AmSurg, Jaguar, Hub, Puma deals open second half; Isle of Capri gains on renewed sale talks

By Paul Deckelman and Paul A. Harris

New York, July 1 – The high-yield primary sphere kicked off the second half of the year on Tuesday with an active session that saw some $2.35 billion of dollar-denominated, fully junk-rated new paper come to market, syndicate sources said.

The big deal of the day was Nashville-based health-care facilities operator AmSurg Corp.’s upsized $1.1 billion of eight-year notes.

Puma Energy Holdings Pte. Ltd., a Singapore-based oil and gas midstream company, did a $250 million add-on to its existing 2021 notes.

Both of those offerings were regularly scheduled forward-calendar transactions.

The day also saw a pair of opportunistically timed drive-by pricings, according to the syndicate sources.

Jaguar Holding Co. I, the parent of Wilmington, N.C.-based drug and biotech company Pharmaceutical Product Development LLC, did a $600 million add-on to its existing 2017 PIK toggle notes.

And Chicago-based insurance provider Hub International Ltd. priced $380 million of five-year senior contingent cash-pay notes via a pair of financing subsidiaries.

In the secondary realm, traders saw both the new AmSurg bonds and new Jaguar issue having firmed from their respective issue prices, with very active dealings seen in the AmSurg paper.

Away from the new deals, traders said that Isle of Capri Casinos Inc.’s paper was up solidly for a second consecutive session, helped by the news that the regional gaming operator had resumed talks about a possible sale of the company to would-be suitor Gaming and Leisure Properties Inc., which had held unsuccessful talks with Isle earlier in the year.

Overall, traders said that the market had a positive tone to it.

Statistical market-performance indicators were seen heading higher after having been mixed on Monday.

AmSurg upsized and tight

Four issuers priced single-tranche deals in the dollar-denominated primary market on Tuesday, raising a combined total of $2.35 billion.

AmSurg priced an upsized $1.1 billion issue of eight-year senior notes (B3/B-) at par to yield 5 5/8%.

The deal was upsized from $880 million.

The yield printed at the tight end of yield talk in the 5¾% area and in line with earlier guidance in the mid-to-high 5% yield context.

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

Proceeds, along with cash on hand, will be used to repay debt under the company’s revolver, repay its senior secured notes due 2020, and help fund AmSurg’s acquisition of Sheridan Healthcare. Additional proceeds, resulting from the upsizing of the notes offer, will be used to pay down the company's term loan B.

PPD taps PIK toggles

Jaguar Holding, the parent of Pharmaceutical Product Development, priced a $600 million add-on to its PIK toggle notes due Oct. 15, 2017 (Caa1/CCC+) at 101.5 to yield 8.621%.

The reoffer price came on top of price talk.

The notes pay a 9 3/8% cash coupon, which steps up to 10 1/8% for PIK payments.

J.P. Morgan, Credit Suisse, UBS, Deutsche Bank and Goldman Sachs were joint bookrunners for the dividend deal.

Hub, rich and tight

Hub Holdings, LLC and Hub Holdings Finance, Inc. priced $380 million of five-year senior contingent cash pay notes (Caa2/CCC+) at 99.75 to yield 8.186%.

The notes pay a cash coupon of 8 1/8%, which increases to 8 7/8% for PIK payments.

The reoffer price came rich to the 99.5 price talk. The yield printed tight to yield talk of about 8¼%.

Morgan Stanley, BofA Merrill Lynch, RBC, BMO and Macquarie were the joint bookrunners for the dividend deal.

Puma taps 6¾% notes

Puma Energy Holdings priced a $250 million add-on to its 6¾% senior notes due Feb. 1, 2021 (Ba3//BB) at 103.125 to yield 6.16%.

The reoffer price came at the rich end of price talk in the 103 area.

Goldman Sachs and SG CIB were 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.

RJS talk is 5¼% to 5½%

Only one dollar-denominated deal remains on the calendar as business to clear prior to the three-day Independence Day holiday weekend in the United States (but don't rule out drive-by business on Wednesday, a source advised).

RJS Power Holdings LLC talked its $1.25 billion offering of five-year senior notes (B1/BB-) to yield 5¼% to 5½%.

The deal is set to price Wednesday.

JPMorgan, Citigroup, Goldman Sachs and Morgan Stanley are the joint bookrunners.

Jarden euro deal

The European primary market continued to generate news on Tuesday.

New York-based Jarden Corp. kicked off a €300 million offering of non-callable seven-year senior notes (expected ratings Ba3/BB) with a global investor call.

A group breakfast is scheduled for Wednesday morning in London, and the general corporate purposes deal is set to price thereafter.

Joint bookrunner Barclays will bill and deliver. JPMorgan, Credit Agricole CIB, Credit Suisse and Wells Fargo are also joint bookrunners.

Care UK starts roadshow

Care UK began a roadshow on Tuesday for a £400 million two-part offering of senior secured floating-rate notes.

The roadshow wraps up on Wednesday, and the debt refinancing deal is set to price thereafter.

The deal is structured as a £300 million tranche of five-year first-lien notes and a £100 million tranche of 5.5-year second-lien notes.

Credit Suisse and Citigroup are the global coordinators. HSBC, ING and Royal Bank of Scotland are the joint bookrunners.

Day starts quietly

In the secondary market, traders said that the new month, quarter and half got off to something of a quiet start, with one noting that “by noontime [ET], things had pretty much closed down,” with participants distracted by the televised World Cup soccer matches from Brazil, first pitting Argentina against Switzerland, and then the much-awaited U.S.-Belgium match that marked the end of the underdog American team’s Cinderella-like run.

