Junk market quietly heads into holiday break; European calendar builds; energy names turn mixed

By Paul Deckelman and Paul A. Harris

New York, July 3 – The high-yield market saw a very quiet pre-holiday session on Monday, with relatively few participants around heading into the Tuesday’s Independence Day holiday break in the United States.

The dollar-denominated junk market – which saw a busy new-issuance week last week, as issuers rushed to get their new deals done ahead of the looming end of the calendar second quarter and first half, clearing the domestic forward calendar – was silent on Monday.

What news there was came out of Europe, from prospective issuers including French container ship company CMA CGM SA, German container ship operator Hapag-Lloyd AG and German plastic packaging manufacturer Kloeckner Pentaplast.

Back in the domestic end of the market, traders reported little activity in recently priced dollar-denominated junk bonds, with only Carrizo Oil & Gas, Inc. and j2 Cloud Services, LLC posting even a handful of transactions.

Away from the upcoming or recently issued deals, traders said that the energy sector was something of a mixed bag – even while world crude oil prices moved up by more than $1 per barrel for most grades, their eighth consecutive gain. There were some rumblings heard that the current strong price trend can’t last in the face of anticipated new supply, setting the stage for a fall in prices at some point.

The overall market remained firm, although at least one major investment bank was reported Monday to have cut its holdings in junk paper, feeling the market has probably topped out.

Statistical market performance measures turned higher on Monday after having been mixed for the previous four consecutive sessions, following two straight stronger sessions before that.

CMA CGM starts roadshow

With some market participants in the United States merging the Monday session into a four-day Independence Day weekend, the dollar-denominated market remained quiet, and the session's news came out of Europe where the stage was set for an active week in the new issue market.

France-based container ship company CMA CGM SA began a roadshow on Monday for a €500 million offering of five-year senior notes (B3/expected CCC+).

The roadshow wraps up on Thursday.

Bookrunner BNP Paribas will bill and deliver for the debt refinancing deal. HSBC is also a bookrunner.

Credit Agricole, SG and UniCredit are joint bookrunners.

Kloeckner PIK toggle deal

Germany-based plastic packaging manufacturer Kloeckner Pentaplast is running a Monday-Tuesday roadshow for a €395 million offering of six-year PIK toggle notes.

Credit Suisse is leading the deal.

Antalis starts roadshow

Antalis International began a roadshow on Monday for a €325 million offering of seven-year senior secured notes.

The offer, which is being managed by Goldman Sachs International, roadshows through Wednesday.

The Paris-based business-to-business distributor of paper and packaging solutions plans to use the proceeds to repay bank debt, fund working capital and for general corporate purposes.

Hapag-Lloyd big retail audience expected

Hapag-Lloyd AG expects to price a €300 million offering of seven-year senior notes (expected ratings Caa1/B-) on Tuesday.

No price talk was available on the deal, which is expected to garner a significant audience among German retail accounts, a London-based sellside source said.

Global coordinator Deutsche Bank will bill and deliver. Berenberg and Credit Suisse are also global coordinators.

Credit Agricole CIB, HSH Nordbank and MM Warburg & Co. are the joint bookrunners.

Some of the banks in the syndicate provided an indication of the retail interest in the Hapag-Lloyd deal, the source added.

The Germany-based container ship company plans to use the proceeds to fund the early redemption of euro-denominated notes due in 2018 and the early partial redemption of euro-denominated notes due in 2019.

Another prospective issuer heard to be near or in the market is McLaren Automotive, with a sterling-denominated deal via JP Morgan, the source said.

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