Altegrity, Ithaca Energy, New Cotai price; AmSurg, Puma slate to open shortened pre-holiday week

By Paul Deckelman and Paul A. Harris

New York, June 30 – The high-yield primary market formally closed the books on the first half of the year on Monday with some $1.22 billion of new paper being priced in the final three transactions of the period.

Syndicate sources said that the big deal of the session came from Altegrity, Inc., a Falls Church, Va.-based risk and information services company.

The company priced a solidly upsized $825 million issue of five-year secured notes, which included improved investor call protection.

Aberdeen Scotland-based oil and natural gas exploration and production company Ithaca Energy Inc. brought a $300 million issue of five-year notes to market.

Both of those transactions were regularly scheduled deals pricing off the forward calendar.

There was also one quickly shopped issue, as New Cotai LLC, a Greenwich, Conn.-based developer of gaming properties in China’s Macau gambling enclave, did an $87.5 million fungible add-on to its existing $380 million of 2019 bonds sold last year.

Traders said the New Cotai issue was too small, while the Altegrity and Ithaca deals priced too late in the session for any kind of an aftermarket.

They also saw only a little activity in recently priced issues, such as Friday’s offerings from Rose Rock Midstream LP and C&S Group Enterprises LLC.

Away from the issues actually priced, the syndicate sources heard that AmSurg Corp., a Nashville-based operator of ambulatory surgery centers, and Singapore-based midstream company Puma Energy will be shopping deals around this week, with any pricing expected to take place on Tuesday or, at the latest, Wednesday as the market winds down ahead of the July 4th holiday, which will see U.S. financial markets closed.

With little real activity going on in the secondary realm, statistical market-performance indicators were seen trending lower for a third consecutive session on Monday, after having been mixed over the previous two sessions and higher for three consecutive sessions before that.

Big upsize for Altegrity

Three single-tranche dollar-denominated deals priced during the primary market session.

The week should be a front-loaded one, according to a market source based on the East Coast of the United States, who added that due to the early close on Thursday, activity in the U.S. primary market should be rolled up by Wednesday's close.

Late Monday, Altegrity priced an upsized $825 million issue of five-year first-lien senior secured notes (B3/B-) at par to yield 9½%.

The debt refinancing deal, which was launched earlier in the day at a range of $800 million to $850 million, was upsized from $550 million.

The price and yield printed on top of revised talk; earlier talk had the deal coming in the 9% area.

Call protection was increased to three years from two years.

Goldman Sachs was the left bookrunner. Credit Suisse and Macquarie were the joint bookrunners.

Ithaca Energy five-year deal

Ithaca Energy priced a $300 million issue of five-year senior notes (Caa1/CCC+/) at par to yield 8 1/8%.

The yield printed in the middle of the 8% to 8¼% yield talk.

Joint bookrunner Barclays will bill and deliver for the debt refinancing. BNP Paribas, Deutsche Bank and RBC Capital Markets were also joint bookrunners.

New Cotai taps 10 5/8% notes

New Cotai, LLC and New Cotai Capital Corp. priced an $87.5 million tack-on to their 10 5/8% senior pay-in-kind notes due 2019 at 109 to yield 8.746%.

Credit Suisse was the bookrunner.

The project financing went into the market without formal price talk, a source said.

AmSurg starts $880 million

AmSurg began marketing an $880 million offering of eight-year senior notes.

The deal is being guided in a mid-to-high 5% yield context.

The acquisition financing and debt repayment deal is expected to price Tuesday.

Citigroup, SunTrust, BofA Merrill Lynch, Jefferies and Wells Fargo are the joint bookrunners.

Puma Energy plans tap

Puma Energy plans to price a $250 million add-on to its 6¾% senior notes due Feb. 1, 2021 (Ba3//BB) this week.

The deal size will not grow.

Goldman Sachs and SG CIB are joint bookrunners.

The Singapore-based midstream and downstream oil group plans to use the proceeds to fund its ongoing investment program and for general corporate purposes.

