 4.5%, the highest so far this year
• IG bonds are down 2.75% YTD
• High- yield backdrop is benign, including steady economic growth, healthy corporate earnings, low default rate

(Globe Newswire)  CoreCivic Enters Into New Agreement With Federal Government to Utilize the La Palma Correctional Center

• CoreCivic announced that the Federal Government has entered into a new agreement to utilize CoreCivic’s 3,060-bed La Palma Correctional Center in Eloy, Arizona.  More specifically, the city of Eloy has agreed to modify an existing Intergovernmental Agreement with Immigration and Customs Enforcement (ICE) to add the La Palma facility as a place of performance, while also permitting the U.S. Marshals Service (USMS) to utilize capacity at the facility at any time in the future.  ICE currently expects to house up to 1,000 adult detainees at the La Palma facility under the new agreement and may house additional populations at the facility, subject to availability.  No family units or unaccompanied minors will be placed in the facility.
• The La Palma Correctional Center currently houses approximately 2,500 inmates from the state of California.  The State has begun to withdraw its population at the facility and announced plans earlier this year to ultimately discontinue utilization by January 2019.  Capacity at the facility will be made available to the Federal Government under the new agreement as additional State inmate populations exit the facility.  Under the terms of our agreement, the federal and state populations will not mix while both government entities utilize the facility.
• The new contract commences on July 24, 2018, and has an indefinite term, subject to termination by either party with 90 days’ written notice.  Updated full year 2018 financial guidance reflecting the impact of this new agreement will be provided with the issuance of the Company’s second quarter 2018 financial results on Wednesday, August 8, 2018.

(CNBC)  Hospital operator HCA lifts full-year forecast as admissions rise

• S. hospital operator HCA Healthcare reported a 24.8 percent rise in quarterly profit and boosted its full-year earnings forecast on higher patient admissions
• The upbeat results, coming from the largest U.S. for-profit hospital operator, allayed concerns that patients were delaying non-emergency surgeries due to worries about soaring out-of-pocket medical costs.
• Net income attributable to HCA rose to $820 million in the second quarter ended June 30, from $657 million a year earlier.
• Revenue rose to $11.53 billion from $10.73 billion a year ago, while revenue per equivalent admission rose 2.1 percent.
• Same-facility equivalent admissions, which include patients who stay in the hospital overnight and those who are treated on an outpatient basis, rose 2.8 percent.

(Business Wire)  Spectrum Brands Holdings Reports Financial Results

• Effective July 13, 2018, the HRG merger was completed resulting in the merger of Spectrum Brands and its former majority shareholder HRG Group, Inc. As a result of the legal form of the merger, HRG Group, Inc. has emerged as the surviving legal entity and renamed as Spectrum Brands Holdings, Inc., with a combined shareholder group of the two former entities, and will continue to operate as a global consumer products company similar to the legacy Spectrum Brands company.
• Net sales of $945.5 million in the third quarter of fiscal 2018 increased 9.6 percent compared to $862.9 million last year. Excluding the impact of $4.9 million of favorable foreign exchange and acquisition sales of $14.5 million, organic net sales increased 7.3 percent versus the prior year.
• Adjusted EBITDA of $206.4 million in the third quarter of fiscal 2018 increased 3.6 percent compared to $199.3 million in fiscal 2017.
• “I am pleased to report to you today that the turnaround of our HHI and GAC business units is well under way,” said David Maura, Chairman and CEO of Spectrum Brands Holdings. “While we have much more progress to make and will be investing in further efficiency measures over the next 12 months, I am thrilled that the leadership changes we have made and the focus on restoring the ownership accountability culture of our Company are already reading through to positive financial results. To execute 14.7 percent sales growth in our HHI division and a 12.5 percent top-line growth in our GAC division is gratifying, and a testament to what is possible with new leadership, new culture and an intense passion to win from our employee partners in these divisions.
• “As we are regaining operating momentum, we are on track to deliver the improved performance we promised in the second half of this fiscal year,” Maura said. “As such, we reiterate our fiscal 2018 adjusted EBITDA guidance for continuing operations of $600-$617 million and total company adjusted free cash flow of $485-$505 million.”