PTC, Mobile Mini price; new PTC notes jump; U.S. Steel, HanesBrands stay busy; oil names off

By Paul Deckelman and Paul A. Harris

New York, May 4 – The high-yield new-deal market saw a pair of pricings on Wednesday totaling $750 million of new dollar-denominated, fully junk-rated paper.

Software company PTC, Inc. came to market with $500 million of eight-year notes that priced as a regularly scheduled forward calendar offering.

When those new bonds hit the aftermarket, traders said the deal was one of the day’s busiest credits, zooming by more than 2 points from their issue price.

The session’s other pricing was a quickly shopped $250 million of eight-year notes from Mobile Mini, Inc., a provider of portable storage containers and office trailer structures to various industries. Traders later quoted the bonds a little higher, though on limited trading volume.

They meantime saw considerable activity in some of the paper that had priced during Tuesday’s session.

United States Steel Corp.’s new five-year notes were once again the most actively traded credit in Junkbondland after having held that same distinction after pricing Tuesday. On Wednesday, they hung in around the firm levels seen on Tuesday.

Both tranches of apparel maker HanesBrands, Inc.’s new megadeal were also actively traded, firming on the session.

Away from the new deals, oil and natural gas names such as Chesapeake Energy Corp., Continental Resources, Inc., Freeport-McMoRan Inc. and California Resources Corp. were lower amid mixed crude oil prices against a backdrop of continually rising crude oil stockpiles.

Another oiler, Denbury Resources Inc., was also down. Besides the impact of lower oil prices, the company announced a private agreement with some of its bondholders to exchange their existing paper for a lesser face amount of new second-lien notes, causing S&P to cut its ratings.

On the upside, iHeartMedia Inc.’s paper strengthened after the broadcasting and outdoor advertising company reported better-than-expected first-quarter numbers.

Statistical market performance measures were lower across the board for a second consecutive session on Wednesday.

PTC prices inside talk

Two issuers completed single-tranche deals to raise a combined total of $750 million on Wednesday.

Executions were tight, with one deal pricing at the tight end of yield talk and the other coming inside of yield talk.

PTC priced a $500 million issue of eight-year senior notes (Ba3/BB-) at par to yield 6%.

The yield printed 12.5 basis points beneath the tight end of yield talk in the 6¼% area.

Initial yield guidance was 6¼% to 6½%, sources said.

The deal appeared to go well, a trader said, marking the new PTC 6% notes due 2024 either side of 102.

Bookrunner J.P. Morgan Securities LLC is part of a syndicate of underwriters that includes Barclays, Fifth Third Securities Inc., HSBC Securities (USA) Inc., Janney Montgomery Scott LLC, KeyBanc Capital Markets Inc., RBC Capital Markets LLC, RBS Securities Inc., Santander Investment Securities Inc., SunTrust Robinson Humphrey Inc., TD Securities (USA) LLC, Huntington Investment Co. and U.S. Bancorp Investments Inc.

Proceeds will be used to repay bank debt.

Mobile Mini drives by

Mobile Mini priced a $250 million issue of eight-year senior notes (expected B2/confirmed BB-) at par to yield 5 7/8%.

The yield printed at the tight end of yield talk in the 6% area.

The debt refinancing deal came to market on a significant amount of reverse inquiry, sources said.

Deutsche Bank Securities Inc., BofA Merrill Lynch, JPMorgan, Barclays, BNP Paribas Securities Corp., BBVA Securities Inc. and MUFG were the underwriters for the quick-to-market deal.

ETF outflows

The primary market remains conspicuously hot, and recent deals tended to be well-bid on Wednesday, sources said.

However, the high-yield exchange-traded funds were seeing better sellers during the day, traders said.

One made mention of a $200 million bid-wanted-in-competition list from an ETF making the rounds on Wednesday morning.

The ETFs have also been sustaining substantial daily outflows of cash, sources say.

The ETFs saw their third substantial daily outflow on Tuesday, at $684 million. They were negative $314 million on Monday and negative $862 million last Friday, sources say.

Wednesday's fund flow number, when it materializes, is also apt to be a negative one, a trader said.

On the other hand, high-yield asset managers saw $5 million of inflows into actively managed funds on Tuesday, the most recent session for which data was available at press time.

Rexel drives by

Rexel SA priced an upsized €650 million issue of seven-year senior notes (confirmed Ba3/expected BB-/expected BB) at par to yield 3½% in a quick-to-market Wednesday deal.

The issue size was increased from €500 million.

The yield printed at the tight end of yield talk in the 3 5/8% area. Initial yield guidance was in the high 3% context.

Joint global coordinator and joint lead bookrunner BNP Paribas will bill and deliver. Barclays and ING were also joint global coordinators and joint lead bookrunners.

BayernLB, Credit Industriel et Commercial, SG CIB and Wells Fargo were the joint bookrunners.

Gestamp upsizes

Gestamp Funding Luxembourg SA priced an upsized €500 million issue of seven-year senior secured notes (Ba3/BB+) at par to yield 3½%.

