SoftBank, OCI, Fidelity price; Hub, Heartland launch roadshows; California Resources gains

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 17 – The high-yield primary market saw an active day on Tuesday with three deals pricing and the forward calendar in both the domestic and European market growing.

SoftBank Group Corp. made a benchmark placement of senior notes (Ba1/BB+) in four tranches in a Regulation S offering. The sale included €1.45 billion of euro-denominated debt and $750 million in dollars.

OCI NV priced five-year senior secured notes (B1/BB-/BB-) in a dual-currency offering. The $650 million of dollar-denominated notes were seen trading up after they broke for trade. It also sold €400 million of euro notes.

Fidelity & Guaranty Life Holdings, Inc. priced a $550 million issue of 5½% seven-year senior bullet notes (Ba2) at 99.5 to yield 5.587%.

Hub International Ltd. and Heartland Dental, LLC launched roadshows on Tuesday.

The European primary remained active with two junk-rated bank perpetuals pricing and two new deals added to the calendar.

While the primary market worked to generate new paper, the secondary market continued to see gains with credit spreads continuing to grind tighter.

California Resources Corp.’s 8% senior notes due 2022 were up another point on Tuesday even as the price of crude oil “took a breather,” a market source said. The oil and gas sector is expected to remain firm against the current macro backdrop.

Guitar Center Inc.’s recently priced 9½% senior notes due 2021 were catching a higher bid on Tuesday after the company completed its exchange offer.

Numericable-SFR SA’s 7 3/8% senior notes due 2026 (B1/B+) and Altice SA’s 7¾% senior notes due 2022 were down slightly after Monday’s rise as chatter about a potential buyout of SFR Group died down.

SoftBank demand at $5 billion

SoftBank Group made a benchmark placement of senior notes (Ba1/BB+) in four tranches on Tuesday.

The deal included:

• €1 billion of five-year notes that priced at par to yield 4%. The yield printed atop final talk and at the tight end of initial talk in the 4 1/8% area;

• $300 million of five-year notes that priced at par to yield 5½%. The yield printed on top of final talk and in the middle of initial talk in the 5½% area;

• €450 million of seven-year notes that priced at par to yield 4½%. The yield printed on top of final talk and at the tight end of initial talk in the 4 5/8% area; and

• $450 million of seven-year notes that priced at par to yield 6 1/8%. The yield printed on top of final talk and in the middle of initial talk in the 6 1/8% area.

Aggregate orders for the deal topped $5 billion equivalent, a source said.

Because it was a Regulation S only offer, SoftBank's following in the United States was less than it might have otherwise been, a trader said.

Joint global coordinator Deutsche Bank will bill and deliver. Morgan Stanley and BofA Merrill Lynch were also joint global coordinators.

The Tokyo-based multinational holding company plans to use the proceeds to repay debt.

OCI sells dollar, euro notes

In another dual-currency deal, OCI priced five-year senior secured notes (B1/BB-/BB-) in two tranches.

The debt refinancing deal included $650 million of dollar-denominated notes that priced at par to yield 6 5/8%.

The tranche, which was marketed at a $400 million minimum amount, priced in the middle of the 6½% to 6¾% final price talk. Earlier talk had the deal coming at 7% to 7¼%.

In addition, OCI priced €400 million euro-denominated notes at par to yield 5%. The yield printed at the tight end of the 5% to 5 1/8% yield talk. Earlier talk was 5¼% to 5½%.

Joint global coordinator and sole physical bookrunner JPMorgan will bill and deliver. Barclays and HSBC are also joint global coordinators.

BofA Merrill Lynch, BNP Paribas, Citigroup, Credit Agricole, Goldman Sachs, Rabobank and SG CIB are the passive bookrunners.

Fidelity at a discount

Fidelity & Guaranty priced a $550 million issue of 5½% seven-year senior bullet notes (Ba2) at 99.5 to yield 5.587%.

The yield came in line with yield talk in the 5 5/8% area.

Joint bookrunner RBC will bill and deliver. Wells Fargo and BofA Merrill Lynch were the joint bookrunners.

The issuer, a Cayman Islands-based holding company that owns a leading U.S. annuity and life insurer and a Bermuda-domiciled reinsurer, plans to use the proceeds to repay its 6 3/8% senior notes due 2021 as well as to repay borrowings under its revolver and for general corporate purposes, including incremental capital for insurance subsidiaries.

Hub starts roadshow

The new issue calendar continued to grow.

Hub International started a roadshow on Tuesday for a $1.32 billion offering of eight-year senior notes (S&P: CCC+).

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

BofA Merrill Lynch, Morgan Stanley, Barclays, Goldman Sachs, Credit Suisse, Macquarie, BMO and Nomura are the joint bookrunners.

The Chicago-based insurance brokerage plans to use the proceeds, together with $3.05 billion and C$200 million of term loans, to refinance its capital structure.

Heartland starts roadshow

Heartland Dental started a roadshow for a $310 million offering of eight-year senior notes (Caa2/CCC).

The deal is set to price on Monday.

Jefferies is the left bookrunner. KKR, TD, BMO and Macquarie are the joint bookrunners.

