No dollar deals price, though Inergy, Clean Harbors, Era Group slate; ArcelorMittal busy

By Paul Deckelman and Paul A. Harris

New York, Nov. 26 - The high-yield market got back to work on Monday after the four-day Thanksgiving holiday break and several days of relative inactivity before that, but there was no surge of pent-up pricings seen - at least not in dollar-denominated junk-rated issues.

While no such deals actually priced on Monday, several junk deals came onto the forward calendar.

High-yield syndicate sources said that Inergy Midstream, LP, a natural gas and gas liquids transportation and storage concern, and its Inergy Midstream Finance Corp. unit began a roadshow for a $400 million eight-year notes offering expected to price later in the week to help fund an upcoming acquisition.

Environmental services provider Clean Harbors, Inc. announced plans for a $500 million notes deal, after it does a companion stock offering, also to fund an acquisition by the company.

And Era Group Inc., a provider of helicopter transportation to offshore energy drillers, said it would sell $200 million of 10-year notes in order to repay debt.

While no dollar-denominated deals priced, primaryside players did see a sterling-denominated deal from British real estate and building firm Annington Finance No. 5 plc come to market, as well as an offering of euro-denominated notes from Italian carmaker Fiat.

Secondary traders reported little or nothing going on in such recently priced high-yield deals as AK Steel Corp. and Sealed Air Corp. Instead, they said some accounts were actually inquiring about new high-grade deals, such as those from Amazon.com Inc. and CVS Caremark Corp.

Away from the new deals, secondary trading in established bonds also saw interest in higher-rated names like ArcelorMittal SA.

Secondary market performance indicators tuned mixed after having been universally higher over the previous few days.

Fiat taps 7¾% notes

The post-Thanksgiving week got off to a relatively quiet start in the United States, with no dollar-denominated issues pricing. However, Europe was a different story.

In drive-by action, Fiat Finance & Trade Ltd. SA priced a €400 million add-on to its 7¾% global medium term notes due Oct. 17, 2016 (existing ratings B1/BB-) at 101.116 to yield 7.4%.

The deal, via Merrill Lynch, BNP, Citigroup, JP Morgan, Morgan Stanley and SG, played to a book containing €1.1 billion of orders, according to an investor.

TMF brings deal

Aside from the Fiat news, the European primary market began the final week of November purposefully.

Netherlands-based TMF Group Holding BV is conducting an investor roadshow for its €580 million two-part offering of high yield notes.

The deal includes a €380 million tranche of senior secured floating-rate notes due 2018 (B1//) and a €200 million tranche of senior fixed-rate notes due 2019 (Caa1//).

Global coordinator Goldman Sachs will bill and deliver for the debt refinancing deal. HSBC, ING and UniCredit are the joint bookrunners.

In addition to TMF, Italy's Cerved Group is running a non-deal roadshow, market sources say.

And Stockholm-based building supplies company Ahlsell is expected to bring an offering of notes in the near term.

Should an Ahlsell deal materialize before the end of the week, it will have been a relatively busy month for Swedish high-yield issuers.

On Nov. 9, Perstorp Holding AB completed a $1.09 billion equivalent multi-currency notes transaction which included a $720 million-equivalent amount of senior secured first-lien notes in two tranches and a $370 million tranche of second-lien notes. Then on Nov. 15, Com Hem Group priced a €250 million issue of PIK notes.

Inergy starts roadshow

Turning to the U.S. primary market, Inergy Midstream LP and Inergy Midstream Finance Corp. started a roadshow on Monday for a $400 million offering of eight-year senior notes (B1/BB).

The deal is set to price on Friday.

Citigroup is the left bookrunner. J.P. Morgan, Merrill Lynch, Credit Suisse, SunTrust and Wells Fargo are the joint bookrunners.

Proceeds will be used to partially fund the acquisition of COLT Hub and to repay borrowings under the company's senior credit facility.

ERA Group debut

Era Group plans to make its debut in the high-yield bond market with a $200 million offering of 10-year senior notes (B2//).

The company will run a roadshow during the present week and expects to price the deal during the week ahead.

