Cinemark, NCR, Targa drive-bys pace $1.3 billion session; new HCA bonds move up

By Paul Deckelman and Paul A. Harris

New York, Dec. 4 - With would-be borrowers now eyeing the calendar as they try to get their end-of-the-year deals done before the junk bond market goes into its traditional holiday-time hiatus at mid-month, the pace of activity in the high-yield primary sphere picked up on Tuesday, as four deals collectively worth $1.3 billion came clattering down the chute.

The key word for the day was "drive-by," as three out of the four were opportunistic quick-to-market offerings.

Movie theater operator Cinemark USA, Inc. raised the curtain on the day's proceedings with a $400 million issue of 10-year notes, which traded up solidly when it hit the aftermarket.

Technology provider NCR Corp. priced a same-day offering of eight-year notes, upsized to $500 million; those bonds mostly traded around their par issue price when they were freed.

Midstream energy concern Targa Resources Partners LP did a $200 million add-on to its 2023 notes, which traded up in the secondary.

The day's sole scheduled forward calendar deal came from helicopter transportation company ERA Group, Inc., but that $200 million 10-year deal was not seen trading around.

Among recently priced issues, both the HCA Holdings Inc. and McClatchy Co. deals which priced on Monday were heard by traders to have moved up on Tuesday.

The forward calendar meantime grew with new-deal announcements from Brookfield Residential Properties, Inc., TPC Group, Inc., and Milestone Aviation Group Ltd.

Price talk emerged on Hamilton Sundstrand Industrial's upcoming deal - but Tuscany International Drilling Inc. withdrew its planned offering.

Traders meantime saw a generally firm secondary, although they said the new issues were the main focus.

NCR upsizes

The pace of primary market business remained brisk on Tuesday, as four issuers - each one bringing a single dollar-denominated tranche - raised $1.3 billion.

NCR Corp. launched and priced an upsized $500 million issue of eight-year senior notes (Ba3/BB) at par to yield 4 5/8%, at the tight end of yield talk that was set in the 4¾% area. The amount was increased from $400 million.

J.P. Morgan, Bank of America Merrill Lynch, RBC, SunTrust and Wells Fargo were the joint bookrunners for the quick-to-market deal.

Proceeds, including those resulting from the upsizing, credit facility borrowings and available cash will be used to finance the acquisition of Retalix. If the acquisition is not completed, the company intends to use the proceeds for general corporate purposes, including funding a contribution to its global pension plans.

Cinemark at the tight end

Cinemark priced a $400 million issue of 10-year senior notes (B2/BB-) at par to yield 5 1/8%.

The yield printed at the tight end of price talk that had been set in the 5¼% area.

Barclays, Morgan Stanley, Deutsche Bank and Wells Fargo were the joint bookrunners for the quick-to-market deal.

The Plano Texas-based motion picture exhibitor plans to use the proceeds for general corporate purposes including funding part of its acquisition of Rave Cinemas, and to repay its existing credit facility.

Targa taps 5¼% notes

Targa Resources Partners LP and Targa Resources Partners Finance Corp. priced a $200 million add-on to their 5¼% senior notes due May 1, 2023 (Ba3/BB) at 101, resulting in a 5.093% yield to worst.

Merrill Lynch, Barclays, Citigroup, Deutsche Bank and Wells Fargo were the joint bookrunners for the quick-to-market deal.

The Houston-based midstream natural gas company plans to use the proceeds for general partnership purposes, which may include working capital and acquisitions, including its recently announced Saddle Butte acquisition.

ERA Group wide of talk

In a debt refinancing deal, ERA Group priced a $200 million issue of 7¾% 10-year senior notes (B2/B) at 98.31 to yield 8%, 12.5 basis points beyond the wide end of yield talk set in the 7¾% area.

Joint bookrunners Deutsche Bank and Wells Fargo will bill and deliver. J.P. Morgan and Goldman Sachs were also joint bookrunners.

Hamilton Sundstrand sets talk

Hamilton Sundstrand Industrial downsized its offering of eight-year senior notes (Caa1/CCC+) to $650 million from $775 million, shifting $125 million of proceeds to its term loan.

