Giant-sized SoftBank plus Cheniere and Golden Nugget megadeals lead $7.2 billion session, year’s biggest day

By Paul Deckelman and Paul A. Harris

New York, Sept. 12 – The high-yield primary market was on fire on Tuesday, with nearly $7.22 billion of new dollar-denominated and fully junk-rated paper seen having come to market in seven tranches – the most single-day primary issuance seen so far this year, according to data compiled by Prospect News.

Leading the way was a trio of megadeal-sized regularly scheduled forward calendar transactions.

Chief among them was Japanese technology company SoftBank Group Corp.’s four-part, dual-currency offering, which included $1.35 billion of seven-year notes and $2 billion of 10-year paper, in addition to two tranches of euro-denominated securities.

That heavily oversubscribed supersized deal dwarfed two other offerings, either of which could have been the biggest issue of the session in its own right – liquefied natural gas company Cheniere Energy Partners, LP’s upsized $1.5 billion of eight-year notes, and gaming and hospitality operator Golden Nugget, Inc.’s $1.41 billion of paper, split into two tranches, one of them an add-on to an issue of 2024 bonds the company sold back when it was still known as Landry’s Inc.

There was also a pair of opportunistically timed, quick-to-market deals – oil and natural gas pipeline company Tallgrass Energy Partners, LP’s $500 million of 10.25-year notes and mortgage insurer Radian Group, Inc.’s upsized $450 million seven-year offering.

In the secondary market, traders said that the new Cheniere Energy notes were up solidly in busy trading.

They also saw considerable activity in some of the big deals that have priced in recent days, including Monday’s two part deal from Southwestern Energy Co. and Friday’s two-tranche offering from construction equipment rental and leasing company United Rentals (North America) Inc.

Statistical market performance measures turned mixed on Tuesday, after having been higher across the board on Monday and lower all around on Friday for the first time since Aug. 17. The indicators had last been mixed on Thursday.

SoftBank three-times oversubscribed

In Tuesday's primary market SoftBank Group Corp. priced $6.05 billion equivalent of senior notes (expected ratings Ba1/BB+) in four tranches.

The deal included $1.35 billion of seven-year notes that priced at par to yield 4¾%. The yield printed at the tight end of yield talk in the 4 7/8% area.

The long dollar-denominated tranche came in the form of $2 billion of 10-year notes that priced at par to yield 5 1/8%. The yield printed 12.5 basis points beneath the low end of yield talk in the 5 3/8% area.

Both euro-denominated tranches priced through official talk.

They included €1.5 billion of eight-year notes that priced at par to yield 3 1/8%. Yield talk was in the 3½% area.

The longest tranche in the massive deal came in the form of a $750 million amount of 12-year notes which priced at par to yield 4%. Yield talk was in the 4 5/8% area.

The Regulation S-only deal, which was launched in the form of four benchmark tranches, played to more than $20 billion of orders, most of it from Europe and Asia, as the deal was not sold into the United States, sources said.

Joint global coordinator, joint bookrunner and joint lead manager Deutsche Bank will bill and deliver. Citigroup, Goldman Sachs and Morgan Stanley were joint global coordinators, joint bookrunners and joint lead managers.

Mizuho, Credit Agricole, JPMorgan, BofA Merrill Lynch, UBS, BNP Paribas and Barclays were passive bookrunners.

The Tokyo-based telecom is using the proceeds to repay bank debt.

Golden Nugget seniors and subs

Golden Nugget, Inc. priced $1,415,000,000 of high-yield notes in two tranches.

The company, which was formerly known as Landry's, Inc., priced a $745 million add-on to the Landry's 6¾% senior notes due Oct. 15, 2024 (B3/CCC+) at 99.00 to yield 6.931%.

The reoffer price came at the cheap end of the 99 to par price talk.

In addition Golden Nugget priced $670 million of eight-year senior subordinated notes (Caa1/CCC+) at par to yield 8¾%.

The yield printed at the wide end of the 8½% to 8¾% yield talk.

Jefferies LLC, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Rabo Securities USA Inc., KeyBanc Capital Markets Inc., Citizens Capital Markets Inc. and Capital One Securities Inc. were the joint bookrunners.

Proceeds, along with a $1.08 billion term loan, will be used to refinance Golden Nugget debt and fund a shareholder distribution.

The issuer is a Houston-based diversified restaurant, hospitality and entertainment company.