Joint bookrunners Deutsche Bank and Wells Fargo will bill and deliver for the debt refinancing deal. J.P. Morgan and Goldman Sachs are also joint bookrunners.

Also, Clean Harbors announced that it plans to place $550 million of senior notes due 2021 and to offer six million shares of common stock.

Proceeds from both the bonds and the stock will be used to finance a portion of the purchase price for its previously announced proposed acquisition of Safety-Kleen, Inc. and its subsidiaries.

Paramount starts roadshow

In the Canadian dollar-denominated high-yield market, Paramount Resources Ltd. started a three-day Canadian and U.S. roadshow in Toronto on Monday for an offering of C$250 million of seven-year senior notes (Caa1/B/).

RBC, Scotia and BMO are the bookrunner for the Calgary, Alta.-based oil and natural gas developer's debt refinancing, capital expenditures and for general corporate purposes deal.

A lack of activity

In the secondary market, traders suggested that participants appeared to still be suffering from a Thanksgiving-induced tryptophan "hangover," with not much real activity seen in the back-to-work session.

They noted the lack of any pricing in dollar-denominated junk issues and the relative lack of any standout names among the established issues.

One characterized Monday as "a boring day," while another agreed that things were "pretty quiet. There's nothing too exciting to report on.'

Junk guys eye IG names

One of the traders said that junk participants he knew "were sending me levels on the new CVS deal, or the new Amazon deal, I guess for lack of stuff to work on in the junk space. When you see these +114 [bps] bids coming across from guys who don't normally touch that stuff, it gets you wondering."

He suggested that "some accounts and some dealers, or competition out there" might be reasoning, "If you've got cash, you need to put it to work, maybe you stick it there in some two- or three-year paper."

Amazon.com, the Seattle-based on-line retailer, did do a $750 million tranche of three-year notes as part of a $3 billion three-part offering.

"Even though it's not yielding great," he allowed, "it's better than zero."

A second trader said that using such deals "to park their cash" for the moment "and then using [their positions] as a source of cash when the junk calendar comes, that makes sense."

However, he did say that from a standard junk market perspective, Amazon is "insane" as an investment, with all three tranches of its new deal trading inside of 100 basis points over comparable Treasuries.

The 0.65% three-year notes priced just 38 bps over comparable Treasuries, a "crazy" level for any junk investor, the second trader said, while its $1 billion of 1.2% five-year notes came to market at 63 bps over and its $1.25 billion of 2½% 10-year paper appeared at 93 bps behind Treasuries.

Scarsdale, N.Y.-based pharmacy giant CVS' $1.25 billion of 2¾% 10-year notes priced at Treasuries plus 110 bps.

A lessening of urgency

"We seemed to hit a lull in the action," one of the traders said.

"The [junk] calendar doesn't seem to be particularly big. Before Thanksgiving, accounts were kind of sneering at the smaller deals, saying, 'I don't have to buy these smaller deals.' "

He continued: "To my mind, that meant that they weren't so flush with cash that they were willing to look at just anything in the credit spectrum and buy it. Now, they'd rather buy a larger issue of a better-rated company, which means that they don't seem to have as much cash as they did before - at least, the urgency to put it to work isn't there, yet."

Recent junk names unseen

Back among the purely junk-rated issues, traders saw no activity Monday in recently priced offerings, even from familiar high-yield names such as AK Steel and Sealed Air Corp.

One trader said that he saw nothing going on today in West Chester, Ohio-based specialty steel alloys maker AK Steel's $350 million issue of 8¾% senior secured notes due 2018, which had priced on Nov. 14 at par languished around its issue price for a few days. It did get lifted to the 103 bid area when the whole junk market moved up last week.

He likewise said that "nothing was doing" in Sealed Air's 6½% notes due 2020, with the last real trades in that paper seen "early last week."

The Elmwood Park, N.J.-based provider of food safety and security, facility hygiene and product protection services had priced its $425 million deal at par on Nov. 15, after having chopped its originally announced $850 million size in half to $425 million.

The company dropped a planned 10-year notes tranche and just went with the eight-year bonds. The bonds initially traded in a 1011/2-to-102 context, moving up to above 103 bid last week and then staying there.

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