Canbriam prices small add-on, Altice slates big deal, calendar grows; Charter, Fortescue climb

By Paul A. Harris and Paul Deckelman

New York, May 26 – The high-yield primary market swung back into action on Tuesday following the long Memorial Day holiday break.

Just one deal – a smallish add-on to existing bonds – was heard by syndicate sources to have priced.

However, they saw considerable behind-the scenes activity as several prospective issuers unveiled their planned bond deals.

The sole pricing was a quickly-shopped $100 million add-on to Canadian oil and natural gas operator Canbriam Energy Inc.’s 2019 notes. It was not seen in the aftermarket.

There was, however, a fair amount of activity in recently priced issues, including Thursday’s offerings from Paramount Resources Ltd., Berry Plastics Corp. and Plantronics, Inc.

Away from the credits which have already priced, primaryside players saw a slew of would-be issuers begin shopping their deals around to prospective investors. The most notable of these was European cable provider Altice SA’s $1.72 billion three-part bond issue, part of the financing for its acquisition of a majority stake in U.S. cabler Suddenlink Communications.

Cable industry merger and acquisition activity was also a factor away from the primary arena, with traders seeing Charter Communications Inc.’s paper better across the board on the news that it has agreed to acquire larger rival Time Warner Cable Inc. as well as acquiring smaller sector peer Bright House Networks in a cash-and-stock deal.

Outside the cable universe, Fortescue Metals Group’s bonds rose amid speculation that Chinese investors would purchase a major stake in the Australian iron ore mining company.

Statistical measures of market performance were mixed for a second consecutive session.

Canbriam taps 9¾% notes

The post-Memorial Day week got under way Tuesday with a heavy volume of news in the primary market.

Only one deal, a drive-by, priced.

Canbriam Energy priced a $100 million tack-on to its 9¾% senior notes due Nov. 15, 2019 (Caa1/B-) at 103 to yield 8.722%.

The reoffer price came on top of price talk.

Credit Suisse, RBC, BMO and CIBC were the joint bookrunners.

The Calgary, Alta.-based privately held energy exploration and production company plans to use the proceeds to fund capital expenditures and for general corporate purposes.

Altice launches $1.72 billion

Meanwhile the active calendar, which was empty last Friday ahead of the three-day weekend in the United States, rocketed to $6.2 billion equivalent on Tuesday, as steady streams of new deal news flowed in from the European and American markets.

Details surfaced of a $1.72 billion three-part high-yield bond financing backing Altice’s acquisition of a 70% stake in Suddenlink Communications.

The deal, which rolled out at a Tuesday morning investor conference call, features three tranches from three different issuing entities.

Altice US Fin I Corp. is offering $1.1 billion of eight-year senior secured first-lien notes (B1/BB-), callable after three years at par plus 75% of coupon.

Altice US Fin II Corp. is offering $300 million of 10-year senior unsecured notes (Caa1/B-), non-callable for five years.

And in a tranche from the holding company, Altice US Fin SA is offering $320 million of 10-year senior notes (Caa2/CCC+) non-callable for five years.

The Rule 144A and Regulation S for life notes are expected to price on Thursday.

J.P. Morgan Securities LLC and BNP Paribas are the underwriters.

CMA CGM to start roadshow

France-based CMA CGM SA plans to start an international roadshow on Wednesday in New York for an $800 million equivalent two-part offering of senior notes (expected ratings B3/B-).

The debt refinancing deal features euro-denominated notes due January 2021, which come with 2.5 years of call protection, and dollar-denominated notes due June 2020, which come with two years of call protection.

Joint global coordinator and bookrunner BNP Paribas will bill and deliver. Morgan Stanley is also a joint global coordinator and bookrunner.

Credit Agricole, HSBC, ING, SG and UniCredit are joint lead managers.

Informatica launches

Informatica Corp. launched a $750 million offering of eight-year senior notes (Caa2/CCC+).

Goldman Sachs is the left bookrunner for the LBO financing. BofA Merrill Lynch, Credit Suisse, Macquarie, Morgan Stanley, Nomura, RBC and Deutsche Bank are the joint bookrunners.

The notes come with three years of call protection.

Life Time to begin marketing

Life Time Fitness Inc. plans to start a roadshow on Wednesday in New York for a $600 million offering of eight-year senior notes (Caa1/CCC+).

Goldman Sachs is the left bookrunner. Deutsche Bank, Jefferies, BMO, RBC, Macquarie, Nomura and Mizuho are the joint bookrunners.

Proceeds, along with a $1.35 billion credit facility, sponsor equity and other equity contributions, sale-leaseback proceeds, and cash on hand, will be used to help fund the buyout of the Chanhassen, Minn.-based company and repay bank debt.

Tops starts Wednesday

Tops Holding LLC and Tops Markets II Corp. plan to start a roadshow on Wednesday for a $550 million offering of seven-year senior secured notes (existing ratings B3/B).

BofA Merrill Lynch and Wells Fargo are the joint bookrunners for the debt refinancing deal.

FTS to price Wednesday

FTS International, Inc. scheduled an investor conference call for 11:30 a.m. ET on Wednesday.

The Fort Worth, Texas-based oil and gas field services provider plans to price a $350 million offering of five-year senior secured floating-rate notes (/B+) on Wednesday afternoon.

Wells Fargo is the bookrunner.

Proceeds will be used to pay off and terminate the gas and oil field services company’s existing revolver and for general corporate purposes.