Proceeds will be used to help fund the leveraged buyout of the Effingham, Ill.-based dental support organization by KKR.

Unilever Spread surfaces

A busy euro-denominated calendar also grew on Tuesday.

Flora Food Group plans to start an international roadshow on Wednesday in the City of London for a €1.05 billion equivalent two-part offering of eight-year senior notes (expected ratings B3/B-/B-).

The deal is set to come in tranches of €500 million and $500 million.

Global coordinator Credit Suisse will bill and deliver. Deutsche Bank and KKR are also global coordinators. BNP Paribas, Credit Agricole CIB, Goldman Sachs, HSBC, ING, Lloyds, Mizuho, RBC, SG CIB and UniCredit are joint bookrunners.

Proceeds will be used to help fund the acquisition of Unilever’s spreads business by KKR

Grupo Antolin roadshow

Spain-based Grupo Antolin-Irausa, SA starts a roadshow on Wednesday for a €250 million offering of eight-year senior secured notes.

Deutsche Bank is leading the debt refinancing deal.

KBC perpetual

Also in the European primary on Tuesday, KBC Group NV priced €1 billion of perpetual deeply subordinated additional tier 1 resettable callable securities (BB/BB+) with a 4¼% coupon at par to yield 4.295%.

Morgan Stanley will bill and deliver.

Demand for the offering was more than €2.1 billion.

The deal came at the tight end of talk, which was set at 4 3/8% plus or minus 12.5 basis points, and tighter than initial price thoughts in the 4 5/8% area.

And Banca IFIS SpA priced €300 million of 2% five-year senior unsecured and unsubordinated notes (Fitch: expected BB+) at a 180 basis points spread to mid-swaps on Tuesday.

The spread came in the middle of spread talk that was set in the 180 bps area.

The deal played to €380 million of orders, the source said.

BNP Paribas, Nomura and UniCredit were the bookrunners.

OCI trades up

Like most recent deals, OCI’s dollar-denominated tranche of 6 5/8% senior secured notes (B1/BB-/BB-) due 2023 was up in the secondary market soon after breaking for trade.

The notes were seen trading at 101.25, according to a market source.

The success of the notes and several of the recent deals was attributed to the shortage of new paper in the high yield space.

“The investor base is starved for new issuance and a place to put money to work,” a market source said. “I wouldn’t be surprised to see a lot of deals trade up if the credit is half good.”

California Resources up more

California Resources’ 8% senior notes due 2022 again rose on Tuesday, with the notes up another point, a market source said.

The 8% notes were seen at 85¼ bid, 85¾ offered on Tuesday and closed the day at 85.5, sources said.

The notes were up even as the barrel price of West Texas intermediate crude oil for May delivery “took a breather,” a market source said.

The price of crude oil was up about 25 cents to $66.77 on Tuesday after dropping $1.05 on Monday.

California Resources 8% notes have gained more than 5 points since the rise of crude oil last week.

The energy sector is expected to remain firm in the current macro environment, sources said.

The growing geopolitical tensions, declining stockpiles of crude oil at the United States’ largest storage hub and chatter that OPEC members are considering maintaining their production limits are supporting the bulls in the energy sector.

Guitar Center rebounds

Guitar Center’s struggling 9½% senior notes due 2021 were seeing higher bids on Tuesday after the Westlake Village, Calif.-based musical instrument announced the completion of its exchange offer for its 9 5/8% notes due 2020.

The 9½% notes, which priced at 98.14 on March 14, were seen at 97½ bid, 98 offered on Tuesday, according to a market source.

The notes were at 96¾ bid, 97¾ offered on Monday.

The notes have largely traded below their issue price since they hit the market in mid-March.

Buy-out rumors die down

The junk bonds of French telecommunications company SFR Group and its parent Altice were down slightly on Tuesday as chatter about a possible acquisition of SFR died down.

Numericable-SFR’s 7 3/8% senior notes due 2026 (B1/B+) were wrapped around 99 on Tuesday. They traded as high as 101½ on Monday, a market source said.

Altice’s 7¾% senior notes due 2022 were wrapped around 97 on Tuesday. While not as active as Numericable-SFR’s 7 3/8% notes, they had traded as high as 99 on Monday.

The junk bonds surged on Monday in high volume trading after Bloomberg reported that Paris-based Bouygues was in the early stages of negotiations to acquire the SFR Group.

Bouygues has denied the report.

Indexes mixed

The gains in high yield continued on Tuesday with some market indicators continuing to rise while the CDX saw a slight dip.

The KDP High Yield index was up another 10 basis points on Tuesday to 71.16 with the yield dropping to 5.59%.

The index has now seen nine consecutive trading days of gains.

The Merrill Lynch High Yield index also continued to climb on Tuesday. The index was up 17.5 bps on Tuesday with the year-to-date return now 0.541%.

The index turned positive on April 12 after a long stretch of negative year-to-date returns.

The index was up 14.5 bps on Monday with the year-to-date return then at 0.366%.

The CDX high yield 30 index was down slightly on Tuesday after a 37 bps gain on Monday. The index dipped 4 bps to 107.28 on Tuesday after climbing to 107.32 on Monday.

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