Cheniere unit drives by with $1 billion deal, new bonds firm; oil issues up with crude, car rentals skid

By Paul Deckelman

New York, May 15 – Monday opened the new week in Junkbondland with one large dollar-denominated pricing.

Syndicate sources said Cheniere Corpus Christi Holdings, LLC, a unit of liquefied natural gas company Cheniere Energy Inc., brought an upsized and quickly-shopped issue of 10-year secured notes to market.

Secondary market traders said the new Cheniere CCH bonds firmed in busy aftermarket dealings.

That deal was the only dollar-denominated and fully junk-rated deal to price.

In the European segment of the junk market, global heavy equipment maker CNH Industrial NV priced €500 million of five-year notes.

Away from the deals that actually priced, syndicate sources said that two other prospective issues climbed aboard the forward calendar, from pawn-shop operator FirstCash, Inc. and from energy name Delek Logistics Partners Partners LP.

Among recently priced issues, traders saw a fair amount of dealings on an otherwise fairly quiet day in Century Communities Inc. and Salem Media Group Inc.

Away from the new deals, energy names like California Resources Corp. gained solidly as world crude oil prices strengthened for a second consecutive session following last Thursday’s big slide.

But bonds of car-rental companies such as Hertz Global Holdings Inc. and Avis Budget Group Inc. were clearly in a skid.

Statistical market performance measures were higher for a second straight session on Monday. They had turned mostly unchanged-to-higher on Friday after having been mixed on Thursday after having been higher across the board last Wednesday.

Cheniere unit brings upsized deal

The day’s sole pricing in the dollar-denominated segment of the junk market came from Cheniere Corpus Christi Holdings, which was heard by high-yield syndicate sources on Monday to have priced $1.5 billion of senior secured notes (Ba3/BB-) at par to yield 5 1/8%.

That was on the tight side of price talk envisioning a yield around 5¼%.

The issue was upsized from an originally announced $1 billion.

The quickly shopped Rule 144A with registration rights/Regulation S deal was brought to market by a hefty slate of underwriters, including joint bookrunners RBC Capital Markets Corp., which will handle billing and delivery, BNP Paribas Securities Corp., Bank of America Merrill Lynch, Commonwealth Bank of Australia, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. LLC, HSBC Securities (USA) Inc., ING, J.P. Morgan Securities LLC, Lloyds Securities Inc., Mizuho Securities USA Inc., Morgan Stanley & Co. Inc., MUFG Securities Americas, Inc., Scotiabank, Societe Generale, SMBC Nikko Capital Markets Ltd. and Standard Chartered Bank.

BBVA Securities Inc. and Credit Agricole-CIB were lead managers on the deal, while ABN-AMRO, CIT Capital Securities, Loop Capital Markets LLC and Raymond James & Associates were co-managers.

The company – a wholly subsidiary of Houston-based liquid natural gas company Cheniere Energy, Inc. – plans to use the net proceeds of the offering to prepay a portion of the principal amounts currently outstanding under its term loan facility.

CNH brings euro deal

In the European half of the junk world, CNH Industrial NV priced €500 million of new five-year senior unsecured notes on Monday, with high-yield primary sources saying the 1 3/8% notes priced at 99.335.

The notes will be issued via CNH Industrial Finance Europe SA, a wholly owned subsidiary of CNH Industrial, a London-based global producer of heavy construction and farm equipment.

The Regulation S notes will be issued under the company’s existing euro medium-term note program, guaranteed by the parent.

There was no immediate information available on the notes’ intended use of proceeds.

Societe Generale and CIB were the deal managers.

First Cash, Delek deals slate

Back on the dollar-denominated side of the fence, two new deals were seen having emerged on the radar screens.

FirstCash, Inc., a Fort Worth, Texas- based operator of pawn shops in 26 U.S. states plus Latin America, announced plans to sell $300 million of senior notes due 2024.

Syndicate sources said the deal is likely to price later on this week.

They said that the Rule 144A/Regulation S offering would come to market via bookrunners Credit Suisse Securities (USA) LLC, Jefferies & Co. and Wells Fargo Securities LLC.

C.L. King. Janney Montgomery Scott, JMP Securities and Wedbush Securities will be the co-managers on the deal.

FirstCash plans to use the net proceeds from the offering to fund a concurrently announced tender offer for or otherwise redeem its existing $200 million of 6¾% senior notes due 2021, to repurchase shares of its common stock, pay related fees and expenses and for general corporate purposes.

Also seen climbing aboard the forward calendar was Delek Logistics Partners LP, a Brentwood, Tenn.-based energy master limited partnership, and its Delek Logistics Finance Corp. subsidiary – the syndicate sources said that they plan to sell $250 million of senior unsecured notes due 2025.

Information of the timing of the Rule 144A/Regulation S deal or the investment banks which may be involved was not immediately available.

Delek plans to use the net proceeds from the notes sale to repay a portion of the outstanding borrowings under its revolving credit facility.

New Cheniere notes move up

In the secondary sphere, traders said that overall trading volumes were relatively light.