The issue size was increased from €400 million.

The yield printed at the tight end of the 3½% to 3¾% yield talk.

Timing on the debt refinancing deal was accelerated, as it had been expected to be in the market through Thursday.

Joint bookrunner Deutsche Bank will bill and deliver. CaixaBank, BBVA, Bankia, BNP Paribas, BofA Merrill Lynch, Santander and SG CIB were also joint bookrunners.

The deal will be guaranteed by Gestamp Automocion, SA.

In Europe the high-yield primary market lately seems more robust than the capital markets backdrop might lead one to expect, a debt capital markets banker said on Wednesday.

Deals are being upsized, shopped on foreshortened timelines and pricing tight to guidance, the banker said, and noted that all of this was taking place as the risk appetite in Europe was somewhat shaky.

The iTraxx Euro Crossover index was 7 bps wider at 330 bps bid on Wednesday, and stock prices were lower, the source remarked.

As in the United States there has been a technical bid in high yield, with accounts having cash to put to work, the banker added.

New PTC paper pops

In the secondary market, traders reported robust gains, in heavy trading, for the new 6% notes due 2024 from PTC.

The Needham, Mass.-based software company priced $500 million of those notes at par.

When they hit the aftermarket, a trader pegged the bonds at 102 bid.

A second saw them at 101¾ bid, 102 1/8 offered.

At yet another desk, a market source located the new bonds at 102¼ bid and said that more than $61 million had changed hands, putting the credit high up on the day’s Most Actives list.

Micro Mini quoted higher

A trader meantime said that the day’s other new deal – from Micro Mini, a Tempe, Ariz.-based provider of portable storage containers and office trailer structures to various industries – was in a 100½-to-101 bid context late in the day.

It had priced $250 million of those 5 7/8% notes due July 2024 at par.

Tuesday deals stay busy

There was also substantial activity among some of the issues that had priced on Tuesday.

A trader said that U.S. Steel’s 8 3/8% senior secured notes due 2021 had “moved back up to 101¾,” matching the high level those notes had brushed against in Tuesday’s aftermarket dealings, before easing from those highs to close at 101½ bid. Those initial trades had followed the Pittsburgh-based integrated steel producer’s pricing of $980 million of those notes at par after the regularly scheduled forward calendar offering had been upsized from an originally announced $500 million.

A second trader saw the bonds at 101 5/8 bid, 102 1/8 offered.

Yet another trader, though, reported the bonds holding steady at the end of the day around 101½ bid, calling them essentially unchanged from late Tuesday.

He said that for a second consecutive session, those new U.S. Steel bonds were the most actively traded junk issue, with over $73 million of volume on Wednesday, in addition to the more than $220 million of turnover seen on Tuesday.

At the Gimme Credit independent investment advisory service, senior analyst Evan Mann said in a Thursday research note that the company had taken “a big step toward addressing its upcoming refinancing hurdle” by doing the bond deal, with the proceeds slated for repayment of its $444 million of 6.05% notes due 2017 and $487 million of 7% notes due 2018.

“The refinancing of these maturities addresses a key investor concern and takes this risk off the table,” Mann declared.

However, he remains cautious on the company, citing what he called its “disappointing” first-quarter results and full-year guidance and projected high leverage, with debt north of 8 times EBITDA. He rates its bonds as “underperform.”

Hanes heads higher

HanesBrands’ two tranches of bonds were both seen to have moved up in active trading on Wednesday, with a trader seeing both having firmed to around 101 bid.

That would be up solidly from their Tuesday closing levels a little above par, where the new 4 5/8% notes due 2024 and 4 7/8% notes due 2026 had priced.

The Winston Salem, N.C.-based marketer of everyday basic apparel had priced a total of $1.8 billion in two equally sized $900 million tranches after the forward calendar offering was upsized from an originally announced $1.5 billion.

A trader on Wednesday saw both tranches in a 100 7/8-to-101 1/8 bid context.

More than $38 million of the eight-year notes had traded on Wednesday and over $46 million of the 10-year notes, putting those credits high up on the Most Actives list.

New-issue focus

One of the traders said that the session “has been new-issue focused, pretty much across the board.”

He said that “the general market was off today by about ¼ to ½ point” but that the new issues “were still hanging in there pretty well.”

He said that “nothing is really standing out, outside of these new issues that are trading.”

Energy names lower

At another desk, a trader said that energy names “were generally lower, in line with recently struggling oil prices.”

The benchmark U.S. crude grade, West Texas Intermediate for June delivery, actually rose slightly on the day in trading on the New York Mercantile Exchange, ending up 13 cents per barrel at $43.78 – its first gain after three straight sessions before that of decline.

But the key international benchmark grade, Brent crude for July delivery, saw a fourth straight day of losses on the London ICE Futures Exchange, ending Wednesday down 35 cents per barrel at $44.62.

Sentiment was not helped by the latest statistics on crude oil stockpiles. The U.S. Energy Information Administration reported that crude oil stockpiles increased to new record levels last week, rising by 2.8 million barrels in the week ended Friday.

