Domestic primary stays quiet; OTE shops deal; Whiting issue up on call; Intelsat loses altitude

By Paul Deckelman

New York, Nov. 24 – The high-yield primary market was quiet on Tuesday, particularly in the dollar-denominated space, heading towards the Thanksgiving Day holiday break later this week in the United States.

Market participants saw no dollar-denominated, fully junk-rated paper having priced during the session, versus the $300 million that got done in one tranche on Monday when builder M/I Homes Inc. priced a quickly shopped offering of five-year notes. They also reported a dearth of fresh news about the sector.

What news the new-deal sphere generated came from Europe.

Greek telecommunications company Hellenic Telecommunications Organization SA, also known as OTE SA, was shopping a €300 million issue of four-year bonds around, with proceeds slated to fund its tender offer for two series of existing paper.

Meantime, aviation services provider Swissport Group – which has been lining up bank financing in connection with the pending buyout of the company – was heard to have added a planned offering of euro-denominated secured notes to its financing mix.

In the secondary arena, traders saw relatively light trading in the new M/I Homes bonds and in such other recently priced offerings as LifePoint Health, Inc. and Constellation Brands, Inc.

Away from the new deals, Whiting Petroleum Corp.’s 2019 notes firmed smartly in active trading after the energy operator announced plans to redeem those notes next month.

Intelsat SA’s bonds were off after the satellite communications company’s shares hit a new 52-week low.

Statistical measures of junk market performance were lower across the board for a second straight session on Tuesday; they had turned downward on Monday after having been mixed on Friday. Tuesday was the third lower session in the last four trading days.

Domestic primary quiet

High-yield syndicate sources said that activity in the domestic primary market was virtually nil on Tuesday.

No new dollar-denominated, junk-rated deals from domestic or industrialized-country borrowers had priced during the session, in contrast to Monday’s $300 million in one tranche, as a result of the M/I Homes offering.

They also saw no fresh news out in terms of new-deal announcements.

There are no deals being actively marketed.

Activity in Europe

What little primaryside activity took place came from “across the pond.”

Sources in Europe said that Hellenic Telecommunications Organization was marketing a €300 million issue of new four-year, fixed-rate bonds on Tuesday.

They reported that the bonds would likely yield 4 5/8% – somewhat tighter than the 4¾% level at which the bonds had initially been talked.

There were expectations that the bonds would price on Tuesday, but no terms had emerged by the end of the trading day.

There was said to be considerable interest in the new issue, which is the company’s first foray into the bond market since July 2014, when it sold €700 million of 2020 notes.

By one estimate, underwriters HSBC Holdings plc, Citigroup Inc. and Deutsche Bank AG had received more than €500 million of orders for the new paper, much of it from domestic Greek investors, including holders of the company’s existing bonds maturing in May 2016 and February 2018.

The bonds are to be issued by the Athens-based telecom provider’s British-domiciled financial subsidiary, OTE plc.

Proceeds from the offering are to be used to fund a tender offer, announced Monday, for OTE’s €250 million of the 2016 bonds and €50 million of the 2018 bonds.

The bonds are not being offered for sale in the United States.

Swissport adds bond component

Elsewhere on the European high-yield scene, Swissport Group – which is in the process of lining up CHF 1.15 billion equivalent of secured financing in support of the pending CHF 2.73 billion buyout of the Switzerland-based aviation ground and cargo-handling services company by China’s HNA Group Co. Ltd. from PAI Partners SAS – was heard to have done some tinkering with its financing plan.

Among the changes was the elimination of a dollar-denominated term loan tranche, the upsizing of a euro-denominated term loan tranche and the addition of a tranche of euro-denominated senior secured notes.

The exact size of the respective term loan and secured notes components has not been set yet.

Traders also heard no other details regarding the planned bond issue, such as the bonds’ tenor or the timing of the note offering.

One market source characterized it as “next week’s business,” for sure.

Meanwhile, recommitments for the term loan portion of the financing are due at 5 p.m. GMT on Dec. 2, the source added.

Barclays and J.P. Morgan Securities LLC are the bookrunners on the deal.

Mixed session seen

In the secondary market, a trader characterized Tuesday’s dealings as “mixed. Our opening was weaker, as equities were down.”

However, he added that “later on in the say, the market firmed a little.”

Overall, he saw things generically unchanged to up about 1/8 to ¼ point.

