Sotheby's, Glatfelter, Air Lease price to cap off $12 billion week; Sotheby's, SBA bonds move up

By Paul Deckelman and Paul A. Harris

New York, Sept. 21 - The high-yield primary market closed out another busy week on Friday, pricing a trio of deals collectively worth $1 billion.

Air Lease Corp., which leases commercial aircraft to airlines and other users, had the biggest deal of the day, an upsized $450 million of 3.25-year notes.

Sotheby's, the tony New York art and antiques auction house, came to market with a $300 million issue of 10-year notes.

And papermaker P.H. Glatfelter did an upsized $250 million of eight-year notes.

Combined with the more than $11.6 billion that came to market heading into Friday's session, the week's issuance was headed over $12 billion - a pretty busy week, but less than last week, which saw more than $16 billion of new dollar-denominated, purely junk-rated paper from domestic and developed-country issuers.

That strong issuance over the past two weeks helped to pull high yield's year-to-date total as the week ended some 28% ahead of the comparable figure from last year, when the junk market was going through a dry period as summer came to an end.

All of the day's deals firmed, although Sotheby's turned in the best aftermarket performance.

Another credit showing strength was cellphone tower operator SBA Communications Corp.'s new seven-year issue, which priced late Thursday but did not get a chance to start trading around until Friday.

As has been the case fairly often in recent days, traders said that dealings in the new issues overshadowed the non-new deal secondary market.

Statistical market performance indicators were mixed on Friday, after having been lower across the board on Thursday, and were mixed versus last week's levels as well.

Air Lease upsizes

Air Lease launched and priced an upsized $450 issue of unrated 3.25-year senior notes at par to yield 4½%.

The yield printed at the tight end of yield talk that was set in the 4 5/8% area.

J.P. Morgan, BMO, Citigroup, Deutsche Bank, Goldman Sachs, RBC and Wells Fargo were the joint bookrunners for the general corporate purposes deal that was upsized from $300 million.

The deal played to a strong book, according to a trader who focuses on crossover credits and who added that the deal broke to par 5/8 bid, 102 offered.

Sotheby's comes atop talk

Sotheby's priced a $300 million issue of 10-year senior notes (Ba3/BB) at par to yield 5¼%, on top of yield talk.

Goldman Sachs and J.P. Morgan were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Glatfelter upsizes

Glatfelter priced an upsized $250 million issue of eight-year senior notes (Ba1/BB+) at par to yield 5 3/8%.

The yield printed at the tight end of the revised 5 3/8% to 5½% yield talk. Earlier talk was 5½% to 5¾%.

The bonds traded to 101½ bid, according to a trader who characterized the trading in the new Glatfelters as very active.

J.P. Morgan ran the books for the debt refinancing and general corporate purposes deal, which was upsized from $200 million.

Buzzi atop tightened talk

In Europe, Italian cement company Buzzi Unicem SpA priced an upsized €350 million issue of six-year senior notes (/BB+/) at par to yield 6¼% on Friday.

The issue size was increased from €300 million.

The yield printed on top of yield talk that had been revised downward from earlier talk of 6 3/8% to 6½%.

Joint bookrunner Bank of America Merrill Lynch will bill and deliver. Mediobanca was also a joint bookrunner.

Proceeds will be used to refinance debt and for general corporate purposes.

Brisa at the wide end

Portuguese toll road concessionaire Brisa-Concessao Rodoviaria, SA priced a €300 million issue of 6 7/8% 5.5-year senior secured notes (Ba2//BBB) at 99.501 to yield 7%, at the wide end of the 6 7/8% to 7% yield talk.

Barclays, Banco Espirito Santo Inc., Caixabi, Deutsche Bank AG, Millenium Capital Markets and Banco Santander were the bookrunners.

AdvancePierre plans deal

AdvancePierre Foods, Inc. plans to run an investor roadshow during the Sept. 24 week for its $450 million offering of five-year senior notes (Caa1/CCC+).

The deal is expected to price before the end of the week.

Deutsche Bank, Barclays, Credit Suisse, Morgan Stanley and BMO are the joint bookrunners for the debt refinancing and dividend-funding deal.

Nufarm starts Monday

Nufarm Australia Ltd. plans to start a roadshow on Monday for a $300 million offering of seven-year senior notes, set to price late in the Sept. 24 week.

Credit Suisse, Deutsche Bank, Jefferies and UBS are the joint bookrunners for the debt refinancing.

Some of the business that was expected to price before Friday's close will likely be pushed into the Sept. 24 week, market sources said after the close.

Among these is the Iberian Minerals SA $200 million offering of five-year senior secured notes (expected ratings B2/B+/B), which was talked with yield in the 10% area on Friday.

That price talk has moved north, according to an investor who is watching the deal. The source reported hearing 10½%.

And it has been "radio silence" on the Calpine Corp. $615 million offering of 10-year senior secured notes (expected ratings B1/BB-), market sources say. One trader reported hearing conversations in the context of 5% to 5¼% on Thursday, but heard nothing on Friday.

Finally, CDRT Holding Corp. (Caa1/B-), the indirect parent of Emergency Medical Services Corp., set price talk for its proposed $450 million senior PIK toggle notes due 2017 on Friday at a 9¼% cash coupon and a 10% PIK coupon to price at 97 to 98 to yield in the 9 7/8% area for the cash coupon and 10½% area for the PIK coupon.