Darling to bring euro deal

In the European market, Texas-based Darling Ingredients Inc. started a roadshow on Tuesday for a €515 million offering of seven-year senior notes.

Join bookrunner Goldman Sachs will bill and deliver for the debt refinancing deal. JPMorgan and BMO Capital Markets are also joint bookrunners.

Europcar starts roadshow

Europcar Groupe SA started a roadshow on Tuesday in London for a €475 million offering of senior notes due 2022.

Joint global coordinator and physical bookrunner Deutsche Bank will bill and deliver. Credit Agricole is also a joint global coordinator and physical bookrunner. BNP Paribas is a joint global coordinator and joint bookrunner.

Goldman Sachs, HSBC, Lloyds, Royal Bank of Scotland and SG CIB are joint bookrunners.

The Paris-based car rental arm of Volkswagen plans to use the proceeds from the Rule 144A and Regulation S offer to refinance the €400 million of its existing senior subordinated notes and for general corporate purposes.

Nexans lines up roadshow

France-based Nexans plans to start a roadshow on Wednesday in London for a €250 million offering of five-year senior notes (BB-).

Santander and SG CIB are the global coordinators and active bookrunners. HSBC and Natixis are also active bookrunners.

Recent deals mixed

In the secondary market, traders did not see the new Canbriam Energy 9¾% 2019 notes changing hands owing to its small size and its status as an add-on.

They said there were some dealings going on in the new issues that priced on Thursday.

As had been the case on Friday, Plantronics 5½% notes due 2023 “remained well bid for,” a trader said. He saw the bonds in a 100¾ to 101¼ bid context

A second trader saw those bonds trading between 100½ bid and 101 offered.

At another desk, a market source saw the bonds at 101¼ bid, a gain of ¼ point on the day, with around $10 million having traded.

The Santa Cruz, Calif.-based communications equipment manufacturer’s regularly scheduled $500 million forward calendar offering had priced at par late in the session on Thursday – too late for any trading at that time. However, on Friday, more than $70 million were traded, as the bonds moved up to 101 to 101½ bid context.

Berry Plastics’ quick-to-market $700 million issue of 5 1/8% second priority senior secured notes due 2023 continued to struggle on Tuesday, just as it had on Friday, trading below its par issue price.

A trader saw the Evansville, Ind.-based plastic packaging products maker’s notes in a 99 to 99½ bid context, calling them down 3/8 point, while another called them down 1/16 at 99 7/16 bid, with about $10 million traded.

Thursday’s third deal, from Canadian energy company Paramount Resources, was seen unchanged Monday at 100 7/8 bid, on volume of about $13 million.

The company priced that regularly scheduled forward calendar offering of 6 7/8% notes due 2023 on Thursday at 99.533 to yield 6.95%, after the issue was upsized to $450 million from $400 million originally.

Charter climbs on Time Warner

While there was some activity in the recently priced credits, a trader said that “the theme today was news-related” – companies’ bonds up on news developments.

One such name was Charter Communications, whose bonds were better on the company announcement that it had reached an agreement to acquire larger rival Time Warner Cable – a Charter goal since last year, when a takeover try by Stamford, Conn.-based Charter for far less money was rebuffed

Charter’s CCO Holdings LLC unit’s 5 1/8% notes due 2023 climbed nearly 7/8 point to 99¼ bid, with over $15 million of the notes traded.

Its 5 7/8% notes due 2027 gained ½ point, ending at par bid, on volume of over $12 million.

And its 5¾% notes due 2024 were also better by ½ point at 102¼ bid, with over $10 million traded.

Fortescue firms on China investment talk

Another big gainer – this one more on speculation than on any actual hard news – was Australian iron ore producer Fortescue Metals Group.

A trader saw its 6 7/8% notes due 2022 up 3½ to 4 points on the day, “on the rumor that China is going to buy them” – or, at least, that Chinese investors may take a sizable stake in the company.

A second trader pegged those bonds at 78¼ bid, up 2½ points, with over $33 million traded – tops in Junkbondland.

He said that the company’s 8¼% notes due 2019 “were active as well,” going home at 92½ bid, up from 90 at the end of last week.

More than $25 million of the notes changed hands

Indicators stay mixed

Statistical market performance indicators were mixed for a second consecutive session on Tuesday, following Monday’s market close.

Those signposts had turned mixed on Friday, after having been higher across the board on Thursday and lower all around for the three sessions before that.

The KDP High Yield Daily Index dipped by 3 basis points to 71.40. It had been unchanged at 71.43 on Friday, after having risen by 6 bps on Thursday, its first gain after three consecutive losses.

The index did not publish on Monday due to the Memorial Day holiday break.

Its yield was unchanged for a second straight session at 5.25%, after having come in by 1 bp on Thursday, its first narrowing after two consecutive sessions of having widened out.

The Markit Series 24 CDX North American High Yield lost 1/32 point on Tuesday to close at 107 bid, 107 1/32 offered, its third straight loss and sixth downturn in the last seven sessions.

While the market was technically closed on Monday, the index was published, and was marginally lower. On Friday, it lost 3/32 point.

But the Merrill Lynch North American Master II high yield index saw its third straight upturn, firming by 0.071%. The index was not published on Monday. It had edged up by 0.009% on Friday, after having risen by 0.12% on Thursday, breaking a three-session losing streak.

Tuesday’s gain lifted the index’s year-to-date return to 3.971% - new peak level for 2015. It was up from 3.896% on Friday, as well as up from its former peak level for the year of 3.952%, set on April 27.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.