Scotts, Communications Sales and upsized RSP Permian drive by; new issues firm in busy dealings

By Paul Deckelman and Paul A. Harris

New York, Dec.12 – The high yield primary realm remained active on Monday, with no sign of the traditional year-end lull yet in sight.

Syndicate sources reported a trio of quick-to-market offerings of fully junk-rated and U.S. dollar-denominated paper got done, totaling $1.1 billion, although that was off slightly from the $1.365 billion of such paper from domestic or industrialized-country issuers seen during Friday’s session.

Energy operator RSP Permian, Inc. had the big deal of the day, pricing an upsized $450 million of eight-year notes.

Communications Sales & Leasing, Inc., a telecommunications-oriented real estate investment trust, brought $400 million of eight-year paper to market.

And lawn-care products provider Scotts Miracle-Gro Co. did a $250 million 10-year transaction.

Traders in the secondary market meantime saw brisk trading, at higher levels, in the new Scotts and Communications Sales & Leasing paper.

They also saw considerable activity in Friday’s new deals from Carlson Travel Inc. and Starwood Property Trust, Inc., extending the gains they had notched in initial aftermarket action.

Apart from those deals that have already priced, primaryside players were anticipating possible Tuesday pricings of American Midstream Partners, LP’s five-year, regularly scheduled forward calendar offering, and perhaps another pair of energy deals coming on a drive-by basis.

Statistical market performance measures turned mixed on Monday, after having been higher across the board on Friday. It was their second mixed performance in the last three sessions, which had followed four straight sessions on the upside before that.

RSP Permian upsizes

A trio of issuers raised a combined total of $1.1 billion at the drive-through window during Monday's primary market session.

One of the three deals was upsized.

All three came at the tight ends of talk.

All three transactions played to strong demand, according to market sources.

RSP Permian, Inc. priced an upsized $450 million issue of 5¼% eight-year senior notes (B3/B+) at par to yield 5.249%.

The issue size was increased from $350 million.

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

Active bookrunner Barclays will bill and deliver for the acquisition financing. RBC was also an active bookrunner.

Communications Sales prices tight

Communications Sales & Leasing, Inc. and CSL Capital, LLC priced a $400 million issue of eight-year senior notes (Caa1/B-/BB-) at par to yield 7 1/8%.

The yield printed at the tight end of official price talk and early guidance, both of which came in the 7¼% area.

Citigroup was the left bookrunner for the debt refinancing deal. Goldman Sachs, BofA Merrill Lynch, J.P. Morgan, Credit Suisse, Morgan Stanley, RBC, SunTrust and Wells Fargo were the joint bookrunners.

The Little Rock, Ark.-based real estate investment trust plans to use the proceeds to repay revolver debt and for general corporate purposes.

Scotts Miracle-Gro drives by

Scotts Miracle-Gro Co. priced a $250 million issue of 10-year senior notes (B1/B+) at par to yield 5¼%.

The yield printed at the tight end of the 5¼ % to 5½ % yield talk, and tight to initial guidance in the mid 5% context.

BofA Merrill Lynch was the left bookrunner. J.P. Morgan and Wells Fargo were the joint bookrunners.

The Marysville, Ohio-based marketer of branded consumer products for lawn and garden care plans to use the proceeds to pay down its revolver.

American Midstream talk 8¼% to 8½%

Looking to the Tuesday session, American Midstream Partners, LP and American Midstream Partners Finance Corp. talked their $300 million offering of five-year senior notes (expected ratings Caa1/B) to yield 8¼% to 8 ½%.

The offering, via left bookrunner Wells Fargo is set to price Tuesday.

Elsewhere Baffinland Iron Mines Corp. is on the road with a $350 million offering of five-year senior secured notes (Caa1/B-), via Goldman Sachs.

A New York lunch and investor conference call were set for Monday.

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.

With recent improvements in energy prices, look for more energy deals to show up in the immediate future, sources said on Monday.

Two energy deals are set to hit the market as drive-bys on Tuesday, a sell-side source said.

Another one, this one sizable, is expected on Thursday, the source said.

Friday inflows

The cash flows of the dedicated high yield bond funds were strongly positive on Friday, the most recent session for which data was available at press time, a trader said.

The high yield ETFs saw $392 million of inflows on the day.

Actively managed funds saw $245 million of inflows on Friday.