That put inventories at 543.4 million barrels, or about 1 million barrels more than analysts had anticipated.

Crude stockpiles on the East Coast and in the Midwest were higher than at any time since 1990.

Against that sobering backdrop – indicating that oil prices are not likely to strengthen any time soon – some well-known oil names were posting losses in Wednesday trading.

Chesapeake Energy’s 8% second-lien senior secured notes due 2022 lost nearly a full point, ending at 63¼ bid, with over $18 million traded.

Its 6 5/8% notes due 2020, though, were seen by a trader about unchanged at the 57-58 bid level.

Continental Resources’ 5% notes due 2022 were off by ½ point at 90 bid, on volume of over $16 million.

California Resources’ 8% notes due 2022 were also half-point losers, ending at 62¼ bid, with over $12 million traded.

WPX Energy Inc.’s 7½% notes due 2020 were particularly hard-hit, plunging by 2¼ points to 92¾, with more than $13 million traded.

Freeport-McMoRan – which operates in both the oil and gas and the metals mining industries – was also among the day’s big losers. Its 5.45% bonds due 2043 lost 3 points, ending at 69½ bid, with volume of over $16 million.

Denbury down on note exchange

Denbury Resources’ three series of bonds were all down multiple points on the session, more so than most of its sector peers, after the Plano, Texas-based oil and natural gas exploration and production company announced that it had entered into privately negotiated exchange agreements with holders of $839.4 million of its outstanding senior subordinated notes to exchange those notes for $482.9 million of new 9% senior secured second-lien notes due 2021 and about 33.6 million shares of the company’s common stock.

The deal takes out $123.4 million of its outstanding 6 3/8% senior subordinated notes due 2021, $301.7 million of its outstanding 5½% senior subordinated notes due 2022 and $414.3 million of its 4 5/8% senior subordinated notes due 2023.

The 5½% notes were the most active on the day, ending down 3 7/16 points at 57 7/16 bid, with over $14 million traded.

The 4 5/8% notes lost 3½ points to close at 56 bid, on over $12 million of turnover.

The 6 3/8% notes plummeted by 5 points on the day, ending at 59¼ bid, but saw only a handful of sizable trades.

News of the debt exchange prompted S&P to cut Denbury’s corporate credit rating to CC from B, along with the rating on its senior subordinated notes to CC from CCC+. The outlook is negative.

The transaction is viewed as a distressed exchange because investors will receive less than what was promised on the original securities, S&P said.

Once the transaction has closed, the agency said it expects to lower the corporate credit rating to SD (selective default) and the issue-level rating on the senior subordinated notes to D.

iHeart gains on numbers

On the upside, iHeartMedia’s 9% notes due 2021 were up by a deuce on the day at just over 73 bid, a trader said, while its 14% notes due 2021 firmed to 30¾ on better-than-expected quarterly numbers.

A second trader said its 10 5/8% notes due 2023 gained 3 points, to 72½ bid, while its 9% notes due 2019 gained 2¼ points to end at 79 bid, 80 offered, “so they were feeling better on the numbers,” although he added that there were “no really big trading amounts,” with around $11 million traded.

The San Antonio, Texas-based broadcasting and outdoor advertising company – formerly known as Clear Channel – reported that for the quarter, net loss attributable to the company was $88.5 million, compared with a net loss of $385 million in the first quarter of 2015, and consolidated net loss was $58.9 million, versus a net loss of $386.6 million in the previous year.

Consolidated revenue for the quarter was $1.36 billion, up from $1.34 billion in the comparable period in the prior year.

Consolidated OIBDAN for the quarter was $300.5 million, versus $276.4 million in the previous year.

Indicators stay lower

Statistical market performance measures were lower across the board for a second consecutive session on Wednesday. They had turned southward on Tuesday after having been mixed for three straight sessions before that. Wednesday was the third such lower session in the last eight trading days.

The KDP High Yield Daily index made it three losses in a row on Wednesday, falling by 7 bps to end at 67.46, on top of Tuesday’s 20 bps slide. Those losses followed three consecutive gains before that. Wednesday was index’s sixth loss in the last nine sessions.

Its yield rose by 3 bps to 6.21%, its second straight widening; it had also risen by 6 bps on Tuesday, its first rise after four straight tightenings. Wednesday was the yield’s third widening in the last seven sessions.

The Markit Series 26 CDX North American High Yield index lost 3/8 point, finishing at 101 31/32 bid, 102 offered, its second successive loss and fourth loss in the last five sessions. On Tuesday, it had ended off 9/16 point.

The Merrill Lynch North American High Yield Master II index retreated by 0.214% on Wednesday, its second consecutive setback and third such downturn in the last four sessions, including Tuesday’s 0.353% loss.

The latest downside move cut the index’s year-to-date return to 6.79% from Tuesday’s 7.019% reading and from Monday’s close of 7.398%, the peak level for the year so far.

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