U.S. Steel prices $650 million; new Valeant dominates secondary; recent Frontier issue adds to volume

By James McCandless and Paul A. Harris

San Antonio, March 13 – In Tuesday's high-yield primary market United States Steel Corp. priced $650 million of eight-year senior notes, while the secondary market was dominated by volume favorites, with newer issues taking up most of the space.

Monday’s new eight-year senior unsecured notes from Valeant Pharmaceuticals International, Inc. took up a majority of the day’s volume.

Last Thursday’s new issue from Frontier Communications Corp., consisting of $400 million in seven-year senior secured second priority notes, continued its heavy volume.

The recent $1 billion pricing from Sprint Corp. continued to add volume on Tuesday.

Heavy trading was seen again in Intelsat SA and Northern Oil and Gas, Inc.

U.S. Steel at the wide end

In Tuesday's primary market United States Steel Corp. priced a $650 million issue of eight-year senior notes (B2) at par to yield 6¼% in a quick-to-market trade.

The yield printed at the wide end of the 6% to 6¼% yield talk and in the middle of the 6 1/8% to 6 3/8% initial guidance.

Early in the session there was a buzz in the market that the deal could upsize to as much as $800 million, but that upsize did not materialize.

JP Morgan, BofA Merrill Lynch, Barclays, Wells Fargo, Credit Suisse, Citigroup, Goldman Sachs and Morgan Stanley were the joint bookrunners for the debt refinancing.

NVA oversubscribed

NVA Holdings, Inc. is expected to price $500 million of eight-year senior notes (Caa2/CCC) during the March 12 week.

Initial price talk has the deal coming with a yield in the 7¼% area.

The debt refinancing deal is said to be playing to an order book that is two-times oversubscribed, according to a bond trader.

BofA Merrill Lynch is the lead bookrunner.

Stora Enso on deck

In the European primary market Finland-based paper and forest products company Stora Enso Oyj is expected to price €300 million of 10-year senior notes (Ba1) on Wednesday.

Deutsche Bank and Goldman Sachs are managing the sale.

Meanwhile a pair of European based issuers from the energy sector are in the market with dollar-denominated deals.

Norway-based Aker BP ASA is selling $500 million seven-senior notes via Deutsche Bank, in a deal that could price as early as Wednesday, a London-based sellside source said.

And Scotland-based KCA Deutag Alpha Ltd. announced that it has mandated advisers to arrange a series of investor meetings relating to an offering of approximately $425 million of five-year senior secured high-yield bonds, subject to market conditions, to finance an acquisition and repay some of the target's debt.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed, and essentially flat, on Monday, the most recent session for which data was available at press time, a trader said.

High yield ETFs sustained $16 million of outflows on the day.

Actively managed high-yield funds saw $30 million of inflows on the day.

The dedicated bank loan funds saw more persuasive Monday inflows: $135 million on the day, the trader said.

New Valeant issue trades

Canada-based pharmaceutical name Valeant’s $1.5 billion Monday issue of eight-year senior notes were the talk of the session Tuesday, traders confirmed, as $250 million in trades sent the notes below par.

“These were the most traded of the session,” a trader said.

The 9¼% notes due 2026 traded off par to 99¾% bid.

Frontier notes active

Norwalk, Conn.-based wireline telecom name Frontier Communications’ new $1.6 billion issue of eight-year second-lien secured notes saw a little less activity Tuesday, a market source confirmed, but were still relatively active.

“They have been active but trending lower,” a trader said.

The 8½% notes due 2026 fell to about 98 6/8% bid.

Recent Sprint issue trades

Overland Park, Kan.-based wireless company Sprint’s recent $1 billion new issue remained active Tuesday, though trending lower since the company announced Friday that it would be laying off 500 people from its headquarters.

The 7 5/8% notes due 2026 lost about ¼ point to close just below 99¼ bid.

Volume names active

Another telecom favorite was Luxembourg-based satellite communications company Intelsat, trading off the back of comments about the country’s 5G network that implies benefits for satellite firms.

The Intelsat Jackson SA 5½% issues due 2023 traded down slightly to close at 82½ bid. The 7¼% issues due 2020 handed back Monday’s gain of about 1¾ points to close at 94¼ bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% issues due 2020 added 1¼ points to close at 92¼ bid.

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