For instance, one said, the most actively traded junk bond issue was the new Cheniere Corpus Christi

5 1/8% notes due 2027, with over $31 million having changed hands.

He saw the notes closing at 100 5/8 bid, up from their par issue price earlier in the day.

Some recent deals active

A trader said that some – though by no means all – of the recently priced offerings from last week—were still trading on relatively decent volume.

He quoted the Salem Media Group 6¾% notes due 2024 at 103 bid, calling that up 1/8 point on the day, with over $11 million of the Camarillo, Calif.-based media content provider’s notes having traded.

He also saw the new Century Communities 5 7/8% notes due 2025 easing by ¼ point, to 99¾ bid.

About $11 million of the Greenwood Village, Colo.-based homebuilder’s bonds were traded.

Another trader saw CDK Global Inc.’s 4 7/8% notes due 2027 at 100½ bid, the same as Care Trust REIT’s 5¼% notes due 2025.

Oil names up on crude gains

Away from the new deals, traders said that a surge in world crude oil prices, bouncing back after Thursday’s big loss, helped carry the energy names higher.

The sector’s bellwether credit – Los Angeles-based exploration and production company California Resources’ 8% notes due 2022 – reflected that better position.

A trader opined that “with oil better today, California Resources traded pretty well on that news.”

He saw the 8% notes up 2½ points on the day, to 77 ¾ bid. More than $11 million traded.

EP Energy’s 8% notes due 2025 jumped by nearly 2 points, closing at 90 and 3/8 bid.

More than $15 million of the Houston-based oil and natural gas operator’s credits traded Monday.

Other sector names showing improvement included MEG Energy Corp.’s 7% notes due 2024, which gained 1¼ points to close at 88 bid.

Denbury Resources’ 6¾% notes due 2021 firmed to 76½ bid, up ¾ point on the day.

The price rise in those credits coincided with a second straight day of rising oil prices.

The benchmark U.S. crude oil grade, West Texas Intermediate for June delivery, was up $1.01 per barrel in Monday trading on the New York Mercantile Exchange, settling at $48.85.

That was on top of Friday’s 70 cent gain – which represented an effort to bounce back from Thursday’s $2.30 per barrel slide.

CGG on the rebound

Another energy-oriented name seen better was Paris-based CGG SA, which provides seismic and geophysical analysis services to energy companies.

On Friday, its bonds had fallen in response to the statement by the company – currently in the midst of trying to negotiate better terms with its bondholders – that it had elected not to make a $12.4 million interest payment due May 15 on its 5 7/8% senior notes due 2020, instead invoking the 30-day grace period.

That caused its widely traded 6½% notes due 2021to fall 1½ points, ending at 43½ bid – but on Monday, those bonds moved back up to the 45 bid level recovering all of their lost ground.

“On Friday, they had gotten down to as low as 41¼,” another trader said, “so those bonds were better today.”

Car rental names clobbered

While energy seemed to be sizzling, car-rental bonds were fizzling, laid low by a combination of continued investor reaction to poor numbers recently posted by industry giant Hertz, overall slim profit margins in the industry, and the rise of competitors such as Uber and GM’s new ride-sharing service.

Hertz’s 5½% notes due 2024 dropped by ¾ point, to 78 bid, with over $14 million traded, while its 5 7/8% notes due 2020 lost ½ point, ending at 90¾ bid, with over $11 million traded.

Hertz’s chief rival, Avis, did even worse,

Its 6 3/8% notes due 2024 lost 2¼ points on the day to close at 97 bid, with $16 million traded.

Its 5½% notes due 2023 ended down a deuce on the day bid, on turnover of $1 million.

Penney paper stabilizes

One of Friday’s key losers in active trading, J.C. Penney’s notes, seemed to stop their fall on Monday.

While a trader said the Plano, Texas-based department store retailer’s longest issue, its 7.4% bonds due 2037, lost 1 point to end at 79½ bid, he said “the volume really wasn’t there.”

Another trader said Penney’s 5 7/8% notes due 2023 were unchanged at par, while its most widely held issue, the 5.65% notes due 2020, held steady at 100 1/8 bid.

Sector peer Neiman Marcus Group’s 8% notes due 2021 – 3-point losers on Friday in active trading – eased by 5/8 point Monday to 53 1/8 bid,” with “just a handful trading,” a market source said.

Indicators stay strong

Statistical market performance measures firmed for a second consecutive session on Monday.

The KDP High Yield Daily index was up by 8 basis points on Monday to close at 72.35, after having been unchanged at 72.27 on Friday. It had firmed for three consecutive sessions before that, including Thursday’s gain of 7 bps.

The Markit CDX Series 28 index gained 1/8 point Monday to close at 107 11/16 bid, 107¾ offered, after having been unchanged on Friday.

And the Merrill Lynch North American High Yield index posted its sixth consecutive advance on Monday as it turned up by 0.169%, on the heels of Friday’s 0.039% improvement.

Those six straight gains followed two successive losses and before that, a streak of 11 gains in a row.

Monday’s upturn raised the index’s year-to-date return to 4.226% from Friday’s 4.051% close, establishing a third straight new high point for the year.

© 2015 Prospect News.
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