Werner prices to cap $3.27 billion week, j2 holds gains, energy better as oil recovers

By Paul Deckelman and Paul A. Harris

New York, June 23 – The high-yield primary arena closed out a second consecutive modestly active week on Friday with one dollar-denominated and fully junk-rated pricing, as ladder and scaffolding manufacturer Werner Co. came to market with a $265 million offering of eight-year notes.

Traders said that new paper posted solid gains in active trading when it hit the aftermarket later in Friday’s session.

They also saw continued brisk trading in the new j2 Cloud Services, LLC eight-year issue which priced on Thursday. Those bonds – which had firmed smartly in their initial aftermarket dealings – were seen continuing to trade at a solid premium over par

There was otherwise not much going in the week’s other new issues, besides a slight firming on decent volume in the Surgery Partners Inc. notes, which had priced on Monday.

The new Werner deal brought the week’s issuance of dollar denominated junk bonds up to $3.27 billion in six tranches, according to data compiled by Prospect News, a little bit higher than the total seen the week before.

Away from the new deals, energy issues such as California Resources Corp., MEG Energy Corp. and EP Energy Corp. were seen at better levels aided by a second straight session of rebounding crude oil prices.

Statistical market performance measures were higher across the board on Friday after being mixed on Thursday and lower all around for the two sessions before that.

However, those indicators were lower across the board compared to where they had finished out last Friday, June 16, their second lower week in the last three. The week before was mixed.

Werner prices at mid-talk

In Friday’s primary market Werner Co. priced a $265 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 8¾%.

The yield printed in the middle of the 8 5/8% to 8 7/8% yield talk.

JP Morgan ran the books for the buyout deal.

Ascend sets roadshow

Ascend Learning, LLC plans to start a roadshow on Monday for a $300 million offering of eight-year senior notes (Caa2/CCC+).

The buyout deal is set to price on Wednesday afternoon.

Barclays is the lead left bookrunner. BofA Merrill Lynch, Deutsche Bank, Morgan Stanley and RBC are the joint bookrunners.

Federal-Mogul upsizes

In the European market, Federal-Mogul, LLC priced an upsized €350 million issue of seven-year senior secured notes (B1/B) at par to yield 5%.

The amount was increased from €300 million.

Deutsche Bank was the lead bookrunner for the debt refinancing deal.

Meanwhile a deal from Italy’s Manutencoop Facility Management SpA has been moved into the week ahead.

The Bologna, Italy-based facilities management company had planned to price its €420 million offering of five-year senior secured notes on Friday, according to a market source.

JP Morgan is leading the debt refinancing deal.

And the market gained visibility on a pair of European deals expected to materialize early in the week ahead.

A prospective issuer from the media sector is slated to meet with high-yield investors on Monday. Meetings are being arranged by Natixis, SG and Credit Suisse.

And a company from the consumer sector is expected to launch a deal on Monday via Morgan Stanley.

Weekly issuance holds steady

The Werner notes brought to $3.27 billion the amount of new dollar-denominated and fully junk-rated paper had priced in six tranches during the week, according to data compiled by Prospect News.

The week’s total was slightly above the $3.21 billion which priced in eight tranches the week previous, ended June 16; both weeks were well down from the $6.35 billion which had priced in 11 tranches during the week before that, ended June 9.

This week’s primary activity pushed year-to-date issuance for 2017 to $139.19 billion in 260 tranches, running about 22% ahead of the $113.96 billion which had priced in 163 tranches by this point on the 2016 calendar, the Prospect News data indicated.

Full-year issuance in 2016 finished at $226.78 billion in 359 tranches – which ran 12.9% behind the $260.02 billion that had gotten done in 408 tranches in 2015.

New Werner bonds climb

In the secondary sphere, Werner’s regularly scheduled forward calendar offering of 8¾% notes was seen by a trader to have moved up to 101½ bid from its par issue price.

A second trader saw the Greenville, Pa.-based ladder and scaffolding company’s new deal at 101 ¾ bid with around $11 million of the notes having changed hands.

j2 Cloud notes hold gains

Thursday’s new issue from j2 Cloud Services, LLC was seen going home in a 102 to 102¼ bid context, a trader said.

A second trader pegged the Los Angeles-based cloud services provider’s paper at 102 1/8 bid, which he called up 1/8 point on the day, with around $20 million traded.

The company had priced an upsized $600 million of the notes at par Thursday after enlarging the deal from an originally announced $500 million.

Surgery Centers steady

A trader quoted Surgery Center Holdings LLC’s 6¾% notes due 2025 at 100 7/8 bid on volume of around $10 million.

That was about unchanged on the day, he said.

The Nashville-based healthcare company had priced $370 million of those notes at par in a quick-to-market deal on Monday, upsized from $335 million originally.

Energy issues on the rebound

After several sessions on the downside, oil and natural gas credits were seen better on the day Friday, in line with a second consecutive day of higher crude oil prices, which rebounded after three straight losses.

Los Angeles-based California Resources’ benchmark 8% notes due 2022 were seen by a trader in a 59½ to 60 bid context, which he called “a little better,” on around $20 million of volume, putting it high up on the day’s Most Actives list.

Houston-based EP Energy’s 9 3/8% notes due 2020 rose more than 3/8 point on the day, closing at just under 75 bid, while Calgary, Alta.-based MEG Energy’s 7% notes due 2024 were seen by a market source up 2 points on the session at 72¼ bid.

The energy names got a boost from the crude price recovery, with August-delivery West Texas Intermediate ending up 27 cents at $43.01 on the New York Mercantile Exchange, on top of Thursday’s 21 cent gain.

Indicators improve

Statistical market performance measures were higher across the board on Friday after being mixed on Thursday and lower all around for the two sessions before that.

However, the indicators were lower across the board compared to where they had finished out last Friday, June 16. They had been lower the week before and this past week was their second lower week in the last three.

The KDP High Yield Daily Index edged up by 1 basis point on Friday to end at 72.01, its first gain after three consecutive losses, including Thursday, when the index had plunged by 16 bps.

Its yield was unchanged at 5.03% after three straight sessions during which it had risen, including on Thursday, when it widened out by 6 bps.

For the week, though, Friday’s levels compared unfavorably with the 72.37 index reading and 4.93% yield seen at the end of last week.

The Markit CDX Series 28 High Yield Index firmed by almost 9/32 point on Friday to end at 107 1/16 bid, 107 3/32 offered, its second successive upturn after two sessions of lower results. On Thursday, it had improved by 1/16 point.

But for the week, the index finished down from last Friday’s close at 107 3/16 bid, 107¼ offered.

The Merrill Lynch North American High Yield Index saw its first gains after three sessions in a row on the downside, rising by 0.071%, in contrast to Thursday’s 0.042% retreat.

Friday’s advance raised the index’s year-to-date return to 4.6% from Thursday’s 4.526%, though it remained below last Wednesday’s close at 5.173%, which had been its second consecutive new 2017 year-to-date peak level.

For the week, however, the index lost 0.342%, its first weekly loss after one weekly gain.

It had risen by 0.03% the previous week.

© 2015 Prospect News.
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