Upsized HCA, Amsted deals price; Amsted jumps; overall market lower, GenOn gives up gains

By Paul Deckelman and Paul A. Harris

New York, March 3 - The old saw about March coming in like a lion certainly seemed to have proven true in Junkbondland on Monday. The recently firm high-yield market saw a widespread downturn - though on limited volume - as it seemed to take its cue from a plunging stock market spooked by the growing tensions between Russia and the Ukraine.

Even so, the primary sphere remained robust with some $4.1 billion of new junk-rated, dollar-denominated paper coming to market. This was the heaviest new issuance total since Feb. 4, when over $4.4 billion of new junk clattered down the chute, led by a big two-part megadeal from Chrysler Group LLC, according to data compiled by Prospect News.

Monday's pricing parade was also led by a giant-sized two-part offering. HCA Inc.'s upsized, quick-to-market $3.5 billion transaction consisted of five- and 10-year secured notes. It was the second-biggest purely junk-rated transaction so far this year, according to the data, trailing only the $4 billion two-part deal done on Jan. 15 by Community Health Systems Inc.

Traders saw both tranches of the new HCA bonds at or slightly above their par issue price when they moved into the aftermarket. The company's existing notes were also active.

The day's other pricing came from Chicago-based industrial manufacturer Amsted Industries Inc., which brought an upsized $600 million of eight-year notes to market following a short roadshow. Unlike the larger HCA deal, traders reported that the new Amsted bonds firmed smartly when they reached the secondary.

But they were the exception to the rule. Market participants saw most junk names down a generic¼ to½ of a point pretty much across the board, including some recently priced issues such as Taylor Morrison Communities Inc., Cloud Peak Energy Resources LLC and Greektown Holdings LLC.

Away from the new-deal realm, bonds of GenOn Escrow Corp. and Mirant Americas Generation LLC were seen down multiple points in active trading, giving up the gains notched on Friday after parent company NRG Energy Inc. reported fourth-quarter numbers.

Statistical market-performance indicators were down across the board on Monday - ending long winning streaks for two of those indexes - after having been higher on Friday.

HCA prices $3.5 billion

Two of the three Monday deals came at the tight end of talk, and the third came on top of talk.

HCA upsized its senior secured notes offer (Ba3/BB) to $3.5 billion from $3 billion and priced the non-callable notes in two tranches.

An upsized $1.5 billion tranche of five-year notes priced at par to yield 3¾%. The tranche was upsized from $1 billion. The yield printed at the tight end of the 3¾% to 4% yield talk.

In addition, HCA priced a $2 billion tranche of 10-year notes at par to yield 5%, at the tight end of the 5% to 5¼% yield talk.

JP Morgan, Barclays, BofA Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, RBC, SunTrust, UBS and Wells Fargo were the joint bookrunners for the quick-to-market debt refinancing and general corporate purposes deal.

Amsted upsizes

Amsted Industries priced an upsized $600 million issue of eight-year senior notes (Ba3/BB) at par to yield 5%.

The deal was upsized from $500 million.

The yield printed on top of yield talk.

Wells Fargo was the left bookrunner for the debt refinancing deal. Morgan Stanley and BofA Merrill Lynch were the joint bookrunners.

Grifols birngs $1 billion

Grifols Worldwide Operations Ltd. plans to take part in a New York investor lunch on Tuesday to discuss its $1 billion offering of eight-year notes (/B+/).

A global investor call was scheduled to take place on Monday.

Nomura, Morgan Stanley, BBVA, Deutsche Bank and HSBC are the joint bookrunners for the debt refinancing deal.

Imperial Metals five-years

Imperial Metals Corp. plans to price a $325 million offering of five-year senior notes late in the present week.

JP Morgan and BMO are the joint bookrunners.

Proceeds, along with proceeds from a new C$200 million senior secured credit facility, will be used to repay debt, as well as to fund capital expenditures related to the Red Chris project and for general corporate purposes.

Labeyrie starts roadshow

There was also news in the European primary market.

Labeyrie Fine Foods SAS began a roadshow on Monday in Paris for its €275 million offering of seven-year senior secured notes.

The roadshow moves to London for presentations on Tuesday and Wednesday.

Joint bookrunner BNP Paribas will bill and deliver. Natixis is also a joint bookrunner.

The Cam, France-based specialty foods company plans to use the proceeds to refinance debt and partially repay shareholder debt.

Lowell roadshows £100 million

Lowell Group Financing plc was scheduled to participate in a global investor call early on Monday to discuss its proposed £100 million offering of five-year senior secured notes (B1/BB).

The deal will roadshow in London today and Tuesday, and is set to price thereafter.

JPMorgan and Goldman Sachs are the joint bookrunners.

The Leeds, West Yorkshire, England-based purchaser of non-performing consumer debt portfolios plans to use the proceeds to refinance debt, fund cash on its balance sheet and for general corporate purposes.

HCA a little higher

When the new HCA Inc. bonds began trading, they were seen up slightly from the par level at which both halves of the Nashville-based hospital operator's deal had priced.

Two traders saw its 3¾% senior secured notes due 2019 trading in a context of par to 100½ bid, which a third quoted the bonds going home at par bid, 100 3/8 offered.

The company's 5% senior secured notes due 2024 initially traded between par and 100¾ bid. Later on, that range dipped to 99¾ to 100½ and then was finally seen by a trader having tightened to between 99 7/8 and par.

One of the traders opined that he was "surprised that they didn't do a little better - but it is what it is."

HCA's existing 7¼% notes due 2020, meantime, were seen maybe¼ point better, at 109 bid, on volume of over $9 million.