Cheniere upsizes

Cheniere Energy Partners, LP priced an upsized $1.5 billion issue of eight-year senior notes (Ba2/BB) at par to yield 5¼%.

The issue size was increased from $1 billion.

The yield printed at the wide end of the 5% to 5¼% yield talk.

Credit Suisse, MUFG, ABN Amro, SG CIB, Mizuho, SMBC Nikko, JP Morgan, HSBC and BofA Merrill Lynch the joint bookrunners.

The Houston-based integrated liquefied natural gas company plans to use the proceeds, including those resulting from the $500 million upsizing of the deal, to repay amounts under its secured credit facilities.

Tallgrass drives by

Tallgrass Energy Partners, LP priced a $500 million issue of 10-year senior notes at (Ba3/BB+) at par to yield 5½%.

The yield printed on top of yield talk in the 5½% area.

Morgan Stanley & Co., BNP Paribas, BofA Merrill Lynch, Citigroup Global Markets and RBC Capital Markets were the joint bookrunners.

The Leawood, Kansas-based oil and natural gas pipeline company plans to use the proceeds to pay down its revolving credit facility.

Radian upsizes

Radian Group Inc. priced an upsized $450 million issue of seven-senior senior bullet notes (Ba3/BB+) at par to yield 4½%.

The issue size was increased from $400 million.

The yield printed at the tight end of yield talk in the 4 5/8% area.

Joint bookrunner RBC Capital Markets LLC will bill and deliver. Goldman Sachs & Co. was also a joint bookrunner.

The Philadelphia-based provider of mortgage insurance, as well as products and services to the real estate and mortgage finance industries, plans to use the proceeds, along with available cash, to fund a concurrent capped tender offer for its 5½% senior notes due 2019, its 5¼% senior notes due 2020 and its 7% senior notes due 2021.

Viking Cruses for Wednesday

Viking Cruises Ltd. plans to take part in a conference call with investors at 11:30 a.m. ET on Wednesday.

The cruise line operator plans to price $550 million of 10-year senior notes (expected ratings B3/B) following the call, on Wednesday afternoon.

Wells Fargo Securities LLC is the left bookrunner for the Rule 144A and Regulation S for life offer. BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and JP Morgan Securities LLC are the joint bookrunners.

The notes become callable after five years at par plus 50% of the coupon.

Viking Cruises plans to use the proceeds to fund a tender offer for any and all of its notes due in 2022.

Tronox starts roadshow

Tronox Finance plc started a roadshow on Tuesday in New York for a $450 million offering of eight-year senior notes (B3/B-).

The offer is expect to price on Thursday.

Citigroup Global Markets Inc. is the lead bookrunner. BofA Merrill Lynch, Goldman Sachs & Co., Wells Fargo Securities LLC, Credit Suisse Securities (USA) LLC, RBC Capital Markets and Barclays are the joint bookrunners.

The Stamford, Conn.-based mining and inorganic chemical company plans to use the proceeds to refinance debt and to support its acquisition of titanium dioxide operations from Saudi Arabian chemical and mining concern Cristal.

SemGroup 8.5-year deal

SemGroup Corp. started a roadshow on Tuesday for a $300 million offering of 8.5-year senior notes.

The roadshow wraps up on Thursday, and the offer is set to price Friday.

Credit Suisse Securities (USA) LLC, Scotia Capital, Wells Fargo Securities LLC, ABN Amro, Barclays, BBVA, BMO Securities and BNP Paribas are the joint bookrunners.

The Tulsa-based midstream energy company plans to use the proceeds to pay down its revolving credit facility.

Bank of Ireland tier 2 deal

Bank of Ireland Group plc priced a two-part offering of 10-year fixed-rate reset callable subordinated tier 2 notes (Ba1/expected BB) on Tuesday, according to a market source.

The deal included $500 million of 4 1/8% notes which priced at a 250 basis points spread to Treasuries. The spread came tight to the Treasuries plus 260 bps guidance.

The Dublin-based commercial bank also priced £300 million of 3 1/8% notes at a 270 bps spread to Gilts. The spread came at the tight end of the Gilts plus 270 bps to 275 bps guidance.

The order book for the sterling-denominated tranche was more than 4.5 times oversubscribed, according to a company press release.

The dollar-denominated order book more than 9.5 times oversubscribed, the release stated.

