Drive-by Navient megadeal, Standard Pacific pricings open November; forward calendar builds

By Paul Deckelman

New York, Nov. 3 – The month of November opened in Junkbondland with an active primary arena, but a not-so-active secondary sphere.

High-yield syndicate sources reported a pair of quick-to-market pricings totaling $1.3 billion, up somewhat from the $1 billion of new dollar-denominated, fully junk-rated paper from domestic or industrialize-country issuers that had priced during Friday’s final session of October.

The big deal of the day on Monday was a two-part, $1 billion offering from education finance products and services provider Navient Corp., split into equal-sized tranches of six- and 10-year bullet notes.

Earlier in the session, homebuilder Standard Pacific Corp. dropped in to price $300 million of 10-year bullets. Unlike the Navient deal, which came to market fairly late in the day, Standard Pacific came early enough in the session to allow for some aftermarket dealings, with the new bonds seen better in fairly active trading.

While those were the only two deals that actually priced, the sources saw several other prospective issuers either formally announce upcoming deals or else just heard the deals surface without a formal announcement.

Cruise-ship operator NCL Corp. was heard to have hit the road to begin marketing $680 million of five- year notes, which are expected to price sometime after mid-week.

Also going on the road were electronic components manufacturer Kemet Corp. with a $400 million offering of five-year secured notes and diversified holding company HC2 Holdings, Inc., which is doing a $250 million five-year secured notes deal.

Energy operator Blue Racer Midstream LLC will be pitching a $400 million issue of eight-year notes to investors on a Tuesday conference call, although pricing isn’t expected until later in the week.

Precious metals mining company Platinum Group Metals Ltd. announced that it will sell $150 million of seven-year notes, packaged in units with warrants allowing its investors buy common stock.

Among recently priced issues, both halves of Charter Communications Inc.’s $3.5 billion deal as well as Friday’s considerably smaller Evraz Inc. NA Canada deal saw fairly sizable dealings.

But traders saw little real activity beyond the new and recently priced deals.

Statistical indicators of overall market performance were mostly stronger for a second straight session on Monday.

Navient brings two-parter

Primaryside activity was fast and furious between deals that actually priced and the roster of new deal announcements.

All of the day’s pricing activity could be considered drive-by, with the bonds coming to market just hours after the deals were first announced.

The biggest transaction of the day came from Newark, Del.-based Navient, which provides financial products and services focused on the education lending sector.

High-yield syndicate sources said that the company priced $1 billion of six-year and 10-year notes (Ba3/BB) in a two-tranche offering, consisting of $500 million of 5 1/8% senior unsecured notes due 2020 priced at 99.365 and $500 million of 5 7/8% notes due 2024, which priced at 99.075.

The offering, via a shelf registration filed with the Securities and Exchange Commission, was brought to market by joint book-running managers Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and RBC Capital Markets Corp.

Navient plans to use the deal proceeds for general corporate purposes.

Standard Pacific 10-year prices

The day’s other pricing came from Irvine, Calif.-based homebuilder Standard Pacific, which priced $300 million of new senior notes due 2024 (B1/B+) at par to yield 5 7/8%.

That deal came to market right in the middle of price talk envisioning a yield between 5¾% and 6%.

The junk market sources said that the SEC-registered offering got done though joint book-running managers JPMorgan, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and Credit Suisse.

BNP Paribas Securities Corp., Comerica Securities, Inc. and U.S. Bancorp Investments, Inc. acted as co-managers.

The quick-to-market issue was announced on Monday morning, was marketed to potential buyers via a mid-morning [ET] investor call and then priced at mid-afternoon.

Standard Pacific plans to use the proceeds from the note offering for general corporate purposes, which may include land acquisition and development, home construction, repurchases of the company’s common stock and other related purposes.

Cruise operator sails in

Apart from offerings that actually priced, market participants said that NCL was beginning a roadshow for a $680 million offering of five-year senior secured notes (expected ratings B2/BB-).

Those sources said that the roadshow would begin on Monday in Los Angeles, moving on to New York on Tuesday and concluding on Wednesday in Boston, with pricing expected sometime thereafter.

The Rule 144A/Regulation S for life deal is being brought to market via bookrunners Barclays Capital Inc., JPMorgan and Deutsche Bank, along with co-managers Credit Agricole CIB and DnB NOR Markets Inc.

The Miami-based cruise-ship company – the operator of Norwegian Cruise Line – plans to use the proceeds from the note issue to finance its pending acquisition of sector peer Prestige Cruise Holdings.

Kemet, HC2 roadshows

Also hitting the road to market bond issues this week were another pair of companies.

Kemet, a Greenville, S.C.-based electronic components manufacturer (existing ratings Caa1/B), plans to offer $400 million of five-year senior secured notes.

High-yield syndicate sources said that the notes will be marketed to potential investors via a roadshow that is scheduled to begin with presentations on Tuesday in New Jersey and Boston, on Wednesday in the Midwestern part of the United States and San Francisco, and on Thursday in Los Angeles, with pricing expected sometime thereafter.

The Rule 144A and Regulation S offering, which is being sold with registration rights, will be brought to market by book-running manager Bank of America Merrill Lynch.