Dedicated bank loan funds were also strongly positive on the day with $240 million of inflows, the trader said.

New deals top Most Actives list

In the secondary market, traders said that new and recently priced issues continued to dominate junk’s Most Actives list on Monday, as had pretty much been the case for much of last week as well.

The new Communications Sales & Leasing 7 1/8% notes due 2024 were the busiest bond in Junkbondland, with over $41 million seen having changed hands in initial aftermarket dealings following their pricing.

A pair of traders at different shops pegged the new bonds in a 100¾ to 101¼ bid context.

A third put that range at 100½ to 101¼, while a fourth quoted them at 100 7/8 bid.

The new Scotts Miracle-Gro 5¼% notes due 2026 were also popular, with over $27 million of those bonds trading.

A trader saw them on the break between 100¼ and 100¾ bid, but later adjusted that range upward to 100½ to 101 bid.

At another shop, a market source saw the bonds going out at 100½ bid, 100 7/8 offered.

There was somewhat less trading reported in the new RSP Permian, Inc. 5¼% notes due in January of 2025, which priced a little later in the session than Scotts and CSAL.

However, a trader initially located the Dallas-based oil and natural gas exploration and production company’s paper in a 100¼ to 101¼ bid context. He saw the bonds a little later having come in to a 100 1/8 to 100 3/8 neighborhood.

Recent deals hold gains

The secondary market also saw active trading in some of the issues that had priced last week, mostly at or somewhat above the aftermarket levels they had reached on Thursday or Friday.

Carlson Travel’s new 6¾% senior secured notes due 2023 were quoted as high as 103 bid, a trader said, before those bonds dropped back into a 102¼ to 102½ bid context.

A second trader saw the notes ending at 102¼ bid, calling that up ¼ point on the day, with over $12 million having traded.

That was up from the 102 bid region where the bonds had finished at on Friday after that $415 million tranche had priced at par as part of a regularly scheduled $1.01 billion equivalent three-part offering that also included a tranche of euro-denominated secured notes and dollar-denominated unsecured paper.

The latter – $250 million of 9½% notes due 2024 – had also priced at par but had not really been seen around the aftermarket on Friday.

And they weren’t seen much on Monday either, said a trader who estimated volume at only around $3 million or $4 million.

He saw the travel services company’s new paper trading between 102 and 102¼ bid.

The new Starwood Property Trust 5% notes due 2021 were seen trading on Monday slightly above the 101 bid mark, up a little from the initial aftermarket levels of 100 7/8 bid they had gone home at on Friday after that upsized $700 million forward calendar deal had priced at par.

More than $40 million of the Greenwich, Conn.-based commercial mortgage real estate investment trust’s new bonds were seen having traded on Monday.

Going back a little further, a trader said that GTT Communications, Inc.’s 7 7/8% notes due 2024 “continued to stand out,” seeing those notes move up to a 103½ to 104½ bid range.

The McLean, Va.-based cloud networking services provider had priced $300 million of those notes at par on Thursday in a regularly scheduled forward calendar offering, after which the new bonds had moved up to a 102 to 103 bid range and had stayed up there.

Indicators turn mixed

Statistical market performance measures turned mixed on Monday, after having been higher across the board on Friday. It was their second mixed performances in the last three sessions, which in turn had followed four straight sessions on the upside before that.

The KDP High Yield index rose by 15 basis points on Monday to end at 71.52, after having risen by 10 bps on Friday. It was the index’s ninth consecutive gain and 14th such advance in the last 15 sessions, including an earlier five straight improvements.

For a second session in a row, its yield came in by 3 bps, matching Friday’s tightening, to close at 5.44%, after having declined by 6 bps on Thursday. It was the yield’s 12th straight narrowing and its 13th such decline in the last 14 sessions.

However, the Markit Series 27 CDX index retreated by around 1/8 point on Monday to end at 106 3/32 bid, 106 5/32 offered, its second downturn in the last three sessions. On Friday, it had rebounded by 13/32 point from Thursday’s 3/32 point loss.

But the Merrill Lynch High Yield index stayed in positive territory for a ninth straight day on Monday, advancing by 0.164%, on the heels of Friday’s 0.175% upturn.

That lifted its year-to-date return to 16.988% – a second consecutive new 2016 peak, surpassing the former mark of 16.796%, which had been set on Friday, when the index topped the previous zenith of 16.768%, set back on Oct. 25.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.