BNP Paribas, Citigroup, Davy Securities, Morgan Stanley and UBS Investment Bank were the joint bookrunners.

Biggest day of the year

The day’s new-deal volume of dollar-denominated and fully junk-rated paper from domestic or industrialized-country issuers totaled a staggering $7.215 billion face amount – $7.208 billion proceeds – in seven tranches brought to market by five issuers.

According to data compiled by Prospect News, this was by far the most junk paper priced in a single session so far this year, eclipsing the old mark of $6.64 billion which got done in eight tranches brought by six issuers back on March 9.

It was, in fact, the most junk paper to price on a single day since April 6, 2016, when four issuers priced five tranches totaling $8.13 billion.

The dollar-denominated portion of SoftBank’s $6.05 billion equivalent four-part dual-currency deal, totaling $3.35 billion in two tranches, was the second-biggest dollar- denominated junk deal of the year so far, lagging behind only Dallas-based hospital operator Tenet Healthcare Corp.’s $3.78 billion four-part offering of senior secured and unsecured paper which priced on June 5.

Cheniere deal churns higher

Traders said that Cheniere Energy Partners LP’s upsized 5¼% notes due 2025 firmed smartly when the big deal went into the aftermarket after its early-afternoon pricing.

One saw the paper in a 100 7/8 to-101 1/8 bid context, while a second pegged the bonds at 101 bid.

A market source at another desk saw the notes going home at 100 7/8 bid, on volume of more than $111 million, putting the credit high up on the day’s Most Actives list.

Golden Nugget trades actively

Among the other new issues that priced during the session, a trader said that only the Golden Nugget deal generated much aftermarket activity.

He saw add-on to the former Landry’s Inc. 6¾% notes due Oct. 15, 2024 at 99 bid, right at its issue price, with over $16 million having traded.

The new Nugget stand-alone 8¾% senior subordinated notes due 2025 were seen finishing at 100 1/16 bid, up oh-so slightly from their par issue price, with some $24 million having changed hands.

Southwestern tops actives list

A trader said that trading in the new or recently priced issues:was “the focus of the day,” as it pretty much has been since the primary market roared back to life last week after its long late-summer siesta.

A market source said that the busiest bond of the day, topping even the new Cheniere Energy notes, was Southwestern Energy Co.’s 7½% notes due in March of 2026. He saw the bonds trading at par, unchanged from the levels seen late on Monday, when the Houston-based oil and natural gas company priced its $1.15 billion two-part deal.

More than $125 million of those notes traded on Tuesday, making it the busiest credit of the day in Junkbondland.

Southwestern’s 7¾% notes due 2027 were also trading at par, which the market source described as “down slightly for the day.” Over $76 million of those bonds traded.

The company had priced $650 million of the 2026 notes and $500 million of the 2027 paper, both at par, in a quick-to-market transaction on Monday.

United Rentals seen better

United Rentals’ 4 5/8% notes due 2025 edged up to 101 5/8 bid, a 1/8 point gain, on volume of around $20 million.

Its 4 7/8% notes due January 2028 gained ½ point, ending at 101½ bid, on more than $10 million of volume.

The Stamford, Conn.-based equipment rental company had priced both halves of its $1.5 billion deal in a quickly shopped offering on Friday.

Indicators turn mixed

The KDP Daily High Yield Index eased by 1 basis point on Tuesday to end at 72.26. It had firmed by 3 bps on Monday, after having lost 3 bps on Friday, its first loss after 11 straight gains.

Its yield came in by 1 bp on Tuesday, to 5.15%, after having been unchanged for a fourth session in a row at 5.16% on Monday. Before that, it had come in by 3 bps last Tuesday, its sixth straight narrowing.

The Markit CDX Series 28 High Yield Index was up by over 1/8 point on Tuesday, closing at 107 11/32 bid, 107 3/8, its second straight gain. On Monday, the index had risen by almost 7/16 point, after having lost 7/32 point Friday, its second loss in a row.

The Merrill Lynch North American High Yield Index also posted its second straight gain on Tuesday, firming by 0.036%, on top of Monday’s 0.091% rise. On Friday, it had moved lower by 0.072%, after seven straight sessions on the upside before that.

Tuesday’s rise improved the index’s year-to-date return to 6.401%, establishing a second straight new 2017 year-to-date peak level. The old mark of 6.362% had been set on Tuesday.

© 2015 Prospect News.
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