Carlson, Starwood price to close $9.6 billion week, new bonds up; Syniverse soars on swap offer

By Paul Deckelman and Paul A. Harris

New York, Dec. 9 – The high-yield market closed out its busiest new-issue week in nearly three months on Friday with a pair of regularly scheduled transactions off the forward calendar that generated $1.37 billion in new junk paper, spaced over three tranches.

Travel management company Carlson Wagonlit brought in a $1.01 billion equivalent three-part dollar- and euro- denominated deal that included $415 million of seven-year secured notes and $250 million of eight-year unsecured paper as well as a euro-denominated tranche of floating-rate notes.

Traders saw the new Carlson secured dollar issue solidly higher in busy dealings once it hit the aftermarket.

The day’s other deal was an upsized $700 million of eight-year notes from commercial property REIT Starwood Property Trust, Inc. Those bonds were also quoted higher as the day ended.

The day’s issuance compared with $1.52 billion which got done in four tranches on Thursday, according to data compiled by Prospect News.

The data also indicated that the more than $9.6 billion of new U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers that priced during the week was the biggest weekly issuance seen in Junkbondland since mid-September.

Traders said meantime said that that there was continued sizable activity in such recently priced issues as Acco Brands Corp. – which topped the Most Actives list – Nuance Communications, Inc. and GTT Communications, Inc., all of which had gotten done on Thursday.

Away from the new and recently priced names, traders said that Syniverse Holdings Inc.’s 2019 bonds were sharply higher on active volume after the company began an offer to exchange most of those notes for new paper.

Statistical market performance measures were higher across the board on Friday after turning mixed on Thursday; there had been four straight sessions on the upside before that.

Those indicators were also higher versus where they had finished last Friday – their third straight week-over-week gain and fourth stronger week out of the last eight.

Carlson’s multi-tranche deal

Two issuers priced a combined three tranches of dollar-denominated notes to raise an overall total of $1.37 billion on Friday. There was also a €330 million euro tranche.

All of the session’s business had been marketed by means of roadshows.

Two tranches came at the tight ends of talk, while the third came at the wide end.

Carlson Wagonlit priced $1.01 billion equivalent of high-yield notes in three tranches.

The debt refinancing deal included $415 million of seven-year senior secured fixed-rate notes (B2/B) which priced at par to yield 6¾%, at the tight end of the 6¾% to 7% yield talk.

A €330 million tranche of 6.5-year senior secured floating-rate notes (B2/B) priced at par to yield Euribor plus 475 bps. The reoffer price came at the cheap end of the 99.75 to par price talk. The spread came at the tight end of the revised 475 to 500 bps spread talk; earlier official talk had the floating-rate notes coming with a 500 to 525 bps spread to Euribor at par.

The sole unsecured tranche came as $250 million of eight-year senior notes (Caa1/CCC+) which priced at par to yield 9½%, at the wide end of the 9¼% to 9½% yield talk.

There was slightly more demand for the secured notes than for the unsecured notes, sources said.

Both dollar-denominated tranches – one secured, the other unsecured – were trading at 102 bid late Friday afternoon.

Bookrunner JP Morgan will bill and deliver for the dollar-denominated tranches.

Bookrunner BNP Paribas will bill and deliver for the euro-denominated tranche.

Lloyds, Morgan Stanley, RBC Capital Markets and US Bancorp were the passive bookrunners.

Starwood oversubscribed

Starwood Property Trust, Inc. priced an upsized $700 million issue of non-callable five-year senior notes (Ba3/BB-) at par to yield 5%.

The issue size was increased from $500 million.

The yield printed at the tight end of the 5% to 5¼% yield talk and well inside of the early 5½% guidance, sources said.

The deal played to a book containing $2.7 billion of orders, a trader said.

JP Morgan, Barclays, Citigroup and Credit Suisse were the joint bookrunners.

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.

The market also expected Downstream Development Authority to price its $250 million offering of six-year senior secured notes on Friday.

However no terms were available at press time.

Talk has the deal coming with a 10% yield at a discount, a trader said. That is wide of the 9½% to 9¾% initial guidance.

The week ahead

The Dec. 12 week, which is expected to be the last week of the year to see a significant amount of business in the primary market, gets underway with a modest calendar.

American Midstream Partners, LP is in the market with a $300 million offering of five-year senior notes (expected ratings Caa1/B).

The debt refinancing deal, via left bookrunner Wells Fargo, is expected to price on Tuesday.

Baffinland Iron Mines Corp. was scheduled to start a roadshow on Friday in Toronto for a $350 million offering of five-year senior secured notes (Caa1/B-).

The deal, via left bookrunner Goldman Sachs is expected to remain on the road through the early part of the week ahead.

And Avison Young (Canada) Inc. is in the market with a $130 million offering of senior secured notes due 2021 (B3/B+) via sole bookrunner William Blair.

The week ahead figures to see a fair amount of activity in the primary market, but not as much as the past week generated, a syndicate banker said on Friday afternoon.

