Upsized Cheniere and NCL Corp. deals drive by; Carlson Wagonlit, Starwood slate; recent issues busy

By Paul Deckelman and Paul A. Harris

New York, Dec. 5 – The first full trading week of December got underway on Monday with a pair of sizable quick-to-market offerings.

Liquefied natural gas company Cheniere Corpus Christi Holdings, LLC did an upsized $1.5 billion of 8.25-year secured notes, while cruise line operator NCL Corp. priced a $700 million issue of five-year notes.

Traders quoted the latter bonds moderately higher in initial aftermarket dealings.

They also saw considerable activity in such recently priced credits as Friday’s offerings from Alta Mesa Holdings, LP, Grinding Media Inc. and Nabors Industries Inc. – the last a split-rated transaction that played to high-grade as well as junk investors – and Thursday’s big two-part deal from Hudbay Minerals Inc.

All were seen holding onto, or even adding to, the gains they notched when those deals began trading in the secondary.

Away from the issues which have already priced, syndicate sources said that the forward calendar grew with the addition of prospective deals from the corporate parent of business travel and event planner Carlson Wagonlit BV, doing a $1.03 billion equivalent three-part offering of dollar- and euro-denominated secured and unsecured notes, and real estate investment trust Starwood Property Trust Inc., which is shopping a $500 million five-year deal around.

Smaller deals were also being marketed by the likes of Rowan Companies, Inc., Downstream Development Authority and Matador Resources Corp.

Statistical market performance measures remained higher across the board on Monday for a second consecutive session and for a third session in the last four trading days; they had strengthened on Friday, after having been mixed on Thursday.

Massive upsize for Cheniere

Two issuers completed single tranche deals in drive-by action on Monday, raising a combined total of $2.2 billion.

Cheniere Corpus Christi Holdings, LLC priced an upsized $1.5 billion issue of non-callable 8.25-year senior secured notes (Ba3/BB-) at par to yield 5 7/8%.

The issue size was increased from $1 billion.

The yield printed at the tight end of yield talk in the 6% area.

Goldman Sachs was the left bookrunner for the debt refinancing.

NCL comes atop talk

NCL Corp. Ltd. priced a $700 million issue of five-year senior notes due (B2/BB) at par to yield 4¾%.

The yield printed on top of yield talk.

Barclays was the lead left bookrunner for the debt refinancing.

Carlson Travel multi-tranche

The active forward calendars saw a big buildup on Monday, as the present week and the week ahead are expected to generate substantial new issue business (at least $6 billion this week) in what are expected to be the final two weeks of good market liquidity in 2016, a trader said.

Carlson Travel, the parent of Carlson Wagonlit BV, is in the market with a $1.025 billion equivalent offering of notes.

The debt refinancing deal, which is being led by JP Morgan, includes $750 million of senior secured notes due 2023, in tranches of dollar-denominated fixed-rate notes and euro-denominated floating-rate notes.

The secured fixed-rate notes are in the market with early guidance of 6½% to 7%. The floating-rate notes come with early guidance of Euribor plus 500 basis points to 525 bps, with no Euribor floor, at 99.5.

In addition there is a $275 million tranche of senior unsecured notes due 2024, in the market with early guidance of 8½% to 9%.

The notes are expected to price late in the present week.

Starwood five-year bullet

Starwood Property Trust, Inc. is expected to price $500 million of non-callable five-year senior notes (expected ratings B1/BB-).

The deal is in the market with early yield guidance of 5½%, according to a trader.

JP Morgan is leading the deal.

The Greenwich, Conn.-based commercial mortgage real estate investment trust plans to use the proceeds to repay a portion of its $653.2 million term loan and for general corporate purposes, which may include the payment of liabilities and other working capital needs.

Rowan whisper 8% area

Rowan Companies, Inc. and Rowan Companies plc plan to price a $400 million public offering of 8.5-year non-callable senior notes in the middle part of the present week.

Initial guidance has the debt refinancing deal coming with a yield in the 8% area.

BofA Merrill Lynch, Barclays, DNB, Wells Fargo, Citigroup, Deutsche Bank, Goldman Sachs, MUFG, HSBC and Morgan Stanley are the joint bookrunners.

Downstream Development deal

Downstream Development Authority gave initial yield guidance for its $250 million offering of six-year senior secured notes of 9½% to 9¾%.

The debt refinancing deal is expected to price before the end of the present week.

Nomura is the sole bookrunner.

Matador tapping 6 7/8% notes

Matador Resources Co. announced in a Monday press release that it intends to issue a $150 million add-on to its 6 7/8% senior notes due 2023.

The Dallas-based independent energy company plans to use the proceeds to fund the purchase of approximately 4,600 net leasehold acres and 475 net mineral acres in Eddy and Lea Counties, N.M., fund capital expenditures, to repay its revolver and for general corporate purposes including capital expenditures associated with the addition of a fourth drilling rig.

The original $400 million issue priced at par in April 2015.

Schustermann & Borenstein

In the European market Schustermann & Borenstein GmbH plans to sell €260 million seven-year senior secured notes by the end of the week.

