AuRico, Navios Maritime price; firmer tone seen; more trading in new United Rentals bonds

By Paul Deckelman and Paul A. Harris

New York, March 17 - The high-yield primary sphere began the new week off on a relatively quiet note Monday, pricing just two single-tranche deals generating $366 million of proceeds.

That was down from the already sedate $579 million raised in two deals on Friday.

Canadian precious metals mining company AuRico Gold Inc. brought a restructured and upsized $315 million issue of six-year secured notes to market as a regularly scheduled forward-calendar deal. Traders said that when the new bonds hit the aftermarket, they firmed smartly from their deeply discounted issue price.

The day's other deal was Greek oil and chemical tanker operator Navios Maritime Acquisition Corp.'s upsized, quickly shopped $60 million add-on offering to its existing 2021 first-priority ship mortgage notes. The new issue was not seen in the secondary market.

That market, meanwhile, had a generally firmer tone to it, although activity was considered relatively quiet.

The firmer tone was evident in the movement of some recently priced new issues, including Virgin Media Secured Finance plc, CEVA Group plc, Wynn Macau Ltd. and United Rentals (North America), Inc., all of which were seen trading at higher levels. The latter company's two-part deal from last Wednesday was seen to have been particularly active on Monday, with most of the trading taking place in its stand-alone tranche of new 10-year notes rather than the add-on to its existing 2023 paper.

Away from the new deals, traders said there seemed to be little real impact on the bonds of either Sears Holdings Corp. or Chesapeake Energy Corp. from the news announcements on Monday that each company has decided to go ahead with previously reported plans to spin off one of its units - the Lands' End clothing business of retailer Sears and oil and gas operator Chesapeake's oilfield services division.

Statistical market-performance measures turned higher across the board for the first time in almost two weeks, after having been down all around on Friday.

AuRico tight to yield talk

AuRico Gold priced an upsized $315 million issue of 7¾% six-year senior secured second-lien notes (B3/B) at 96.524 to yield 8½%.

The deal was upsized from $300 million.

The yield printed at the tight end of the 8½% to 8¾% yield talk. The reoffer price came in line with discount talk of three to four points OID.

The deal was restructured, with the maturity of the notes reduced to six years from eight years. Also the ranking on the capital structure is improved to senior secured second-lien status, whereas the deal had previously been in the market as a senior unsecured note.

Joint global coordinator and joint bookrunner RBC will bill and deliver. Credit Suisse was also a joint global coordinator and joint bookrunner. Scotia was a joint bookrunner.

The Toronto-based gold exploration and mining company plans to use the proceeds to repurchase convertible notes via a tender offer, to repay bank debt and for general corporate purposes, which may include funding capital expenditures to support organic growth.

Navios taps 8 1/8% notes

Navios Maritime Acquisition and Navios Acquisition Finance (US) Inc. priced an upsized $60 million add-on to their 8 1/8% first-priority ship mortgage notes due 2021 (B3/B) at 103.25 to yield 7.554%.

The deal was upsized from $50 million.

The reoffer price came on top of price talk.

Morgan Stanley ran the books for the quick-to-market add-on.

Proceeds will be used for general corporate purposes, including replacement of cash on the balance sheet that was used to partially finance the acquisition cost of the Nave Buena Suerte.

Talking the deals

Multiplan, Inc. talked its $1 billion offering of eight-year senior notes (Caa1/CCC+) to yield 7%.

The notes are expected to price on Tuesday.

J.P. Morgan and Barclays are the joint bookrunners.

Cornerstone Chemical Co. upsized its offering of five-year senior PIK toggle notes to $77.5 million from $75 million.

The deal is talked with a cash coupon of 10½%, plus or minus one-eighth percent. The PIK coupon steps up by 75 basis points.

Call protection is increased to two years from one year, and the first call premium is increased to 105 from 102.

Imperial Capital is the bookrunner for the deal which is also expected to price Tuesday.

First Cash sets investor call

First Cash Financial Services, Inc. plans to participate in an investor conference call set to get under way at 11:30 a.m. ET on Tuesday to discuss its proposed $200 million offering of seven-year senior notes (expected ratings Ba3/BB-).