ArcelorMittal drive-by

In a news-heavy European primary market session, ArcelorMittal launched and priced a €600 million issue of 2 7/8% six-year notes (Ba1/BB+/BB+) at a 220 basis points spread to mid-swaps.

The spread came on top of spread talk.

The notes came at a reoffer price of 99.182 to yield 3.026%.

The deal played to roughly €1.2 billion of orders, sources said.

Active bookrunner Barclays will bill and deliver. Credit Agricole and Commerzbank were also active bookrunners.

IKKS starts roadshow

Clothing retailer IKKS Group SAS began a roadshow on Monday for its €320 million offering of seven-year senior secured notes.

The LBO deal is being guided in a low-6% yield context.

The roadshow wraps up Thursday, and the notes are set to price thereafter.

Joint global coordinator Goldman Sachs will bill and deliver. UBS is also a joint global coordinator. Natixis and SG CIB are the joint bookrunners.

Titan whisper is 4% area

Titan Cement Co. SA began marketing a €300 million offering of non-callable five-year senior notes on Monday.

The debt refinancing and general corporate purposes deal comes with initial guidance in the 4% area and is expected to price during the middle part of the present week.

HSBC, JPMorgan and SG CIB are managing the sale.

IMO Car Wash secured notes

IMO Car Wash is offering €240 million of five-year senior secured notes.

The deal comes with initial guidance in the high 6% range.

JPMorgan is the bookrunner for the deal to help fund the LBO of the Buckinghamshire, England-based car wash company by TDR Capital.

Finally, a “save-the-date” memo from Credit Suisse went out Monday, giving investors a heads-up on a deal from the European health care services sector due to be unveiled early Tuesday afternoon, U.K. time.

Day’s deals unseen

A trader said that the New Cotai LLC add-on to its existing 10 5/8% senior PIK notes due 2019 would probably not be seen around, owing to the relatively small size of the issue, at $877.5 million, on top of $380 million of notes sold last year.

And he said the lateness of the hour would prevent any dealings Monday in either the Altegrity, Inc. 9¼% senior-secured first-lien notes due 2019 or in Ithaca Energy Inc.’s 8 1/8% notes due 2019

Rose Rock firms

A trader said that he did not see any activity in Friday’s new deals -- Rose Rock Midstream’s 5 5/8% notes due 2022 or C&S Group Enterprises’ 5 3/8% senior secured notes due 2022.

At another desk, a trader saw Rose Rock’s bonds offered at 101¾.

The Tulsa, Okla.-based energy company priced $400 million of those notes at par on Friday, after upsizing the issue from an originally planned $350 million.

The notes were seen having moved up later Friday in a 100 7/8 to 101 3/8 context.

Another trader quoted the bonds at 100 7/8 bid, 102 1/8 offered.

He also saw C&S Group’s notes at 100 5/8 bid, 100 7/8 offered.

The Keene, N.H.-based wholesale grocery distributor priced $400 million of the notes Friday. They were later seen trading around 100 5/8 bid, 101 offered.

Quiet session seen

A trader characterized Monday’s session as “very quiet.”

He noted that Monday marked the month’s end, a natural damper on market activity.

He also said that “a lot were just trying all day to figure out how to get their Trace data updated for following 144As on Trace,” after the Financial Industry Regulatory Authority said Monday that it had begun disseminating Rule 144A transaction data, which previously remained a mystery.

He opined: “It feels like the whole week is going to be like this.”

A second trader agreed, saying, “We had a summer Monday, and it was the end of the month. And we’re beginning a short pre-holiday week.”

All of that “creates a perfect storm” for inactivity, the trader added.

He predicted that “by [Tuesday] at 3 p.m. ET, everything will be shut down ahead of the soccer game,”the televised World Cup match between a surprisingly strong United States team and Belgium.

TXU trades around

Among specific names, several issues of Texas Competitive Electric’s paper were seen among the most active junk bond market credits on Monday, as investors tracked the latest news developments coming out of the U.S. Bankruptcy Court in Wilmington, Del.

