Anglo American revives $1 billion two-parter, Ultra Petroleum, other deals hit road; new Aston Martin climbs

By Paul Deckelman and Paul A. Harris

New York, April 3 – The new month of April and the calendar second quarter kicked off on Monday in Junkbondland with a big deal, as mining concern Anglo American plc priced a $1 billion two-part offering consisting of five- and 10-year notes. The company had shopped a prospective dual-currency deal around to potential investors last month, but then shelved the transaction to await more favorable interest rates.

Syndicate sources meantime heard a quartet of new offerings making the rounds on roadshows – energy operators Alliance Resource Partners, LP and Ultra Petroleum Corp. – the latter a $1.2 billion two-part transaction – as well as USI Insurance Services and Petra Diamonds Ltd.

Secondary market traders saw continued brisk upside activity in British luxury auto maker Aston Martin Lagonda Ltd.’s five-year secured notes, which priced on Friday.

Another Friday deal, from Canada’s Videotron Ltd., was also active.

Statistical market performance measures improved across the board on Monday, after having been seen mixed on Friday following three more consecutive sessions on the upside.

Anglo American returns

In the Monday primary market Anglo American Capital plc priced $1 billion of senior notes (Ba1/BB+) in two tranches.

The debt refinancing deal included $300 million of five-year notes which priced at par to yield 3¾%. The yield printed on top of final yield talk, and inside of the 4¼% to 4 3/8% initial guidance.

In addition the London-based mining company priced $700 million of 10-year notes at par to yield 4¾%. The yield on the 10-year paper also came on top of final talk and inside of the 5 1/8% to 5 ¼% initial guidance.

Joint global coordinator Citigroup will bill and deliver for the deal which was given a high grade execution. Morgan Stanley was also a joint global coordinator.

Anglo American kicked of a benchmark dual currency offering – dollars and euros – in the middle of March with investor meetings, then shelved the offer after finding rates insufficiently attractive, before ultimately returning with dollar bonds, only, on Monday, sources said.

The London-based mining company, a subsidiary of Anglo American plc, plans to use the proceeds to fund tender offers for outstanding notes with maturities ranging from 2018 to 2020.

Ultra Petroleum starts Tuesday

Ultra Petroleum Corp. plans to start a roadshow on Tuesday for a $1.2 billion two-part offering of senior notes.

The offer includes $700 million of five-year notes and $500 million of eight-year notes.

Joint bookrunner Barclays will bill and deliver. Goldman Sachs and BMO are also joint bookrunners.

Proceeds will be used to fund the Houston-based company's obligations under its plan of reorganization.

The bond portion of the financing was downsized by $200 million, with that amount shifted to the concurrent term loan, increasing the loan size to $800 million from $600 million.

USI roadshowing eight-year deal

USI Insurance Services is on the road with a $705 million offering of eight-year senior notes (Caa2/CCC+).

The LBO deal is expected to price later this week.

BofA Merrill Lynch is the left bookrunner.

Alliance Resource starts Tuesday

Alliance Resource Partners plans to start a roadshow on Tuesday for a $500 million offering of eight-year senior notes, a debt refinancing deal set to price later this week.

JP Morgan is leading.

Elsewhere Petra Diamonds Ltd. is on the road with $600 million of five-year second-lien secured notes due 2022 (B2), a deal that is playing to both high-yield and emerging markets accounts.

The offering has been running an emerging markets-style non-deal roadshow among fixed income investors, according to an informed source.

The two-team roadshow has been underway since late last week.

It was in New York today, and will be in Boston, the West Coast of the United States and Canada on Tuesday.

There's no whisper yet, the source said.

Barclays, RBC and BMO are joint bookrunners.

Scholz + Bickenbach €200 million

In the European primary market Switzerland's Schmolz + Bickenbach AG announced in a Monday press release that it plans to offer €200 million of senior secured notes due 2022.

The Lucerne-based steel producer plans to use the proceeds to refinance debt.

Friday inflows

The dedicated high-yield bond funds saw strong daily inflows on Friday, the most recent session for which data was available at press time, according to a trader.

High yield ETFs saw $409 million of inflows on the day.

Actively managed funds saw $250 million of inflows on Friday.

Dedicated bank loan funds also saw cash inflows on Friday, albeit more modest ones, the trader said.

The loan funds saw $70 million of inflows on the day.

Wide levels for Anglo American

When the new Anglo American bonds, brought by the company’s finance unit, hit the aftermarket after pricing, a trader saw the 10-year piece trading as “a kind of wide” level of 99½ bid, 100¾ offered level.

He did not report any immediate initial trading in the megadeal’s five-year component.

Aston Martin motors higher

Traders saw continued strong trading in the new Aston Martin bonds which priced during Friday’s session.

Those 6½% senior secured notes due 2022, brought to market via the Gaydon, England-based luxury automaker’s Aston Martin Capital Holdings ltd. subsidiary, were seen by one trader to have pushed as high as 101½ bid, which he called a gain of 1¼ points, with more than $28 million having changed hands.

Another trader pegged the notes in a 101-to-101½ bid context.

And a third saw a 1-point gain on the day, to 101¼ bid, 101¾ offered.

That jump came on top of the modest gains of around ¼ point, seen on Friday, on volume of over $50 million.

The company had priced $400 million of the notes, along with £230 million of 5¾% senior secured 2022 notes, both at par on Friday, after the regularly scheduled dual-currency forward calendar offering was upsized to £550 million equivalent from an originally shopped £530 million equivalent.

Videotron active, though easier

A market source said that the new Videotron. 5 1/8% notes due 2027 were trading around 100 7/8 bid on Monday.

At another desk, a trader also saw the notes at 100 7/8 bid, calling them down 1/8 point on the day on around $16 million of volume.

Videotron, a Montreal-based telecommunications company, had priced $600 million of the notes at par on Friday in a quick-to-market transaction.

They had initially traded in a 100¼-to-101 1/ bid context, before finishing at the higher end of that range

Little action in SLM

A trader saw the new SLM Corp. 5 1/8% notes due 2022 around 101¼ bid, but said “they really haven’t traded at all.”

The Newark, Del.-based financial services concern priced a quickly shopped $200 million of the notes at par on Friday.

Indicators show improvement

Statistical market performance measures improved across the board on Monday, after having been seen mixed on Friday following three more consecutive sessions on the upside.

The KDP High Yield Daily index edged up by 1 basis point on Monday to close at 71.83, its fifth straight gain after one loss. On Friday, it had risen 4 bps.

Its yield was unchanged at 5.28%, after six consecutive tightenings, including Friday, when it had come in by 1 bp.

The Merrill Lynch North American High Yield index meantime notched its fifth consecutive advance, moving up by 0.027%, on top of Friday’s 0.09% gain.

Monday’s improvement raised its year-to-date return to 2.736% from 2.708% on Friday, though those levels remain below the 2017 peak level of 3.19%, set on March 1.

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