Resized inVentiv prices, along with Mohegan, Crescent; new bonds busy; funds gain over $2 billion

By Paul Deckelman and Paul A. Harris

New York, Sept. 29 – The high-yield primary sphere got back in gear on Thursday, with its first multiple-deal day since last Friday.

Syndicate sources saw $1.57 billion of new dollar-denominated and fully junk-rated paper come to market in three tranches, in contrast to complete new-deal shutouts on Monday and Wednesday and only one small deal getting done on Tuesday.

inVentiv Health, Inc., a provider of services to the healthcare industry, priced $675 million of eight-year notes in a regularly scheduled forward calendar offering that was first downsized and then slightly upsized before it finally appeared.

Casino operator Mohegan Tribal Gaming Authority did $500 million of eight-year notes off the calendar, while real estate developer Crescent Communities, LLC priced $400 million of five-year secured paper, another scheduled deal.

Traders saw considerable activity in the new Crescent and Mohegan bonds, registering modest gains from their respective issue prices.

They also quoted inVentiv’s deal higher, though on less volume.

Away from the new deals, oil and gas names like Chesapeake Energy Corp. and California Resources Corp. continued to ride the upside momentum of strengthening world crude oil prices.

Statistical market performance measures turned mixed on Thursday after having been higher across the board on Wednesday, after having been mixed over the previous three sessions.. It thus was the indicators’ fourth mixed session in the last five trading days.

Flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends, moved back into positive territory this week, posting their first net inflow after two consecutive outflows.

Some $2.011 billion more came into those weekly-reporting-only domestic funds than left them in the form of investor redemptions during the reporting week ended Wednesday, in stark contrast to the $273.555 million outflow reported last Thursday for the seven-day period ended Sept. 21, which followed the $2.453 billion cash bleed during the week ended Sept. 14 (see related story elsewhere in this issue).

inVentiv plays to big book

Three issuers completed dollar-denominated roadshow deals on Thursday, raising a combined total of $1.57 billion.

All three deals came at the tight end of yield talk.

inVentiv Health priced $675 million of eight-year senior notes (Caa2/CCC+) at par to yield 7½%.

The deal was upsized marginally from $670 million after having been previously downsized from $720 million, with a shift of proceeds to the concurrent term loan.

The yield printed at the tight end of the 7½% to 7¾% yield talk, and well inside of initial guidance of 8% to 8¼%, according to market sources, who added that the deal played to a big book.

Credit Suisse, Goldman Sachs, BofA Merrill Lynch, Morgan Stanley, Barclays and Jefferies were the joint bookrunners.

The Burlington, Mass.-based provider of clinical, consulting and commercial services to the health care industry plans to use the proceeds to refinance debt and to fund Advent International’s partial acquisition of the company.

Mohegan at a discount

Mohegan Tribal Gaming Authority priced a $500 million issue of 7 7/8% eight-year senior notes (B3/CCC+) at 99.271 to yield 8%.

The yield printed at the tight end of the 8% to 8¼% yield talk.

Credit Suisse, BofA Merrill Lynch, Citizens, SunTrust, Goldman Sachs, CIT and KeyBank were the joint bookrunners.

The Uncasville, Conn.-based operator of gaming and entertainment enterprises plans to use the proceeds to help refinance its entire capital structure.

Crescent’s secured deal

Crescent Communities priced a $400 million issue of five-year senior secured notes (Caa1/B+) at par to yield 8 7/8%.

The yield printed at the tight end of the 8 7/8% to 9 1/8% yield talk.

J.P. Morgan, Credit Suisse and RBC were the joint bookrunners for the debt refinancing deal.

Quality talked at 8% to 8¼%

Thursday’s action left four deals on the calendar as business expected to clear the market before the week, month and quarter come to a conclusion at Friday’s close.

Quality Care Properties Inc. talked its $750 million offering of seven-year senior secured second-lien notes (B3/BB-) to yield 8% to 8¼%.

