Hamilton Sundstrand deal prices, gains; Plains Exploration zooms on sale to Freeport-McMoRan

By Paul Deckelman and Paul A. Harris

New York, Dec. 5 - The high-yield primary market calmed down on Wednesday from the more active pace it had set on Tuesday, as two issues collectively worth $800 million priced.

Hamilton Sundstrand Industrial, a manufacturer of pumps and compressors, brought a downsized $650 million eight-year regularly scheduled forward-calendar offering to market. A trader saw the new bonds firm smartly in the aftermarket.

Resolute Energy Corp., an independent oil and gas exploration and production operator, did a $150 million add-on to an existing series of notes. The new issue did not trade around.

Syndicate sources heard that several deals joined the forward calendar, from familiar high-yield names such as Six Flags Entertainment Corp., Caesars Entertainment Operating Co. Inc. and Crown Castle International Corp., although only the Caesars deal is expected to price on Thursday.

New deals which came to market earlier in the week were seen mostly holding their own or adding to prior gains, particularly HCA Holdings Inc.'s $1 billion offer from Monday; traders quoted the hospital giant's big deal up a full point in the session in brisk trading.

But the busiest activity of the session took place in the established issues of Plains Exploration & Production Co., whose bonds soared on the news that Freeport-McMoRan Copper & Gold Inc. will buy the energy operator.

Statistical indicators of market performance were firm across the board.

Hamilton vastly oversubscribed

Issuance came in at just $800 million on Wednesday, as two companies priced single-tranche deals.

However the active forward calendar of deals to clear before the end of the year shot to $5.4 billion.

And it's not done growing, sources say.

In a deal that one investor characterized as "vastly oversubscribed," Hamilton Sundstrand Industrial priced a downsized $650 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 7¾%.

The yield printed at the tight end of the 7¾% to 8% yield talk.

The deal was downsized from $775 million, as the company shifted $125 million to its term loan.

Allocations were lousy, said the investor, who cited aggravating factors including the above-mentioned downsizing - undertaken so that the company could realize a cheaper cost of capital in the bank loan market - and the widely held assumption that at least half the bonds went to those accounts who participated in the bridge loan syndication, leaving just $325 million for the rest to scrap for.

Earlier in the day a trader said that the deal was heard to be seven-times oversubscribed.

When it first came into the market, yield discussions had taken place in low 8% range, the trader reflected.

Credit Suisse, Citigroup, Deutsche Bank, Morgan Stanley, RBC, Goldman Sachs and UBS were the joint bookrunners for the LBO deal.

Resolute Energy taps 81/2s

Resolute Energy priced a $150 million add-on to its 8½% senior notes due May 1, 2020 (B3/B-) at 101.25 to yield 8.205%.

The reoffer price came in the middle of the 101 to 101.5 price talk.

Citigroup was the left bookrunner for the quick-to-market deal. BMO, Wells Fargo and Barclays were the joint bookrunners.

The Denver-based independent oil and gas company plans to use the proceeds to fund the acquisition of Permian Basin assets and for general corporate purposes.

Caesars upsize expected

Caesars Entertainment plans to price a $300 million add-on to its 9% senior secured first lien notes due 2020 (B2/B) on Thursday.

Price talk is 98 to 98.5.

Timing on the deal was moved back; it was originally announced as Wednesday's business.

An investor watching the deal expects it to upsize to at least $500 million, and added that the delay likely has to do with the re-sizing, and considerations which have to be made with respect to the company's first lien debt capacity.

Citigroup is the left bookrunner. Merrill Lynch, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan and Morgan Stanley are the joint bookrunners.

Upon release from escrow, 50% of the proceeds from the notes will be used to pay down non-extended term loans while the other 50% will be put on the balance sheet as cash.

Caesars is a Las Vegas-based gaming and entertainment company.

Armstrong Energy sets talk

Armstrong Energy, Inc. talked its $200 million offering of seven-year senior secured notes (/B-/) to yield 10½% to 10¾%, a market source said.