The books were scheduled to close at 1:30 p.m. ET on Friday, and terms were expected to follow shortly after.

No terms were available at press time.

The deal will get over the line, according to an investor, who added that the book was at deal size on Friday.

However, it's not an easy deal to like, added the buysider, noting that it is seven times plus leveraged and unsecured, with no guarantees.

Putting cash to work

A trader in the secondary market characterized Friday's session as "a crazy day," which he said had capped off another crazy week. The new-issue market remained red hot even as the last embers of summer were dying out and making way for fall.

He noted that junk had seen "another inflow of funds, and these guys had to put their money to work" - even if it meant buying issues carrying relatively small coupons that probably would have been laughed out of the junk market year ago.

"I speak to some of the guys that run big portfolios," he said, "and they're saying 'oh my God, I never thought that I would be buying 4% or 5% bonds.'"

Day's deals trade up

He said that Sotheby's new 5¼% notes due 2022 "did well," locating the new bonds at 101½ bid, 102 offered.

Incongruously, the latest junk bond borrower is the high-end New York auction house known for its sales of pricy art treasures, antiques, jewelry and memorabilia from deceased celebrities that often attract bids in the millions.

The $300 million issue had earlier priced at par.

Glatfelter's 5 3/8% notes due 2020 came to market at par. The York, Pa.-based manufacturer of specialty paper and fiber-based engineering products' $250 million deal - upsized from an originally announced $200 million - was trading at 100¾ bid, 101 offered.

The day's other deal - from Los Angeles-based commercial aircraft leasing company Air Lease Corp. - was seen by a trader at a wide par to 101 context, which he said probably tightened to 100¼ to 100 5/8 bid.

That $450 million deal priced at par after having been upsized from an originally shopped $300 million.

SBA leads Thursday deals

Among the deals which came to market on Thursday, SBA Communications' 5 5/8% notes due 2019 "did pretty well," a trader said, quoting the bonds at 101½ bid, 102 offered.

The Boca Raton, Fla.-based communications antenna tower operator's $500 million drive-by deal had priced at par, after having been upsized from an original $300 million.

The trader said that General Cable Corp.'s 5¾% notes due 2022 were trading at 101 3/8 bid, and were left at 101 3/8-1013/4.

The Highland Heights, Ky.-based maker of electrical and fiber-optic wire and cable's $600 million issue had priced at par, after having been upsized from an originally announced $550 million.

CNO Financial Group Inc.'s 6 3/8% senior secured notes due 2020 were trading at 102 1/8 bid, 102 3/8 offered.

The Carmel, Ind. -based insurance company priced its $275 million offering at par after upsizing it from $250 million originally.

Rockwood Specialties Group Inc.'s $1.25 billion of 4 5/8% notes due 2020 traded at or around 101 3/8 bid. The Princeton, N.J.-based chemical manufacturer's deal had priced at par, after having been massively upsized from an originally announced $750 million.

Thursday's biggest deal of the day - the quick-to-market offering of $2.25 billion of 6 3/8% notes due 2020 from Mississauga, Ont.-based specialty pharmaceuticals maker Valeant Pharmaceuticals International Inc. was seen by a trader going home Friday bid around 100 5/8 to 1003/4.

"They did better than people thought they would do," he said.

He explained that that "people were afraid of that one" as it was originally announced, forcing it to be restructured.

Valeant was originally planning a three-tranche deal, to consist of a $500 million fungible add-on to the company's existing 7¼% notes due 2022, while the $1.75 billion portion of the deal was to be split into tranches mirroring its existing 7% notes due 2020 and 7¼% 2022 notes.

After investors balked, the deal was restructured into a two-part offering, and the add-on tranche and the mirror tranches were dropped, leaving just the two new-stand alone tranches, one of $500 million and the other of $1.75 billion. The two had different official issuing entities and different uses of proceeds.

Indicators mixed on day, week

Statistical indicators of junk market performance were meantime mixed on the day, after having been lower across the board on Thursday, and they were mixed on the week as well after having been solidly higher the week before, ended Sept, 14.

The Markit Group CDX North American Series 18 High Yield Index rose by ½ point on Friday to finish at 102¼ bid, 102 3/8 offered, after having dropped by ¼ point on Friday.

The index ended the week unchanged from last Friday's level.

The KDP High Yield Daily Index suffered its second straight loss on Friday, falling 12 basis points to close out the day at 75.02. On Thursday, it had dropped 10 bps.

Its yield rose by 4 bps, to 5.76%, after having tightened by 3 bps on Thursday.

The index was down from the previous week's reading of 75.16, although its yield was little changed from the prior week's 5.75%.

And the widely followed Merrill Lynch U.S. High Yield Master II Index meanwhile posted its second straight loss, falling by 0.044% on Friday, on top of Thursday's 0.102% retreat. Thursday's loss had been the first setback after an incredible 24-session winning streak that dated back to Aug. 17.

The loss left its year-to-date return at 12.65%, down from Thursday's 12.70%, and below its peak level for the year of 12.814%, set on Wednesday.

On the week, though the index rose by 0.034%, its fifth consecutive weekly gain. Last week, it rose by 1.211% - the biggest such gain so far this year, leaving the year-to-date return at 12.612%.

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