Anadarko steps out as biggest trader; Capella finally comes to the table; market mostly strong

By Paul A. Harris and Stephanie N. Rotondo

St. Louis and Portland, Ore., June 21 - Anadarko Petroleum Corp. was by far the most active name in the high-yield universe, traders said, while Capella Healthcare, Inc. at last priced its notes after a delay caused by market conditions.

On the heels of an extended dormancy, the high-yield primary market saw renewed vigor on Monday, with two issues pricing and four new deal announcements.

Over in the secondaries, the high-yield market remained mostly strong.

Traders saw the Anadarko bonds slipping 3 basis points to 4 points in early trading, though the bonds managed to pare down the losses, ending up down just 1 point to 3 bps on the day. The declines came after a downgrade on Friday, and one trader speculated that some investors were attempting to get rid of their position in the oil company.

Capella returned after being sidelined since late May with its more than twice-oversubscribed $500 million offering of senior notes.

Meanwhile, Chesapeake Energy Corp. saw its debt improving by at least a point following news of a completed private placement and a note redemption.

Realogy Corp.'s notes continued to trade upward, traders reported, a trend that began in last week's market rally. First Data Corp. was also on the firm side. There was no fresh news out on either company.

The high-yield market was unchanged to better, depending on whom you asked or what index you followed.

One trader said the market "started out stronger," but that by mid-day it had "somewhat petered out."

Another trader saw last week's strength continuing on Monday.

"There was huge turnover for a random Monday," the trader said, noting that total trading volumes were "just shy" of $2 billion.

The trader also opined that "unless the new issue calendar really builds," there was "still some cash [around] to keep it running [up].

"It's hard to get in the way of a speeding freight train," he quipped.

The CDX High Yield Index was deemed unchanged by a market source at 97 bid, 97½ offered. The KDP High Yield Index, however, was firmer at 71.22, with an 8.45% yield. That compared to Friday's reading of 70.85, with an 8.56% yield.

Anadarko animated

One trader said that Anadarko bonds made up at least eight out of 10 of the most active trading bonds, according to the Trace bond-tracking system. He saw the 5.95% notes due 2016 slipping "almost 3 points" to end around 88, while the 6.45% notes due 2036 dipped 2 to 3 points to around 841/2.

Another trader said Anadarko made up "a big hunk" of total trading volume, with at least $300 million of the 5.95% notes changing hands around 88. That was down nearly 3 points, he said.

The second trader also saw "a couple hundred million" of the 6.20% notes due 2040 falling over 2 points to close around 831/2. He noted that most of the trading took place in the longer issues.

The trader also speculated that activity in the name was a result of last week's rating downgrade by Moody's Investors Service. The rating agency dropped Anadarko to Ba1 from Baa3. The company called the move "very disappointing and surprising in light of Anadarko's limited role as a non-operating investor in the Macondo well."

"A lot of places [such as insurance companies] can't own 5-B paper," he said. As such, trading volumes suggested that some investors were trying to rid their portfolios of Anadarko debt.

Among others in the oil arena, BP plc's bonds were "active, but not to the same extent of Anadarko," a trader said.

The trader said about $70 million of the 5¼% notes due 2013 traded around 93, which he called essentially flat on the day.

Another trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were "mildly active" and "kind of unchanged" at 72½ bid, 73½ offered.

Anadarko owns a 25% interest in BP's Deepwater Horizon rig that exploded in April, resulting in a massive oil leak in the Gulf of Mexico. Under the terms of the joint operating agreement, Anadarko would have to fork over a quarter of the costs associated with any liabilities, unless BP proved to be grossly negligent.

In a press release issued on Friday, Anadarko implied that it would not be footing any of the costs associated with the Gulf clean-up effort, as it alleged that evidence showed BP to be completely on the hook.

"The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP's reckless decisions and actions," Jim Hackett, chairman and chief executive officer, said in the June 18 statement.

"Frankly, we are shocked by the publicly available information that has been disclosed in recent investigations and during this week's testimony that, among other things, indicates BP operated unsafely and failed to monitor and react to several critical warning signs during the drilling of the Macondo well.

"BP's behavior and actions likely represent gross negligence or willful misconduct and thus affect the obligations of the parties under the operating agreement," he added in the statement.

Anadarko is also looking to cancel a leasing contract with Noble Corp. due to the six-month moratorium on offshore drilling that was put in place on May 27 because of the oil leak.

Capella prices $500 million

Capella returned on Monday to price its $500 million offering of 9¼% seven-year senior notes (B3/B).

The notes priced at 98.74 to yield 9½%, which was the tight end of the 9½% to 9¾% price talk, well after the market closed. The bonds have a July 1, 2017 maturity.

The in-demand deal went very well, according to an informed source.

Bank of America Merrill Lynch, Citigroup Global Markets Inc. and Barclays Capital Inc. were the joint bookrunners.

The final terms included covenant changes.

Proceeds will be used to repay bank debt.

Citgo quiet

A trader said he was surprised by the "complete lack of trading" in the new Citgo Petroleum Corp. bonds that priced late Friday.

The $300 million of 11½% senior secured notes due June 1, 2017 came after the market closed on Friday at 98.822. The trader said the paper immediately traded higher to par ¾ bid, 101 offered.

But come Monday, the trader said, "I don't think $5 million bonds traded hands.

"To me, it's just amazing when a new issue comes" and there is little to no movement, at least in terms of volume.