The notes are talked to yield 7¾% to 8%.

The deal also underwent covenant changes.

Books close at noon ET on Wednesday.

The deal, which is in the market via special-purpose vehicles Silver II Borrower SCA and Silver II US Holdings, LLC, is set to price Wednesday afternoon.

Credit Suisse, Citigroup, Deutsche Bank, Morgan Stanley, RBC, Goldman Sachs and UBS are the joint bookrunners.

TPC roadshow for Wednesday

There were also new deal announcements on Tuesday.

TPC Group will begin a roadshow on Wednesday for a $655 million offering of eight-year senior notes.

Merrill Lynch, Jefferies and Morgan Stanley are joint bookrunners for the acquisition financing.

Brookfield starts roadshow

Brookfield Residential Properties began a roadshow on Tuesday for a $400 million offering of eight-year senior notes.

Credit Suisse, Citigroup and J.P. Morgan are the joint bookrunners.

The Calgary, Alta.-based land developer and homebuilder plans to use the proceeds to refinance debt.

KraussMaffei to start roadshow

Looking to Europe, Munich-based KraussMaffei AG plans to start a roadshow on Wednesday for a €325 million offering of eight-year senior secured notes (expected ratings B2/B-).

Joint bookrunner Credit Suisse will bill and deliver. Barclays and RBC are also joint bookrunners.

Proceeds will be used to help fund the acquisition of KraussMaffei by Onex Corp.

Milestone via Jefferies

Ireland's Milestone Aviation Group plans to sell $250 million of senior notes via Jefferies.

Timing had not been announced at press time.

Proceeds will be used to finance the purchase of aircraft and to refinance previously purchased aircraft, with the remainder, if any, to be used for general corporate purposes.

Tuscany postpones

It was bad news-good news from the Canadian high-yield primary.

Tuscany International Drilling Inc. announced that it has withdrawn a $200 million offering of senior notes (/B/B+) due to current market conditions.

The deal came into the market in mid-November, led by Credit Suisse and Scotia Capital.

Tuscany International may not have found current market conditions to its liking. However global high-yield funds are flush with cash, and some of the nine deals that have been pulled or postponed since early November are headed back into the market, sources say.

Among them, look for the return of Bombardier Inc., a trader advised on Tuesday.

In mid-November the Montreal-based air and rail transportation manufacturer postponed a $1 billion two-tranche offering of senior notes (Ba2/BB/BB) due to market conditions.

Deutsche Bank, Merrill Lynch, BNP, Citigroup, Credit Agricole, J.P. Morgan, NBCF and RBC were the managers of the withdrawn general corporate purposes deal.

Cinemark moves up

When Cinemark's new 10-year notes were freed for secondary dealings, a trader saw those bonds trading at 101 1/8 bid, 101 3/8 offered, up from their par issue price.

A second trader pegged the new bonds at 101 1/8 bid, 101½ offered.

NCR not much changed

A trader said that the new NCR eight-year notes "went nowhere - they were wrapped right around issue," which in this case was par.

A second trader initially quoted the bonds trading in a par to 100 3/8 bid context, but later saw them at par to 1001/4, "so they're slowly coming in."

Targa Resources rises

Targa Resources' deal priced later in the afternoon than Cinemark and NCR did. However, a trader did see those notes at 102¼ bid, 103 offered.

That was up from the 101 level at which that add-on tranche of notes had priced.

Several traders meantime said they had not seen any dealings in Era Group's new 10-year bonds.

Monday deals move up

Looking at the deals that priced during Monday's session, a trader saw HCA Holdings' 6¼% notes due 2021 trading around 102 to 102½ bid. That was up from the 101½ to 101 5/8 bid context at which the Nashville-based hospital giant's quick-to-market $1 billion issue had traded late Monday, and well up from the par level at which it had priced earlier that session.

A second trader said that "HCA remained active and moved up," seeing it going home trading at 102¼ to 102½ bid, "so there was some more improvement in that one."