The deal is expected to price on Thursday.

Stifel Nicolaus has the books for the debt refinancing.

Apart from Caesars and Armstrong, price talk was scarce on Thursday, which is somewhat surprising, considering that the active calendar of deals set to price before the end of the week is well populated.

Prince Mineral Holding Corp.'s $260 million offering of seven-year first-lien senior secured notes (Caa1/B) is being discussed in a mid-11% yield context, according to a trader who added that the order book is heard to be around deal-size.

Credit Suisse and BMO are the joint bookrunners.

Rain CII starts roadshow

Rain CII Carbon LLC and Rain CII Carbon Corp. began a roadshow in Europe on Wednesday for a $675 million equivalent offering of eight-year senior secured second lien notes (expected ratings B1/BB-).

The offering is comprised of tranches sized at $400 million and €210 million.

Citigroup is the left bookrunner and Goldman Sachs is the joint bookrunner.

The Kingwood, Texas-based calcined petroleum coke producer plans to use the proceeds to partially fund the acquisition of Rutgers NV and repay existing debt.

Six Flags sets investor call

Six Flags Entertainment Corp. plans to hold an investor conference call at 12:30 p.m. ET on Thursday to discuss a $600 million offering of senior notes due Jan. 15, 2021 (expected ratings B3/B+).

The deal is expected to price early in the week ahead.

Wells Fargo is the left bookrunner. Merrill Lynch and Barclays are the joint bookrunners.

The Grand Prairie, Texas-based regional theme park company plans to use the proceeds to repay $72.2 million of its term loan A and $177.8 million of its term loan B, and plans to use the remainder for general corporate purposes, including to fund repurchases of common stock.

Crown Castle announces

Crown Castle International Corp. announced Wednesday that it intends to sell senior notes in a deal that would price and settle before the end of the year, depending on market conditions.

The company said it intends to use the proceeds to redeem or repurchase its existing senior notes.

The deal is expected to be sized at between $1.05 billion and $1.1 billion, according to a high-yield investor, who also expects Goldman Sachs to lead the offering.

Crown Castle has $972 million of the original $1.2 billion issue of its 7¾% senior secured notes due May 1, 2017 outstanding, the investor observed.

Those notes, which currently trade at 106, are callable on May 1, 2013 at 103.875, said the investor, who added that based on the price of the existing issue the new notes should come with a yield of between 6% and 6½%.

The deal will likely be split-rated, with Moody's expected to assign a Baa2 rating, Standard & Poor's a BB rating, and Fitch a BBB- rating, the buysider said, and added that it is unclear at this point whether the deal will be transacted on the high-yield or high-grade desk.

Hamilton Sundstrand heads up

When Hamilton Sundstrand's new bonds were freed for secondary dealings, a trader said the new bonds were up around a 103¾ to 104 context.

"They were straddling 104," he added.

Two other traders, however, saw no trace of the pump and compressor manufacturer's new bonds.

There was no aftermarket in Resolute Energy's smallish ($150 million) add-on deal.

Tuesday deals trade firmly

Looking at the issues that priced during Tuesday's session, a trader said that the new Targa Resources Partners LP/Targa Resources Partners Finance Corp. add-on to the Houston-based midstream natural gas company's existing 5¼% notes due 2023 had moved up in Wednesday's dealings to around the 102¾ bid, 103¾ offered level.

The company had priced its quick-to-market deal at 101 on Tuesday, to yield 5.093%, and the bonds then traded around the 102 to 103 area when they were freed for secondary dealings.

A trader saw Cinemark USA, Inc.'s 5 1/8% notes due 2022 at 101½ bid, 102 offered.

"The volume was mostly in the morning, then it slowed in the afternoon," he said.

A second trader said he had not seen the Plano, Texas-based movie theater operator's quickly shopped new deal at all on Wednesday, although he had seen the bonds trade on Tuesday.

That $400 million offering had priced at par and had been seen going home at 101 1/8 bid, 101½ offered.