Amsted improves

The day's other deal, Amsted Industries' 5% notes due 2022 were seen having firmed solidly from the get-go after the upsized $600 million issue priced at par.

A trader quoted the new bonds at 101½ bid, 102 offered, while a second had them at 101 3/8 bid, 101¾ offered.

Yet another trader pegged those bonds at 101¼ bid, 101¾ offered near the end of the day.

Recent deals seen lower

Away from Monday's new deals, market participants noted a mostly easier market, and one of the traders said that extended to the trading levels for some of the deals priced last week/

For instance, he quoted Taylor Morrison Communities' 5 5/8% notes due 2024 at 99¼ bid, par offered, down 1 point on the day.

The Scottsdale, Ariz.-based homebuilder priced $350 million of the notes at par on Friday in a quick-to-market offering, after upsizing the deal from $300 million originally, and the bonds had gotten as good as 100¼ bid, 100 5/8 offered in initial aftermarket dealings.

He saw Thursday's $200 million offering of 6 3/8% notes due 2024 from Gillette, Wyo.-based coal operator Cloud Peak Energy Resources down ¾ of a point at 102½ bid, 103¼ offered.

Those bonds came to market at par as a regularly scheduled forward calendar transaction via company subsidiaries Cloud Peak Energy Inc. and Cloud Peak Energy Finance Corp. The notes were seen having jumped to the 102¾ bid, 103¼ offered level in initial aftermarket dealings on Thursday and continued to firm on Friday, going out at around 103¼ bid, 103¾ offered.

The trader said that Detroit-based casino operator Greektown Holdings' 8 7/8% senior secured notes due 2019 were also off by ¾ of a point on Monday, quoting them at 102¾ bid, 103¾ offered.

Greektown Holdings, along with its Greektown Mothership Corp. subsidiary, priced $425 million of the notes at par on Wednesday in a regularly scheduled forward calendar deal. When they hit the aftermarket later Wednesday, the notes rose as high as 102¾ bid, 103 offered.

The bonds continued to firm on Thursday, spiking past the 103 bid level, and pushing upward again on Friday to around 103½ bid, 104 offered.

And he saw Regal Entertainment Group's 5¾% notes due 2022 down 1/8 of a point on Monday at 102 3/8 bid, 102 7/8 offered.

The Knoxville, Tenn.-based movie theater operator priced a massively upsized $775 million drive-by offering of those bonds at par last Tuesday, after more than doubling the deal's size from an originally announced $350 million.

The bonds moved up to above 101 bid in initial aftermarket dealings -- over $80 million changed hands - and then continued to firm in Wednesday's action on volume of more than $30 million, moving up to a little bit under the 102 bid level, and they continued to rise on Thursday and Friday, finishing the week around 102½ bid, 103 offered.

GenOn bonds down

Away from the new deals, one of the biggest losers on the day was the various bonds of GenOn Energy, one of the principal operating division of Princeton, N.J.-based power generation company NRG Energy Inc.

Those bonds had risen smartly on Friday after NRG reported quarterly results, even though it swung to a loss of $290 million, or 90 cents a share, versus a year-earlier profit of $252 million, or $1.02 a share, after the company posted write-downs totaling $558 million.

But on Monday, they gave up those gains, and then some, as investors took a second look at the nuts and bolts of the company's finance. The retreat was also influenced by the overall more defensive tone in the junk market.

The company's GenOn Escrow Corp. 9½% notes due 2018, which on Friday had gained 2½ points on volume of over $6 million, slid by 4 points on Monday to go out at 99½ bid, with over $21 million of the bonds having traded.

Its Mirant Americas Generation LLC 8½% notes due 2021 had risen about 3½ points on Friday, to the mid-90s, with over $24 million of the bonds traded. But on Monday, the notes plunged by nearly 5 points to end at 91½ bid, also on turnover of about $24 million.

Mirant Americas' 9 1/8% bonds due 2031 gained 4 points on Friday to close at 95, but coughed it all up on Monday to finish at 90¾ bid, with over $10 million having changed hands.

Overall softer market seen

A trader, asked if anything was going on generally, replied, "Not really - the market was a little weaker today, as you probably can imagine, along with equities," all of the major indexes of which were down sharply on investor worries about the deteriorating situation in the Ukraine, which overshadowed relatively positive domestic economic news of increased factory activity and consumer spending last month.

He estimated that the cash market was "down generically by ¼ [of a point], with derivatives index off by ½ of a point.

"It didn't seem like there was a lot of trading, but stuff was quoted down."

Market indicators turn south

In line with the generally softer market tone, statistical junk-market performance indicators were lower across the board on Monday, after having been steady to higher for a third consecutive session on Friday.

The Markit Series 21 CDX North American High Yield index lost ½ of a point to finish Monday at 107½ bid, 107 5/8 offered. On Friday, it had been about unchanged on the day, after gaining 9/32 point on Thursday.

The KDP High Yield Daily index ended lower on Monday, breaking a 16-session winning streak dating back to Feb. 6. It fell by 6 basis points to end at 75.22, after having gained 5 bps on Friday.

The index's yield, meanwhile, was unchanged 5.16%, also snapping a 16-session streak during which it had come in every day, including Friday, when it narrowed by 5 bps.

The widely followed Merrill Lynch index also lost ground for the first time in a long time, dropping by 0.039% on Monday, versus Friday's 0.127% gain. That broke an 18-session string of daily wins, going back to Feb. 5.

The downturn dropped its year-to-date return to 2.718% from Friday's 2.759%, which had been its 14th consecutive new peak level for 2014.

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