Traders also noted the relatively light volume, typical of the week heading into Thursday’s Thanksgiving holiday, when the U.S. fixed-income markets will be closed.

One predicted that Wednesday’s session would be short and lightly attended.

At his shop, “we’re buggin’ out around lunchtime.”

Light trading in new bonds

The traders saw not much trading going on in recently priced high-yield bonds.

A trader said that M/I Homes’ new 6¾% notes due January 2021 were in a 100 1/8-to-100 3/8 bid context, “kind of how it was yesterday [Monday].”

A second trader quoted the Columbus, Ohio-based single-family homebuilder’s bonds at 100 1/8 bid, 100½ offered, which he called about unchanged from late Monday, on “not much trading.”

Another market source likewise called the bonds unchanged at 100 3/8 bid, with volume of around $8 million.

M/I homes priced $300 million of the notes at par in a quick-to-market transaction on Monday.

A trader said that LifePoint Health’s 5 7/8% notes due 2023 were closing at about 100¼ bid, up slightly on the day.

A second trader pegged the bonds at 100 3/8 bid, which he said was up ¼ point, with around $11 million traded.

The Brentwood, Tenn.-based health-care services provider priced $500 million of the notes at par on Thursday after the unscheduled transaction was upsized from an originally announced $300 million.

Constellation Brands’ 4¾% notes due 2025 were seen ending somewhere between 100¾ and 101¼ bid.

Another market source, though, called the bonds down 1/8 point on the day at 101 3/8, with perhaps $4 million traded.

The Victor, N.Y.-based producer, importer and distributor of alcoholic beverages such as wine, beer and spirits priced $400 million of the notes at par in a drive-by deal, also on Thursday.

Whiting paper pops

Away from the new deals, a trader saw Whiting Petroleum’s 8 1/8% notes due 2019 having pushed up to the 104½ mark, calling it a gain of around 1½ points. Over $19 million of the notes traded, making it one of the busiest Junkbondland issues.

“Whiting was very busy,” a second trader said.

He noted that the bonds had closed on Friday around 102 bid, did not trade on Monday but were going home Tuesday at 104½ bid.

The bonds jumped on the Denver-based independent oil and natural gas exploration and production company’s announcement that it plans to redeem all of the outstanding $798 million principal amount of those bonds, originally issued by Kodiak Oil & Gas Corp. Whiting bought Denver-based Kodiak last year, assuming its bond debt in that transaction. Kodiak is now officially called Whiting Canadian Holdings ULC.

The notes will be redeemed at 104.063% of par plus accrued interest up to the redemption date of Dec. 24.

Whiting plans to fund the redemption with debt under its $3.5 billion credit agreement.

Intelsat loses altitude

Elsewhere, traders saw lower levels on active trading in Intelsat’s bonds.

Its 7¾% notes due 2021 fell by 2¾ points on the day to end at 42½ bid, on volume of $15 million.

Intelsat’s 6¾% notes due 2018 dropped to 70¾ bid, a ½ point loss on the day, with over $11 million traded.

There was no firm news out on the Bermuda-based satellite communications services provider that might explain the loss, although it follows Monday’s session when the company’s shares hit their 52-week low.

Indicators stay lower

Statistical measures of junk market performance were lower across the board for a second straight session on Tuesday; they had turned downward on Monday after having been mixed on Friday. Tuesday was the third lower session in the last four trading days.

For a second consecutive session, the KDP High Yield Daily index lost 6 basis points on Tuesday. It closed at 65.62, its fifth loss in a row after 1 gain and its 12th downside finish in the last 13 sessions.

Its yield rose by 2 bps to close at 6.95%, its fourth straight widening out after one unchanged session and one narrowing and its 11th such move upward in the last 13 sessions, including having edged up by 1 bp on Monday.

The Markit Series 25 CDX North American High Yield index was off by 1/32 point on Tuesday, closing at 101 11/16 bid, 101¾ offered. On Monday, it had been unchanged from where it had finished on Friday, when it was 1/32 point higher on the day.

The Merrill Lynch North American Master II High Yield index posted its fifth straight loss on Tuesday, finishing off by 0.186%, after having fallen by 0.073% on Monday. Wednesday’s loss was its eighth loss in the last nine sessions.

The index’s year-to-date loss widened to 2.401% from Monday’s 2.219%.

But big as they are, those year-to-date losses still remain well above the index’s worst 2015 cumulative setback of 3.069%, recorded on Oct. 2.

Sara Rosenberg contributed to this review

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