Morgan Stanley, Barclays and Deutsche Bank are the joint bookrunners.

Also expected to price is Steak n Shake’s $400 million offering of seven-year notes (B2/BB) via Jefferies.

The deal was talked Wednesday at the 8½% area. It had been scheduled to price Thursday, however it was pushed back into Friday’s session, a market source said.

Confie is expected to price its $350 million offering of six-year senior notes (Caa2/CCC+) via left bookrunner RBC before Friday’s close. No formal price talk has been circulated, market sources say.

And Vertiv is also on deck with $750 million of eight-year senior notes (B3/B) in a deal helmed by BofA Merrill Lynch, J.P. Morgan, Citigroup, Deutsche Bank, Goldman Sachs and Morgan Stanley.

Jerrold prices tight

The sterling-denominated new issue market saw its biggest day in over two years on Thursday as three issuers priced junk-rated deals.

Jerrold FinCo plc priced a £375 million issue of five-year senior secured notes at par to yield 6¼%.

The yield printed at the tight end of the 6¼% to 6½% yield talk.

The global coordinator and bookrunner was Credit Suisse.

The Cheshire, England-based mortgage lender plans to use the proceeds to fund a tender offer for £300 million of its senior secured notes due 2018, as well as to prepay the amounts outstanding under its revolver and for general corporate purposes.

Cabot at the wide end

From the same market sector, Cabot Financial (Luxembourg) SA priced a £350 million issue of seven-year senior secured notes (B+) at par to yield 7½%.

The yield printed at the wide end of the 7¼% to 7½% yield talk.

JPMorgan, Credit Suisse and HSBC managed the debt refinancing deal.

Virgin Media receivables-backed

In a deal that turned a lot of heads, Virgin Media Receivables Financing priced a £350 million issue of eight-year receivables-backed notes (B) at par to yield 5½%.

The yield printed on top of yield talk.

The receivables-backed notes priced right on top of Virgin Media’s unsecured notes, the manager said.

The deal went well, as investors seemed open to the novel speculative-grade-rated securitization deal, the source said, adding that the bonds were trading par ½ bid, par ¾ offered in the secondary market late Thursday afternoon, New York time.

Credit Suisse, Citigroup, Deutsche Bank and ING were the managers for the deal.

Schoeller Allibert atop talk

In the euro-denominated market, Schoeller Allibert Group BV priced a €210 million issue of five-year senior secured notes (B2/B-) at par to yield 8%.

The yield printed on top of yield talk.

Citigroup ran the books for the debt refinancing deal.

Sarens talked at 98.5 to 99.5

There is also a slate of European deals expected to clear by Friday's close.

Sarens Bestuur NV talked a €125 million add-on to its 5 1/8% senior notes due Feb. 5, 2022 (BB-) at 98.5 to 99.5.

ING, BNP Paribas and Degroof Petercam are the joint bookrunners.

Two other deals are possible Friday business, although neither one has generated news since early in the week, sources say.

Deutsche Erodel is in the market with €400 million of six-year notes senior notes via Deutsche Bank.

And Global University Systems has been roadshowing a £75 million add-on to its 8% senior secured notes due July 23, 2020 (B3/B+) via Goldman Sachs.

Wednesday inflows

The daily cash flows of dedicated high-yield bond funds were positive on Wednesday, the most recent session for which data was available at press time, a portfolio manager said.

High-yield ETFs saw $237 million of inflows on the day.

The ETFs have seen robust positive flows since the beginning of the week, with Wednesday’s tally bringing the overall total to $720 million over the three sessions, according to a Prospect News analysis of data from market sources.

Actively managed funds, meanwhile, saw $30 million of daily inflows on Wednesday.

Dedicated bank loan funds also saw a healthy $145 million of daily inflows on Wednesday, the portfolio manager said.