A trader said that the company’s 10¼% notes due 2015 “were up a good bit,” about 1 point to 1½ point, with the bonds recently trading in a 114 to 115 context and seen on Monday “just north of 16.”

At another desk, a market source saw those bonds finishing just a shade below 16 bid, at 15 15/16. He said that was up a little more than 1 point, with volume in the credit over $11 million.

Texas Competitive’s 15% notes due 2021 were even busier, ending at 46¼ bid, about unchanged but with over $18 million having changed hands.

Trader said that Energy Future Intermediate Holding Corp.’s11¼% notes due 2018 “dipped some from where they had been,” going home “straddling 120” versus previous levels in the low 120s.

The activity in the TXU bonds came against the backdrop of renewed arguments in the Dallas-based utility operator and merchant power producer’s bankruptcy restructuring case.

On Monday, the company, which last week rejected a $2.3 billion strategic financing and restructuring proposal from investor NextEra, Inc. and a group of second-lien noteholders, outlined some changes to its previously announced $1.9 billion debtor-in-possession financing plan.

The changes included lower interest costs and other improved terms from its original plan, with hope of convincing creditors and the court to go along with the plan.

The company said that it had managed to negotiate a 1.75% lower interest rate than when it initially put its proposal to lenders on the table and cut fees it would have to bay by some $437 million, helped by intense lender competition to get a piece of what is expected to be a lucrative financing.

The plan was developed with input from some of the company’s unsecured senior toggle noteholders.

However, those accomplishments failed to impress some of the other creditors, who asked bankruptcy judge Christopher Sontchi to hold off on approving the company’s plan. They charge that the plan would unfairly give control of the crown jewel among Energy Future’s assets, its profitable Oncor power transmission business, to certain favored lenders, leaving other creditors on the outside looking in.

The company – acquired in a $46 billion leveraged buyout in 2007 – was forced into bankruptcy at the end of April, staggering under that giant debt load and hurt by weaker-than-expected revenues from its power-generation business.

iPayment rebound continues

iPayment Inc.’s 10¼% notes due 2018 gained 2¾ points on Monday on round-lot volume of over $10 million, as well as brisk activity in smaller odd-lot pieces, even though there was no fresh news heard out on the company, which provides credit and debit card payment processing services to small merchants across the United States.

A trader saw those bonds going out at 91¼ bid, versus Friday’s levels around 88½.

A second trader pegged the bonds around 90¾, calling it a nearly 2-point rise on the session. He noted that just a week ago, the bonds had been trading at 83 bid.

That was about where the bonds had opened the year, but they were eventually hammered down to lows around 68 bid in May, following the release of first-quarter numbers showing a new loss of over $11.5 million, more than triple the year-earlier red ink of $ 3.6 million.

That deterioration in operating performance and concerns about the company’s liquidity caused Moody’s Investors Service in May and then Standard & Poor’s in June to downgrade its ratings.

However, the bonds began rising even after the ratings cuts, rising to their current levels from their recent lows just under $73 on June 11, despite a lack of fresh news about the company.

Mixed results in quiet market

Elsewhere, a trader said that “there wasn’t a lot going on in the retailers,” quoting RadioShack Corp.’s 6¾% notes due 2019 as having “backed down” to around a 41-42 context. He said that the Fort Worth. Texas-based consumer electronics retailer’s bonds had risen as high as 44 bid on Friday.

Market indicators seen easier

Statistical indicators of junk market performance, meanwhile, were trending lower for a third consecutive session on Monday, after having been mixed on Tuesday and Wednesday and having been higher across the board for the three sessions before that.

The KDP High Yield Daily index eased on Monday 6 basis points to close at 74.95, after having been off by 4 bps on Friday and unchanged for the three previous sessions before that. Its yield edged up by 1 bp for a second straight day to end at 4.95%, after having been unchanged over the previous two sessions.

The Markit CDX Series 22 index was down by 1/8 of a point on Monday, its third straight loss, as it closed at 108 3/8 bid, 108 5/8. On Friday, it had eased by 1/16 of a point and it had retreated by 3/32 of a point on Thursday.

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