AmSurg, Jaguar notes rise

In between watching the kicks and passes, though, market participants did get a few things done, including buying in the new AmSurg 5 5/8% notes due 2022.

A trader said that over $60 million of the new notes changed hands, pegging them going home around 101 3/8 bid, 101 5/8 offered, well up from their par pricing level earlier in the day.

A second trader saw the bonds at 101 3/8 bid, 101 7/8 offered, while a third had them in a 101½ to 102 context.

Traders also saw gains, though on much less volume, in the new Jaguar Holding 2017 add-on bonds.

One trader initially quoted those 9 3/8%/10 1/8% PIK toggle notes at 102 bid, up a little from their 101.5 pricing level.

A second called them 102 3/8 bid, while a third saw two-sided markets in a 102½ to 103½ context.

Traders did not see any immediate aftermarket dealings in Puma Energy’s 6¾% add-on notes due 2021 or in Hub Holdings’ 8 1/8%/8 7/8% contingent cash-pay notes due 2019.

New Ithacas trade around

Among other recently priced deals, a trader said that his shop had traded some of the new Ithaca Energy Inc. 8 1/8% notes due 2019 that had priced on Monday.

He saw the Aberdeen, Scotland, oil and natural gas exploration and production company’s paper at 101 bid, 101¼ offered, up from the par level at which that $300 million of bonds had priced.

Out of that same sector, a trader said that Rose Rock Midstream, LP’s 5 5/8% notes due 2022 “were out there at 101 to 102.”

A second trader also quoted the bonds at 101 to 102, calling them unchanged on the day.

The Tulsa, Okla.-based energy concern had priced $400 million of the notes on Friday at par after upsizing the deal from an originally announced $350 million, and they had risen to 100 7/8 bid, 101 3/8 offered in initial aftermarket dealings.

Friday’s other new issue – Keene, N.H.-based wholesale grocery distributor C&S Group Enterprises LLC’s 5 3/8% senior secured notes due 2022 – were seen by a trader to have eased by ¼ point, to 100 3/8 bid, 100 7/8 offered.

A second trader located the bonds even lower, at par bid, 100½ offered.

The company had priced its $400 million issue at par, with the bonds then firming to 100 5/8 bid, 101 offered when they hit the aftermarket.

A trader saw Memorial Resource Development Corp.’s 5 7/8% notes due 2022 at 101¼ bid, 101¾ offered.

The Houston-based upstream master limited energy partnership had priced $600 million of those notes in a quick-to-market transaction back on June 25, pricing the bonds at par after doubling the size of the deal from $300 million originally.

They priced in a 101 to 101 1/8 context when they hit the aftermarket and remained up there subsequently.

Isle improved on sale talk

Away from the new deals, traders saw some activity – though not an overwhelming amount – in the bonds of Isle of Capri Casinos.

It was the second straight session that the St. Louis-based regional gaming operator’s bonds had risen, after news appeared late in the day on Monday indicating that Isle of Capri had resumed its on-again, off-again talks with would-be suitor Gaming and Leisure Properties on a possible sale of Isle.

The news had pushed the company’s 8 7/8% notes due 2020 by nearly 2 points on Monday afternoon to 109¼ bid on volume of over $5 million.

On Tuesday, the bonds rose another ¾ point to end at 110 on $3 million of volume.

The company’s other issue, its 5 7/8% notes due 2021, had gained 1¾ points Monday on volume of over $6 million, ending at 102 7/8 bid, with most of the activity coming in the last minutes of the trading day.

Things picked up on Tuesday right where they had left off on Monday evening. The bonds added on another point to end at around 103 7/8 on volume of over $5 million.

Isle of Capri’s Nasdaq-traded shares meantime gained 32 cents on the day, or 3.74%, to end at $8.88. Volume of 378,000 shares was more than triple the norm.

Market indicators firm up

Statistical indicators of junk market performance meanwhile turned higher on Tuesday, after having been mixed on Monday and lower across the board for two sessions before that.

The KDP High Yield Daily index gained 2 basis points on Tuesday to end at 74.97. It had previously been lower for two consecutive sessions, including Monday, when it was off by 6 bps.

Its yield came in by 1 bp to finish at 4.94% after having moved up over the previous two sessions, including Monday, when it had edged up by 1 bp for a second straight day.

The Markit CDX Series 22 index was up by ¼ point on Tuesday to close at 108 7/8 bid, 109 offered after having dropped by 1/8 point on Monday, its third straight loss.

The widely followed Merrill Lynch High Yield Master II index posted its second straight gain Tuesday, rising by 0.031% on top of Monday’s 0.007% improvement, its first gain after three straight losing sessions to wrap up last week. Those losses had snapped a streak of 15 straight sessions in which the index had risen, going back to June 4.

The gain on Tuesday lifted the index’s year-to-date return to 5.673% from Monday’s 5.64%, although it remains below its peak level for the year, 5.727%, recorded last Tuesday.

Despite the gains, the index’s yield-to-worst – which would normally decline as the return improved – instead rose to 5.009% from Monday’s 5.006% reading, both well up from last Tuesday’s 4.847%, its low for the year as well as all-time low level.

Its average issue price rose to 105.6857 from 105.6719 on Monday but remained below its high price for the year, the 105.9617 level recorded last Monday.

And its spread- to-worst over comparable Treasury issues came in to 370 bps from 372 bps on Monday. Those spreads, however, remain above last Monday’s 353 bps, the index’s tight level for the year.

Although junk bond yields are currently near their all-time lows, their spreads remain up by more than 100 bps from their historical tight levels around 250 bps over comparable Treasuries, first set back in 1997 and then matched in 2007.

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