Crescent busy, better

In the secondary arena, traders said that the new 8 7/8% senior secured notes due 2021 from Crescent Communities, LLC and the Charlotte, N.C.-based real estate developer’s co-issuer, Crescent Ventures Inc., moved up solidly after pricing at par.

One saw those notes trading in a 100½ to 101 bid context, while a second pegged them at 100 7/8 bid.

At another desk, a trader quoted the notes late in the day at 101 1/8 bid and said that more than $50 million had changed hands, making it the day’s busiest credit in Junkbondland.

Mohegan moves up

Mohegan Tribal Gaming Authority’s new 7 7/8% notes due 2024 were moving around in a 99¾ to 100¾ bid context, a trader said, noting that the Mohegan Sun casino resort operator’s deal had priced below par at 99.271.

A second trader quoted a more conservative trading range of 99¾ to par, while a third saw the bonds going home just under par at 99¾ bid.

Nearly $30 million of the new bonds traded, a market source estimated.

inVentiv issue improves

The day’s third deal, inVentiv Health’s 7½% notes due 2024, were seen advancing solidly, with two separate traders quoting the bonds going out between 101½ and 102 bid, up from their par issue price.

However, they said that there had been less trading in those new bonds than they had seen in the Crescent and Mohegan issues.

Alcoa firming trend continues

Among recently priced issues, last week’s Alcoa, Inc. two-part megadeal continued to gain strength in relatively busy trading, which the New York-based aluminum and aluminum products company’s paper has been doing ever since it priced.

“They just continue to get better,” one of the traders said.

He saw its 6¾% notes due 2024 up by 7/16 point on Thursday, ending at 103 5/8 bid, on top of the 1 point gain notched on Wednesday.

Nearly $20 million of those notes traded around.

The trader also saw Alcoa’s 7% notes due 2026 up by ¾ point to 103¼ bid, matching the size of Wednesday’s rise.

Volume on that issue was also around $20 million, putting the two tranches high up on the day’s Most Actives list.

Alcoa priced $750 million of the 6¾% notes last Thursday at par in a regularly scheduled forward calendar deal, along with $500 million of the 7% notes, which also priced at par.

The two-part megadeal came to market via the company’s Alcoa Nederland Holding BV subsidiary after having been upsized to $1.25 billion from $1 billion originally and restructured with the addition of the 10-year tranche to what was originally just a single-tranche deal.

Energy names on the upside

Away from the new deals, a second straight session of firmer oil prices pushed energy credits higher.

A trader said that Oklahoma City based oil and natural gas operator Chesapeake Energy’s 8% notes due 2022 “were busy again,” seeing them jump more than 3 points on the session to 101½ bid.

A second trader saw them up 2¾ points on the day at 101¼ bid, with over $37 million of the notes trading.

He said that California Resources’ bonds “were also pretty active today,” seeing more than $20 million of the Los Angeles-based exploration and production company’s 8% notes due 2022 trade. The issue gained ¾ point to 66¼ bid.

“Oil was up again today, although it was off its highs,” one of the traders said, noting that the energy issues had held their own “even with equities selling off this afternoon.”

The benchmark U.S. crude oil grade, West Texas Intermediate for November delivery, improved by 78 cents per barrel to end at $47.83; on Wednesday, it had shot up by $2.38 per barrel on the New York Mercantile Exchange.

Meanwhile, the international benchmark Brent crude for November delivery tacked on 55 cents per barrel on Thursday to settle at $49.24; on Wednesday, it had zoomed by $2.72 per barrel on the London ICE Futures Exchange.

The gains came on reports that the Organization of Petroleum Exporting Countries had reached a deal to limit production for the first time since 2008. The decision came as members of the cartel held an informal meeting in Algeria.

Though details have not yet been decided – official terms are expected to be ironed out at a formal meeting in November – OPEC members agreed to cut total production to 32.5 million barrels per day.

Currently, the organization is pumping a total of 33.24 million bpd.

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