Busiest week in three months

The $9.60 billion of new U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers that priced in 16 tranches easily topped the $4.72 billion which had priced in 10 tranches last week, ended Dec. 2, and was well up from the week before that, ended Nov. 25, when just $1.20 billion had gotten done in two tranches, according to data compiled by Prospect News.

In fact, the data indicated that this week was the busiest for the junk primary since the week ended Sept. 16, when $9.85 billion of new paper got done in 12 tranches.

This week’s primary activity pushed the year-to-date issuance total up to $219.07 billion in 342 tranches.

That was running some 15.7 % behind the new-deal pace seen at this time last year, when $259.80 billion had priced in 407 tranches by this point on the calendar, the Prospect News data indicated.

That was a narrower difference than the 19% gap between this year’s and last year’s issuance which was seen last week.

Carlson active, climbs

When the new Carlson Wagonlit bonds – officially issued by the company’s Carlson Travel Inc. subsidiary – came to market, a trader said that the 6¾% senior secured notes due 2023 ended up a deuce on the day at 102 bid after pricing at par.

He said that more than $25 million of those new notes changed hands, putting the credit high up on the day’s Most Actives list

He did not immediately report any initial aftermarket dealings in the other dollar tranche, the 9½% senior unsecured notes due 2024.

Starwood issue improves

Another trader meantime was quoting the new Starwood Property Trust 5% notes due 2021 at 100 7/8 bid, up from their par issue price.

GTT gains continue

Among the bonds which priced during Thursday’s session, a trader said that GTT Communications’ new 7 7/8% notes due 2024 continued to add to the sizable gains they had notched during Thursday’s initial aftermarket activity following that pricing.

He saw the McLean, Va.-based cloud networking services provider’s new bonds moving up to 103¼ bid, a gain of ½ point on the day, with over $15 million traded.

That $300 million regularly scheduled forward calendar deal had priced at par, moved up to a 102-to-103 bid context in initial aftermarket dealings, and, according to several market sources, topped the 103 bid level on Friday.

Thursday issues firm

But the day’s best showing among the deals which got done on Thursday came from Acco Brands’ 5¼% notes due 2024, which a trader said was the most widely traded issue, with over $38 million changing hands.

He saw those notes going home at 101 7/8 bid, calling that up 1¼ points on the day.

The Lake Zurich, Ill.-based office products manufacturer had priced a quickly shopped $400 million of the notes at par and they had moved up to around 100½ bid in initial dealings.

Nuance Communications 5 5/8% notes due 2026 were seen trading at 99 bid, off about ½ point from the preliminary gains seen in Thursday trading

Syniverse soars on swap

Away from the new or recently priced issues traders saw Syniverse’s 9 1/8% senior notes due 2019 jump more than 12 points on the session to 86¼ bid on over $30 million of volume.

They attributed the big gain to the fact that the Tampa, Fla.-based provider of technology and business services for the telecommunications industry had announced an exchange offer for up to $364 million of its $475 million of outstanding ’19 bonds.

According to a filing with the Securities and Exchange Commission, Syniverse Foreign Holdings Corp., an indirect wholly owned subsidiary of the company, is offering to issue new 9 1/8% senior notes due 2022 for each $1,000 principal amount of notes tendered by 5 p.m. ET on Dec. 21, the early participation date.

The exchange value contains an early tender premium of $50 principal amount per $1,000 of notes.

Holders who tender their notes for exchange after the early deadline will receive $950 principal amount of the new notes due 2022.

The exchange offer will continue until midnight ET on Jan. 6.

Indicators up on day, week

Statistical market performance measures were higher across the board on Friday after having turned mixed on Thursday and four straight sessions on the upside before that.

The indicators were also higher versus where they had finished last Friday – their third straight week-over-week gain and fourth stronger week out of the last eight.

The KDP High Yield Index rose by 10 basis points on Friday to end at 71.37 after jumping 21 bps on Wednesday and then gaining another 14 bps on Thursday. It was the index’s eighth consecutive gain.

Its yield came in by 3 bps to close at 5.44% after declining by 6 bps on Thursday. It was the yield’s 11th straight narrowing.

Those levels compare favorably to last Friday’s 70.60 index reading and 5.72% yield.

The Markit Series 27 CDX Index rebounded by 13/32 point on Friday after losing more than 3/32 point on Thursday. It finished Friday at 106 7/32 bid, 106¼ offered, its fifth gain in the last six sessions.

It was also up from 104¾ bid, 104 25/32 offered last Friday.

The Merrill Lynch High Yield Index rose for an eighth straight day, advancing by 0.175%, following Thursday’s 0.149% upturn.

That lifted its year-to-date return to 16.796% from Thursday’s 16.592% finish.

It also established a new peak level for this year, topping its former mark of 16.768% established on Oct. 25.

On the week, the index shot up 1.289%, one of its biggest weekly gains so far this year. It was the third straight weekly gain after four consecutive weeks of losses.

© 2015 Prospect News.
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