Goldman Sachs is leading the LBO deal from the Munich-based fashion retailer.

Mixed flows on Friday

The dedicated high yield funds saw mixed cash flows on Friday, the most recent session for which data was available at press time, a trader said.

High yield ETFs sustained $27 million of outflows on the day.

However actively managed funds saw $40 million of inflows on Friday.

And the cash flows of the dedicated bank loan funds remained robust on Friday.

The bank loan funds saw $305 million of inflows on the day, $63 million of which flowed into the bank loan ETFs, the trader said.

New NCL deal firms

When the new NCL Corp. 4¾% notes due 2021 were freed for secondary market dealings, traders said that the Miami-based cruise ship operator’s quickly shopped offering initially trader in a 100¼ to 101 bid context.

Later on in the session, a trader saw that narrow to between par and 100¾ bid.

The traders did not immediately report any initial aftermarket dealings in Cheniere Corpus Christi’s 5 7/8% senior secured notes due in March of 2025, noting the lateness of the hour at which that greatly upsized drive-by offering had priced.

Friday deals trade actively

The traders reported that several of the new deals which had priced on Friday were “pretty active today,” as one put it.

Chief among these was the new Grinding Media Inc. 7 3/8% senior secured notes due 2023, which saw more than $35 million changing hands – the most actively traded purely junk-rated issue.

A trader saw those bonds at 102½ bid, calling them unchanged on the session.

A second saw them in a 102¼ to 102½ bid context.

Grinding Media, along with co-issuer MC Grinding Media (Canada) Inc., priced $775 million of those notes on Friday at par in a regularly scheduled forward calendar offering, and the bonds moved up to the 102¼ to 102½ area when they were freed for trading later on in the session.

The proceeds from the deal will be used to support American Industrial Partner’s acquisition from Arrium Ltd. of Moly-Cop, a Kansas City, Mo.-based producer of steel balls used in mining.

There was also a fair amount of trading Monday in Houston-based energy exploration and production company Alta Mesa’s new 7 7/8% notes due 2024, $500 million of which had priced at par Friday off the forward calendar after the deal was upsized from an originally announced $450 million.

That paper then proceeded to jump to above the 102 bid level in initial secondary action.

On Monday, a market source saw the notes having firmed by around 3/16 point, going home at 102 7/16 bid.

At another desk, a trader pegged those bonds around the 102½ bid level.

The trader also saw AdvancePierre Food Holdings, Inc.’s 5½% notes due 2024 closing at 100¾ bid.

That was not much changed, he said, from Friday’s levels – a 100¾ to 101¼ bid context.

The Cincinnati-based manufacturer of ready-to-eat sandwiches, entrees and snacks had priced its $400 million scheduled forward calendar offering at par, after the deal was upsized from $350 million.

Hudbay moves higher

The traders saw both tranches of Hudbay Minerals’ $1 billion two-part offering continuing to move up on Monday.

One trader saw its $400 million of 7¼% notes due in January of 2023 push up to 103¼ bid, while the $600 million of 7 5/8% notes due in January of 2025 were at 102¾ bid.

At another desk, a market source said that that six-year notes had gained 1¼ points on the day, ending at 103¼ bid, with over $15 million traded.

He saw the eight-year paper even busier, with over $20 million having changed hands and gaining 1 point on the day to close at 103½.

The Toronto-based mining company had priced both halves of its big deal on Thursday at par, with both pieces of that forward calendar offering immediately jumping to a 102 to 103 bid aftermarket context and then staying up there subsequently.

Nabors leads actives

The most active issue of the day was Nabors Industries’ 5½% notes due 2023, which gained about ¼ point on the day to 101¼ bid, with over $100 million having traded.

The Bermuda-based energy drilling company’s split-rated (Ba2/BBB-/BBB-) $600 million deal had priced at par on Friday, attracting attention from both junk and high-grade investors.

Indicators remain strong

Statistical market performance measures remained higher across the board on Monday for a second consecutive session and for a third session in the last four trading days; they had strengthened on Friday, after having been mixed on Thursday.

The KDP High Yield index climbed by 16 basis points on Monday to close at 70.76, its fourth straight gain and its ninth such advance in the last 10 sessions, including a recent streak of five consecutive gains. On Friday, it had been up by 9 bps.

For a third session in a row, its yield came in by 3 bps to close at 5.69%, following similarly-sized tightenings on Thursday and again on Friday. It was the yield’s seventh straight narrowing and eighth decline in the last nine sessions.

The Markit Series 27 CDX index firmed by 9/32 point on Monday, ending at 105 1/32 bid, 105 1/16 offered, its second straight rise and third improvement in the last four sessions. On Friday, it had been up by around 5/32 point.

The Merrill Lynch High Yield index rose for a fourth straight day, advancing by 0.234%, on top of Friday’s 0.066% upturn.

That raised its year-to-date return to 15.58% from 15.309% on Friday, although those levels are still below the index’s peak level for this year of 16.768%, established on Oct. 25.

© 2015 Prospect News.
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