The deal is set to price on Wednesday morning.

Wells Fargo is the left bookrunner for the debt refinancing and general corporate purposes deal. Deutsche Bank is the joint bookrunner.

Columbus roadshow

Barbados-based telecom Columbus International Inc. plans to start a roadshow on Tuesday for a $1.25 billion offering of seven-year senior notes.

The deal is expected to price on March 25.

Citigroup, JP Morgan and RBC are the joint bookrunners for the debt refinancing deal.

Rallye upsizes

The Monday session also saw activity in the euro-denominated primary market.

Rallye SA priced an upsized €500 million issue of non-callable, non-rated seven-year senior notes at par to yield 4%.

The deal was upsized from €300 million.

The yield printed inside of initial yield talk in the 4¼% area.

Banca IMI, BNP Paribas, CM-CIC, Royal Bank of Scotland, SG CIB and UBS were the joint bookrunners for the quick-to-market deal.

BNP will bill and deliver.

Proceeds will be used to refinance debt.

Almirall starts roadshow

Barcelona-based pharmaceutical firm Almirall SA began a roadshow on Monday for a €325 million offering of seven-year senior notes.

Joint bookrunner Deutsche Bank will bill and deliver. BBVA, Banca March and Nomura are also joint bookrunners.

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

AuRico Gold bonds glitter

In the secondary market, a trader quoted AuRico Gold's new 7¾% senior secured second-lien notes due 2020 at 98 bid - up from its deeply discounted 96.524 issue price - although he "never saw an offering" in the new deal.

However, a second trader who did see two-sided markets in the bonds quoted them as having moved up to 97½ bid, 98½ offered.

And at yet another desk, a trader proclaimed that AuRico "was up pretty good from their discount price," seeing the bonds having gotten as high as 99¾ bid, 100¼ offered.

There was no observable aftermarket trading in the days other newly priced issue - Navios Maritime Acquisition's $60 million add-on to its 8 1/8% first-priority ship mortgage notes due 2020. A trader suggested that the smallish deal likely "priced and then got put away."

Virgin Media bonds better

A trader saw Virgin Media Secured Finance's new 5½% senior secured notes due 2025 in a 100½ to 100¾ bid context on Monday.

That was up from the par level at which the company - a funding arm of Virgin Media Inc., which provides internet, wireline and mobile telephone services in the United Kingdom - priced its $425 million issue on Friday.

The bonds were part of a three-part, £915 million-equivalent regularly scheduled forward-calendar deal that also included two tranches of sterling-denominated paper.

Virgin Media itself is a subsidiary of London-based Liberty Global plc, part of billionaire tycoon John Malone's international communications empire.

Recent deals trade up

Some of the recently priced new deals were seen trading at better levels on Monday, in line with an overall firmer trend.

For instance, a trader saw both halves of Thursday's new issue of bonds from Netherlands-based logistics company CEVA Group up around 7/8 of a point on Monday from the already-handsome gains that those bonds had racked up in initial aftermarket dealings when they were freed to trade on Friday.

He pegged CEVA's 7% first-lien notes due 2021 at 102 bid, 102½ offered. On Friday, those notes had moved up to 101 1/8 bid, 101 5/8 offered from the par level at which the $300 million issue had priced as a regularly scheduled forward-calendar offering following its downsizing from $400 million originally.

And the trader saw its 9% first-and-a-half-lien notes due in September of 2021 at 102 1/8 bid, 102 5/8 offered. That was up from Friday's levels of around a 101¼ to 101¾ context. That $325 million of notes had also priced at par on Thursday, after having been downsized from $425 million originally.

A trader saw Wynn Macau's 5¼% notes due 2021 on Monday at 101 3/8 bid, 101 5/8 offered.

Those bonds had been quoted offered around 101¼ on Friday, but with no bids seen at that time, the trader said.

The quick-to-market $750 million issue - sharply upsized from an originally announced $400 million - had priced on Thursday at 100.75 to yield 5.093% by the company, a Macau-based subsidiary of Las Vegas-based Wynn Resorts Ltd. that runs the company's casino resort in that Chinese gambling enclave.