One of the traders said that NCR Corp.'s 4 5/8% notes due 2021 were going out at par bid, 100¼ offered. Earlier, he said that the Duluth, Ga.-based technology company's bonds "a touch below par."

That $500 million offering - upsized from the originally announced $400 million - had priced at par and had not ventured very far from that price.

HCA climb continues

A trader said that HCA Holdings' new 6¼% notes due 2021 "were really ripping" in Wednesday's aftermarket, continuing to add to the strong gains that the Nashville-based hospital operator's drive-by mega-deal had already notched since its pricing on Monday afternoon.

"They were up another point," he noted, locating the bonds at 103¼ bid, 103¾ offered.

A second trader quoted them at that same level, also calling it a 1 point gain.

That $1 billion issue had priced at par, then moved up to around 101½ bid, 101¾ offered by Monday's close. On Tuesday, the bonds had firmed to 102¼ bid, 102¾ offered, and they continued to add to their gains in Wednesday's dealings.

A market source at another shop, quoting the bonds trading as high as 104 bid, said that volume was a busy $25 million by mid-afternoon, good enough to land near the top of the day's most-actives list.

A trader said that McClatchy Co.'s 9% senior secured first-lien notes due 2022 went home at 102¼ bid, 102¾ offered on Wednesday afternoon.

That was up from 101½ bid, 101 7/8 offered on Tuesday, and well up from the par level at which the Sacramento, Calif.-based newspaper publisher had priced its $910 million deal on Monday, after first upsizing it from the originally announced $750 million amount.

Plains pops on Freeport news

For the first time in several sessions, the focus swung away from the primary arena on Wednesday, with the dominant story being Freeport-McMoRan Copper & Gold's planned acquisition of Plains Exploration & Production Co.

Traders saw the latter company's bonds jumping about 10 or 11 points on the news, in heavy trading.

One saw the Houston-based oil and gas operator's 6 1/8% notes due 2019 rising to 110½ bid, 112½ offered, a gain of more than 10 points, on mid-afternoon volume of over $41 million, tops in Junkbondland. The company's 6 7/8% notes due 2023 were almost as busy also jumping more than 11 points on the session to end at 114½ bid, 116½ offered.

Plains' 6¾% notes due 2022 climbed to 112½ bid, 114½ offered, with over $36 million having changed hands by mid-afternoon.

The bonds took off in tandem with Plains' New York Stock Exchange-traded shares, which gained $8.45, or 23.44%, to end at $44.50 on 14 times their usual volume. The securities were propelled by the news that metals miner Freeport-McMoRan will acquire Plains for $6.9 billion in cash and stock.

Freeport McMoRan will also acquire McMoRan Exploration Co., an energy company it spun off several years ago, for an additional $3.4 billion in cash and trust units. McMoRan Exploration's 11 7/8% notes due 2014 pushed up to 106½ bid, 107½ offered, on volume of over $37 million.

Indicators stay strong

Overall, traders said that the secondary market was firm Wednesday, on good volume, although much of that was attributable to the Freeport-Plains Exploration news.

Statistical junk market performance indicators were up across the board for a second straight session on Wednesday, after having been mixed on Monday.

The Markit Series 19 CDX North American High Yield index rose 5/16 point on Wednesday to end at 100 1/8 bid, 100 3/8 offered, its second straight gain, after having gained 3/16 point on Tuesday.

The KDP High Yield Daily Index meantime notched its 12th consecutive gain on Tuesday, as it soared by 26 basis points to end at 74.78. On Tuesday, it had advanced 9 bps. Its yield came in 10 bps Wednesday to 5.90%, its 12th straight narrowing, after having declined Tuesday by 4 bps.

And the widely followed Merrill Lynch High Yield Master II index rose by 0.316% on Wednesday, its 13th straight sessions on the upside, including Tuesday's 0.137% gain.

The latest advance lifted its year-to-date return to a new peak level for the year of 14.487%. It was the fifth consecutive new peak, moving up from the previous high of 14.126%, recorded on Tuesday.

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