Yet another trader quoted it up ¾ point on the session at 102¼ bid, 102¾ offered.

The company's existing 5 7/8% notes due 2022 were also busy, gaining ¼ point to go home at 109 bid, on round-lot volume of more than $12 million, putting the issue high on the Junkbondland most-actives list.

HCA's 7¾% notes due 2021 were even busier, gaining 5/8 point on the day to finish at 108¼ bid, on volume of over $13 million on the session.

A trader said that another Monday deal, McClatchy's 9% senior secured first-lien notes due 2022, were trading at 101½ bid, 101 7/8 offered.

The Sacramento, Calif.-based newspaper publisher's $910 million deal had priced at par off the forward calendar after having been upsized from an originally announced $750 million. It came too late in the session Monday for aftermarket activity at that time.

Last week's deals firm

Going back to last week's offerings, a trader saw Stamford, Conn.-based commercial aircraft leasing company Aircastle Ltd.'s 6¼% notes due 2019 continuing to gain altitude on Tuesday, estimating them to be up ¾ point on the day at 102¾ bid, 103¾ offered.

The company had priced $500 million of the notes at par in a quickly-shopped offering last Tuesday, after upsizing it from an originally announced $400 million. The bonds quickly rose to 101 bid, 101¾ offered in last Tuesday's aftermarket, and then continued to firm as the week went on, and again into the new week.

Ally Financial Inc.'s 3 1/8% notes due 2015 were up by 1/8 point on Tuesday to 101 1/8 bid, 101 3/8 offered, reversing Monday's decline.

The Detroit-based automotive and residential lender and online banking company had priced $500 million of those bonds at 99.445 to yield 3.3125% in a quick-to-market deal last Wednesday, and they had firmed modestly from that initial level.

On the other hand, the trader saw some activity, but no real price movement, in German cable operator Unitymedia Hessen GmbH & Co. KG's 5½% senior secured notes due in January 2023, which continued to trade in a 101½ to 102 bid context.

That was where the bonds had traded on Friday, after the $1 billion quick-to-market offering had priced at par when it was upsized from $845 million originally.

Those bonds were part of a larger two-part issue that also included a euro-denominated tranche.

Inergy Midstream LP and Inergy Midstream Financial Corp.'s 6% notes due 2020 were also seen steady at 101 5/8 bid, 102 1/8 offered.

The Kansas City, Mo.-based natural gas transportation and storage company had priced $500 million of those bonds at par in a scheduled forward calendar deal last Thursday, after upsizing the deal from an originally announced $400 million.

New deals the focus

A trader indicated that while overall market volume was "good" - particularly in light of the fact that a number of regular junk players were out of pocket, still attending the Bank of America Merrill Lynch 2012 Leveraged Finance Conference in Boca Raton, Fla., the main focus of the day remained the new issues.

Still, he said that the market as a whole "definitely had a better tone. Most things were up - but nothing was really standing out."

He went on to say that "it's getting harder to find offerings - but there are definitely buyers out there, no question."

Indicators improve

Statistical junk market performance indicators turned mixed on better across the board on Tuesday after having been mixed on Monday, resuming the pattern of strength seen over the last three sessions of the previous week.

The Markit Series 19 CDX North American High Yield index gained 3/16 point on Tuesday to end at 99 7/8 bid, 100 offered, after having lost ¼ point on Monday, its first loss after three straight sessions on the upside.

The KDP High Yield Daily Index meantime notched its 11th consecutive gain on Tuesday, as it rose by 9 basis points to end at 74.52. On Monday, it had advanced by 10 bps. Its yield came in by 4 bps Tuesday, to an even 6.00%, its 11th straight narrowing, after having declined Monday by 3 bps.

And the widely followed Merrill Lynch High Yield Master II index rose by 0.137% on Tuesday - making an even dozen sessions on the upside, including Monday's 0.168% advance.

The latest gain lifted its year-to-date return to a new peak level for the year of 14.126%. It was the fourth consecutive new peak, moving up from the previous high of 13.97%, recorded on Monday.

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