Kemet plans to use the proceeds from the offering to fund the redemption of all of its outstanding 10½% senior notes due 2018, to reduce outstanding borrowings under its existing credit facility and to pay related transaction fees and expenses.

Meanwhile, HC2 Holdings, Inc., a Herndon, Va.-based diversified holding company, was heard by the sources to have begun a roadshow Monday for its $250 million offering of five-year senior secured notes.

They said that the marketing effort would continue throughout the week, with pricing expected sometime thereafter

Jefferies & Co. will be the bookrunner for the Rule 144A/Regulation S offering, which is being sold without registration rights.

HC2 plans to use the proceeds from the offering to refinance existing debt that was issued in connection with its previous purchases of shares in Global Marine Systems Ltd., Schuff International Inc. and Novatel Wireless Inc.

Blue Racer pitches deal

Also joining the new deal pipeline was Blue Racer Midstream, LLC, which began an offering of $400 million eight-year senior notes (B3/B) on Monday.

High-yield syndicate sources said that those notes will be marketed to potential investors via a conference call that will take place at mid-day [ET] on Tuesday, with pricing expected late in the week.

The Rule 144A/Regulation S offering, which is being sold with contingent registration rights, will be brought to market via bookrunners Wells Fargo Securities LLC, RBS Securities Inc., USB Securities LLC, RBC Capital Markets, Sun Trust Robinson Humphrey, Inc., Comerica Securities Inc. and Barclays, plus a roster of co-managers.

The Dallas-based midstream energy company will use the deal proceeds repay existing revolving credit facility borrowings, fund continued expansion and for general corporate purposes.

Platinum Group marketing units

Platinum Group Metals was heard to be in the market with an unusually structured offering.

The company said Monday that it plans to offer $150 million of senior unsecured notes due 2021.

There was no immediately available information on the timing of the prospective offering or the investment banks involved, among other items.

The notes will be sold as part of 150,000 units, each of which will be composed of one $1,000 note and equity warrants, with the company offering a total of 55.2 million common share purchase warrants, each of which will entitle the holder to buy one common share.

The platinum mining company, based jointly in Vancouver, B.C., and in Johannesburg, South Africa, plans to use the proceeds from the offering to fund the remaining planned construction and development costs of its WBJV Project 1 platinum mine in South Africa and for working capital purposes.

Standard Pacific trades up

In the secondary market, a trader said that Standard Pacific’s new 5 7/8% notes due 2024 were the busiest bonds on a not-so-very busy day.

He saw over $26 million of the homebuilder’s new notes changing hands, pegging them around 101 bid, 101¼ offered, up from their par issue price.

He did not see any sign of the late-breaking Navient two-part megadeal.

Charter, Evraz busy

Among other recently priced deals, a market source saw both halves of Charter Communications’ $3.5 billion two-part offering among the day’s more actively traded credits – but that wasn’t saying much, given the overall lack of substantial volume.

The source saw $15 million of the 5¾% notes due 2024 trading at 100¾ bid, unchanged on the session, while around $10 million of the 5½% notes due 2022 were trading at that same 100¾ figure, which he said was up 1/8 of a point.

Stamford, Conn.-based cable and broadband operator Charter priced $1.5 billion of the 5½% notes and $2 billion of the 5¾% notes at par in a quick-to-market transaction last Wednesday, after the overall deal size was enlarged to $3.5 billion from the originally announced $1.5 billion.

Evraz Inc. NA Canada’s 7½% senior secured notes due 2019 were seen up about ½ of a point at 101¾ bid, on volume of over $9 million.

The Regina, Sask.-based steel producer priced $350 million of those notes at par on Friday, after the offering was downsized from $500 million originally.

Quiet day seen

Even those new deals seemed to be trading in relatively restrained volume, versus, say, the more than $200 million of Charter 5¾s and the more than $180 million of Charter 5½s that traded when that deal was first freed for aftermarket activity.

On Monday, though, a trader lamented, “Only about 15 names traded over $10 million. Secondary activity was light-to-non-existent.”

A second trader suggested that since it was the beginning of the month, activity levels would naturally be lighter.

He added, somewhat tongue in cheek, that perhaps people were Halloweened out.

“Maybe someone had a candy hangover – or is suffering from some bad caramel.”

Indicators are better

Statistical indicators of junk market performance were stronger for a second consecutive session on Monday. They had also firmed on Friday, after having been lower across the board on Thursday and mixed for two straight sessions before that.

The KDP High Yield Daily index rose by 3 bps Monday to 72.51, its second straight rise. That followed Friday’s 5 bps improvement. Its yield came in for a fifth successive session, easing by 2 bps to 5.26% It had declined by 1 bp on Friday.

The Markit CDX North American High Yield Series 23 index was unchanged on Monday, after having gained 13/32 of a point on Friday to end at 106 31/32 bid, 107 1/32 offered. Before that, it had fallen for two sessions, including Thursday’s 1/16 of a point setback.

The Merrill Lynch U.S. High Yield Master II index gained 0.029% on Monday, its second straight gain. That followed Friday’s 0.109% improvement.

The latest advance lifted the index’s year-to-date return to 4.817% from Friday’s 4.786%.

According to the FINRA-Bloomberg Active US High Yield Bond index, Monday’s junk market volume fell to $2.496 billion from Friday’s $2.592 billion.

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