Parker Drilling prices add-on, Landry's readies deal; recent issues up as market strengthens

By Paul Deckelman and Paul A. Harris

New York, April 11-The high-yield market seemed to recover on Wednesday from its Tuesday retreat, although overall volume was light and activity in the primary market dwindled markedly from the nearly $4 billion new-issue session seen on Tuesday.

Just one small deal priced - a quickly shopped $125 million add-on to oilfield services operator Parker Drilling Co.'s existing 2018 notes. That paper was quoted higher in the aftermarket.

The primary sphere was otherwise quiet, except for high-yield market sources hearing that restaurant and gaming company Landry's Inc. would be bringing about $400 million of eight-year notes to market next week, planning to use the proceeds from that transaction and from $1.2 billion in bank debt it is lining up to repay various pieces of outstanding debt.

Investors meantime awaited the lone deal seen on tap for pricing Thursday, from firearms manufacturer Freedom Group, Inc., which is marketing a $250 million offering of senior secured notes.

Traders in the secondary market saw a stronger tone, in contrast to the weakness seen on Tuesday.

They noted strong gains in some of the credits which had priced on Tuesday, notably Constellation Brands, Inc., whose upsized $600 million offering of 10-year notes continued to build on the already solid gains it had racked up when it was freed for trading immediately after pricing.

Other gainers among the Tuesday transactions included the big new two-part deal from EP Energy Corp., as well as the add-on from Solera Holdings, Inc.

Away from the new-issue sphere, traders saw a generally firm market, with upsiders including Caesars Entertainment Corp., and Levi Strauss & Co., the latter helped by favorable numbers.

But one name whose boat failed to float along with the rising tide was Chesapeake Energy Corp.; its bonds lost ground as natural gas prices remained near their recent lows.

Junk market statistical performance indicators were mixed.

Parker Drilling taps 9 1/8s

A quiet primary market saw a single add-on issue price during the Wednesday session.

Parker Drilling priced a $125 million add-on to its 9 1/8% senior notes due April 1, 2018 (B1/B+) at 104.

The reoffer price, which came on top of price talk, resulted in a 7.919% yield to worst.

Barclays was the lead left bookrunner for the quick-to-market add-on. RBS, Wells Fargo and Bank of America Merrill Lynch were the joint bookrunners.

The Houston-based drilling services company plans to use the proceeds to fund a tender offer for its 2 1/8% convertible notes due July 2012.

The original $300 million issue of 9 1/8% senior notes priced at par in March 2010.

Upon registration the new notes will be fungible with the original outstanding notes.

The deal, from a name that is ultra-familiar to the high-yield investment community, was several times oversubscribed, according to an informed source who added that the order book contained some "blue chip accounts."

The Wednesday add-on was at least partially driven by reverse inquiry, the source added.

Better secondary tone seen

In the secondary market, both new issues and established bonds were generally seen higher, as Junkbondland seemed to rebound from the retreat it had experienced on Tuesday.

"Everything kind of ratcheted up by about ½ to 1 point this morning," a trader said.

"You had a little bit of selling pressure [Tuesday]; it seems like it may not have been so strong today, and some names were popping back up."

Another trader estimated the market was up about ¼ point, but he said that "it was pretty inactive all day long today. It was a lot slower than [Tuesday] - they seemed like two polar opposites."

While Tuesday had been considerably more active than Wednesday, both in new issues and in dealings in existing bonds, Wednesday had the better tone, he said.

However, "it wasn't name-specific," but rather generic.

Yet another trader opined that "it seemed like it gyrated a little during the course of the day - it started out better, then it got weak, and then it finished up a little better as well.

Parker pops a little

Among specific names among new or recently priced deals, a trader quoted Parker Drilling's bonds on the break at 104¼ bid, looking for offers.

Another, later on in the session, saw the contract energy driller's paper having gotten as good as 105 3/8 bid, 105 7/8 offered, well up from the 104 level at which the $125 million add-on priced on Wednesday.

Constellation climb continues

Among the bonds which priced on Tuesday, the new 10-year notes from Constellation Brands remained the standout issue.

Constellation "shot to the stars," a trader said, quoting the Victor, N.Y.-based wine and spirits maker's upsized $600 million of 6% notes due 2022 at 103 bid, 103¼ offered.

Several traders pegged the bonds at 102¾ bid, 103¼ offered, while yet another had them at 102 7/8 bid, 102 3/8 offered.

That quick-to-market issue - increased in size from the originally shopped $400 million - priced at par on Tuesday and then was seen as high as 101½ bid, 102½ offered, before going home at 101 3/8 bid, 101 7/8 offered.

EP shows improvement

Traders said the big new two-part deal from EP Energy was considerably improved on Wednesday from the levels both tranches held in their immediate aftermarket dealings after Tuesday's pricing off the forward calendar.

One quoted the Houston-based energy exploration and production operator's 6 7/8% senior secured notes due 2019 at 101 bid, 101¾ offered; that $750 million issue, upsized from $500 million originally, had priced at par and then had traded around 100 5/8 bid, 100 7/8 offered in the aftermarket.

A second trader saw them get as good as 101¾ bid, 102¼ offered in Wednesday's session, while yet another trader had them exiting at 102 bid, 102½ offered.

The same pattern was seen in the $2 billion tranche of 9 3/8% unsecured senior notes due 2020, which had priced at par on Tuesday after having been downsized from an original $2.5 billion, and then traded up to 100½ bid, 100¾ offered in the immediate aftermarket.

On Wednesday, a trader said, those bonds had improved to 101 1/8 bid, 101 and 3/8 offered, while a second saw them, at 101 bid, 101¼ offered.

Solera strengthens

A trader saw Solera's $400 million add-on to its existing 6¾% notes due 2018 at 103¼ bid, looking for offers, which he said was about a half-point better on the day.

A second said that they had gotten up to 103½ bid, 104 offered.

The Dallas-based provider of software to the automotive claims industry priced its quickly shopped offering, upsized from an originally announced $300 million, via its Audatex North America Inc. unit on Tuesday at 102.72 for a yield to worst of 6%.

The deal came too late in the session on Tuesday for any kind of aftermarket.

Tuesday's other deal - a quick-to-market $200 million offering of 11% senior secured notes due 2017 from Nashville-based business services provider Sitel Worldwide Corp. - was not seen in trading Wednesday, just as it had not been seen in any dealings on Tuesday after pricing at 96 yield 12.058%. Traders cited the deal's small size and the fact that it was largely done on a reverse-inquiry basis, "so that deal was probably all put away," one said.

Merrill index down again

The widely followed Merrill Lynch High Yield Master II Index suffered its fifth consecutive loss on Wednesday, easing 0.065%, on top of the 0.171% loss on Tuesday and Monday's 0.203% retreat. The year-to-date return fell to 4.665%.

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