Still, the trader said that the bonds remained up from the issue price, though lower from Friday's high at par bid, par ½ offered.

Chesapeake up on capital raise, redemption

Chesapeake Energy's bonds were "up a good point across the board," a trader said, as the company announced it had raised $900 million via a private placement and also called about $600 million of its 6 3/8% notes due 2015.

The trader pegged the 6 5/8% notes due 2016 around 1021/2, up "about a point," and the 6½% notes due 2017 at par 1/2, a gain of over a point day over day.

Another trader said the 6 5/8% notes were "up a little bit," also at that 102½ level. He also saw the 9½% notes due 2015 "up the most" at 111¼ - a 11/2-point gain, he said - and the 6½% notes at par 3/8.

The natural gas producer said in a press release issued on Monday that it had completed a $900 million private placement of convertible preferred shares. The financing was a follow-on transaction to a private placement conducted in May, according to Jeffrey L. Mobley, senior vice president of investor relations and research.

In addition to the capital raise, Chesapeake said it would redeem all of its outstanding 6 3/8% notes due 2015. The company will pay $1,031.88 for each $1,000.00 of notes tendered.

The redemption price includes accrued interest incurred through the redemption date of July 22.

Also going on in the energy arena, Energy Future Holdings Corp. - more commonly referred to by its former moniker, TXU - saw its bonds trading up, according to a trader.

The trader saw the 10¼% notes due 2015 trading up 1 point to 721/4, while the 7.9% notes due 2038 were "up 1 point-ish" at 121 3/8.

Realogy still strong

Realogy debt remained firm in Monday trading, but there was "not as much volume" in the credit as last week, a trader said.

The trader called the 10½% notes due 2014 "up a solid ½ point" around 90, while the 12 3/8% notes due 2015 inched up slightly to around 811/4.

Another trader also placed the 10½% notes around the 90 mark, calling that up a ½ point to ¾ point.

There has not been additional news from the Parsippany, N.J.-based real estate services company.

El Paso Pipeline add-on

Also on Monday, El Paso Pipeline Operating Partners LLC priced a $110 million add-on to its existing 6½% senior notes due April 1, 2020 (Ba1/BB) at 99.987 to yield 6½%.

RBS Securities ran the books for the issue, which was upsized from $100 million.

The quick-to-market transaction was executed on the investment-grade bond desk, according to a market source.

Proceeds will be used to partially finance the pending acquisition of an additional 16% general partner interest in Southern Natural Gas Co. from El Paso Corp.

Case New Holland $1 billion for Tuesday

Meanwhile, Case New Holland, Inc. plans to price a $1 billion offering of 7.5-year senior notes on Tuesday.

Credit Suisse, UBS Investment Bank and Goldman Sachs & Co. are joint bookrunners.

Proceeds will be used to finance the call of the company's 7 1/8% senior notes due 2014 at 103.563 and to repay certain Fiat intercompany debt.

Michael Foods price talk

Michael Foods Group, Inc. talked its $430 million offering of eight-year senior unsecured notes with a 9¾% to 10% yield.

Pricing is set for Tuesday morning.

Goldman Sachs & Co. is the left lead bookrunner. Bank of America Merrill Lynch and Barclays Capital Inc. are the joint bookrunners.

Proceeds will be used to help finance the leveraged buyout of the company by GS Capital Partners from Thomas H. Lee Partners LP.

DynCorp starts roadshow

DynCorp International Inc. began a roadshow on Monday for its $455 million offering of seven-year senior unsecured notes.

An investor call is set for noon ET on Tuesday.

The roadshow wraps up on June 28.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Barclays Capital and Deutsche Bank Securities are joint bookrunners.

Proceeds will be used to help fund the buyout of the company by Cerberus Capital Management LP, and to repay debt.

First Data makes a comeback

First Data bonds were "a big trader," a market source said, though there wasn't any news out on the Atlanta, Ga.-based electronic payment processor.

The source said about "$50-odd million" of the 10.55% notes due 2015 turned over, gaining "3 [points] and change" to finish around 81. He noted that the gains were in addition to the roughly 2 points gained Friday and another 2 on Thursday.

"They have come a long way back" from the recent smackdown caused by a management shakeup, he said.

The source also saw about $40 million to $50 million of the 9 7/8% notes due 2015 trading at 851/4.

At another desk, a trader said the 10.55% notes improved 2 to 3 points, closing at 81 bid, 82 offered.

Bankrate via Jefferies, RBC

Meanwhile, Bankrate, Inc. began a roadshow on Monday for its $280 million offering of five-year senior secured notes (expected ratings B2/B).

The roadshow wraps up on June 30.

Jefferies & Co. and RBC Capital Markets are the joint bookrunners.

Proceeds will be used to partially finance the acquisition of NetQuote Inc. and the acquisition of CreditCards.com, Inc.

Hertz roadshow

Elsewhere, Hertz Holdings Netherlands BV will start a roadshow on Tuesday in Europe for its €275 million offering of five-year senior unsecured notes (B1/B).

The roadshow wraps up on Friday.

Barclays Capital and JP Morgan are the physical bookrunners. BNP Paribas, Credit Agricole CIB and Natixis Bleichroeder are joint bookrunners.

Proceeds will be used to refinance international fleet debt facilities and the Belgian fleet financing facility as well as for general corporate purposes.

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