URI notes remain busy

For a third consecutive session, there was considerable trading in United Rentals' new two-part drive-by issue, which had priced late in the day on Wednesday and began trading around on very heavy volume on Thursday. That brisk activity continued on Friday, and extended on into Monday.

A trader saw the company's 5¾% notes due 2024 trading at levels between 100 3/8 and 100 5/8 bid, on volume of over $40 million, making those bonds one of the most heavily traded credits in Junkbondland on Monday.

A second trader also saw those bonds in that same 100 3/8 to 100 5/8 bid context, calling that up 5/8 point on the day.

The Greenwich, Conn.-based construction and industrial equipment rental and leasing company had priced that $850 million tranche of bonds late in the day on Wednesday at par. They came too late in the day for any trading after that, but made up for it with a vengeance on Thursday, when an estimated $117 million of bonds changed hands, including some $106 million of round-lot transactions, easily topping the day's most-actives list. They initially traded at 100 1/8 bid, 100 3/8 offered.

On Friday, the bonds had hung around a par to 100 1/8 bid context, on volume of around $20 million, again making it one of the most actively traded junk credits on the day.

A trader saw the other half of that deal - its $525 million add-on to its existing 6 1/8% notes due 2023 - around 106 1/8 bid on Monday.

However, he said that volume was nowhere near that of the 5¾% notes -- only about $6 million on the day.

Another trader saw those bonds at 106 bid, 106½ offered, calling them up ½ of a point.

Yet another trader said: "We had sellers 1061/4. There wasn't anyone jumping up and down saying 'give them to me.' "

He said activity was on "a decent size."

Those bonds had priced at 105.25 on Wednesday to yield 5.188%, and then got as good as a 105 5/8 to 106 1/8 context when they were freed to trade on Thursday on over $50 million of volume.

On Friday, with volume moderating to around $11 million, the notes were seen down 1/8 to ¼ of a point from Thursday's finish, quoted around 105½ bid.

Quiet session seen

A trader characterized Monday as "a quiet day overall."

At his shop, he said, "most of our trading was in yield-to-call and shorter-maturity paper," considered to be a defensive strategy.

He said that around mid-afternoon [ET], "we saw a lot of offer-wanted lists coming out of the [exchange-traded funds]. However, there was not much response from retail customers."

One trader suggested that activity may have been dampened, especially in New York, by Monday's big St. Patrick's Day parade, with people slipping out of their offices to see the famous spectacle.

Or, as a second trader speculated, "perhaps to just go get some green beer."

Among specific names, traders saw little going on in either Sears Holdings paper or in the bonds of Chesapeake Energy, despite news announcements from each company indicating they were going forward with previously disclosed plans to spin-off non-core assets.

A trader said he saw no activity in Sears. Chesapeake's 6 5/8% notes due 2019 traded around 103½ bid - "but not a ton of volume" was trading., perhaps around $6 million.

A second trader agreed that Chesapeake's bonds "didn't do anything.

And he said, "There was nothing notable happening with Sears. That news [of the coming Lands' End spinoff] had pretty much been in the market for a while anyway."

Market indicators improve

Statistical junk performance indicators turned higher across the board on Monday after having been lower all around on Friday. It was the first solidly higher session since March 5.

The Markit Series 21 CDX North American High Yield index gained 7/16 of a point on Monday to end at 107 3/8 bid, 107 7/16 offered - its first gain after seven consecutive sessions of losses, including Friday's 3/32 of a point downturn.

The KDP High Yield Daily index also finally broke a seven-session losing streak, rising by 7 basis points on Monday to end at 74.80, versus its 16 bps slide on Friday. Its yield, meanwhile, came in by 1 bp, to 5.28%, marking its first narrowing after two straight rises, including 5 bps on Friday.

And the widely followed Merrill Lynch High Yield Master II index, which has recently alternated gains and losses in a choppy pattern, rose by 0.093%, in contrast to Friday's 0.134% retreat.

Monday's advance raised its year-to-date return to 2.501% from 2.407% on Friday, although it remained well below the 2.812% reading seen on March 5, its 2014 peak level.

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