Upsized Parsley, Matador and Rowan issues price, Chesapeake shopping deal; new Cheniere tops actives

By Paul Deckelman and Paul A. Harris

New York, Dec.6 – Activity continued in the high yield primary market on Tuesday, with most of it seen in energy or energy-related names.

A total of $1.325 billion of new U.S. dollar-denominated and fully junk-rated paper came to market in three single-tranche deals, although that was off from the $2.2 billion which got done in two tranches on Monday, according to data compiled by Prospect News.

There were two deals from oil and natural gas exploration and production companies.

Parsley Energy, LLC priced a $650 million issue of eight-year notes, while Matador Resources Co. did a $175 million add-on to its existing notes due in April 2023. Traders saw modest gains in both issues when they hit the aftermarket, with Parsley’s new deal actively traded. The company’s existing 7½% bonds, which are being tendered for using proceeds of the new deal, were also busy, and better.

The day’s third pricing came from Rowan Cos., Inc., which provides contract offshore drilling services to the petroleum industry. It priced $500 million of 8.5-year notes.

Syndicate sources said that all three of the day’s deals were upsized.

Besides the deals heard to have priced, the sources said that another sector name –Chesapeake Energy Corp. – was shopping $750 million of eight-year notes around to potential investors.

A lone non-energy deal surfaced in the dollar-denominated market Tuesday, as Canadian builder Mattamy Homes began a roadshow for its $300 million of seven-year notes.

Among recently priced issues, liquefied natural gas company Cheniere Corpus Christi Holdings, LLC’s upsized $1.5 billion of secured notes was by far the busiest issue of the day in Junkbondland, though it was about unchanged from where it had traded in initial aftermarket dealings after pricing on Monday.

Statistical market performance measures remained higher across the board on Tuesday for a third consecutive session and for a fourth session in the last five trading days; they had strengthened on Friday, after having been mixed on Thursday, and stayed stronger on Monday and again on Tuesday.

Parsley upsized and tight

Activity was robust and the news volume remained high during Tuesday's session in the high yield primary market, as the countdown to year-end is underway, sources say.

Three issuers completed single-tranche deals on Tuesday.

All three were upsized, but only one came as an a.m.-to-p.m. drive-by.

Executions were conspicuously tight, with two of the three deals coming at the rich or tight ends of talk, while the third priced inside of talk.

Parsley Energy, LLC priced an upsized $650 million issue of eight-year senior notes (B3/B+) at par to yield 5 3/8%.

The issue size was increased from $600 million.

The yield printed at the tight end of yield talk in the 5½% area. Initial guidance was also 5½%.

Credit Suisse and RBC were the joint bookrunners for the debt refinancing deal.

Rowan Cos. oversubscribed

Rowan Cos. priced an upsized $500 million issue of non-callable 8.5-year senior notes (B1/B+) at par to yield 7 3/8%.

The issue size was increased from $400 million.

The yield printed 12.5 basis points beneath the tight end of the 7½% to 7¾% yield talk. Initial guidance was in the 8% area.

The debt refinancing deal went very well and played to an order book that was five-times oversubscribed, a trader said.

BofA Merrill Lynch, Barclays, DNB, Wells Fargo, Citigroup, Deutsche Bank, Goldman Sachs, MUFG, HSBC and Morgan Stanley were the joint bookrunners.

Upsized Matador prices rich

Matador Resources Co. priced an upsized $150 million add-on to its 6 7/8% senior notes due April 15, 2023 at 105.5 to yield 5.436%.

The issue size was increased from $150 million.

The reoffer price came at the rich end of the 105 to 105.5 price talk.

Much of the capex and debt refinancing deal was take down by existing holders, a trader said.

BofA Merrill Lynch was the left bookrunner. Scotia, SunTrust, RBC, BMO and Wells Fargo were joint bookrunners.

Chesapeake talk includes discount

Chesapeake Energy Corp. talked its $750 million offering of eight-year senior notes to yield in the 8¼% area including 1.5 points of original issue discount.

Initial guidance had the deal pricing with a yield in the mid-8% context.

The deal was scheduled to be shopped on a Tuesday morning conference call with investors and was expected to price later on Tuesday.

However no terms were available at press time, according to market sources.

Deutsche Bank is leading.

Tervita expected Wednesday

Tervita Corp. is expected to accelerate timing on its C$475 million equivalent offering of dollar-denominated senior secured notes, a trader said.

The deal, which is in the market with early guidance in the 7% area (versus early guidance in the 8% area), and is going very well, is now expected to price on Wednesday, the trader said, adding that the offer had previously been expected to remain in the market late into the present week.

The company seeks to raise about $350 million, a source said.

Mattamy Homes roadshow

Mattamy Homes started a roadshow on Tuesday for a $300 million offering of seven-year senior notes.

The offer is set to price later in the present week.

Credit Suisse, RBC and Wells Fargo are the joint bookrunners for the debt refinancing deal.

Big Monday inflows

The daily cash flows of the dedicated high yield bond funds were strongly positive on Monday, the most recent session for which data was available at press time, a portfolio manager said.

High yield ETFs saw $163 million of inflows on Monday (the ETFs were active buyers on Tuesday, a trader said).

Actively managed high yield funds saw a solid-or-better $310 million of inflows on Monday.

Meanwhile the cash flows of the dedicated bank loan funds continue to be phenomenal: the loan funds saw $605 million of inflows on Monday, according to the portfolio manager.

Parsley pops up

In the secondary market, a trader saw Parsley Energy’s new 5 3/8% notes due in January of 2025 initially trading in a 100¼ to 101¼ bid context.

He later saw those levels tighten to a range of par to 100½ bid.

At another desk, a market source saw the bonds firm by around 1/8 point by the end of the day from their par issue price.

Over $49 million of the new notes traded.

A trader meantime noted that the Austin, Texas-based oil and natural gas company would be using the proceeds from its offering to fund a tender for its existing 7½% notes due 2022.

He said that the latter bonds “were trading actively around their tender price” of 106.672.

Another trader also saw them at that level, which he called a gain of more than 11/16 point on the day, on volume of over $16 million.

Matador moves up

Traders meantime saw a little upside movement in Matador Resources’ 6 7/8% notes due April 15, 2023, an upsized $175 million of which priced as an add-on to the original deal.

One trader said the Dallas-based energy operator’s bonds traded between 105½ and 106 bid after pricing at 105.5.

A second saw the notes between 105¾ and 106¼ bid.

Cheniere leads Most Actives list

Among the recently priced issues, Cheniere Corpus Christi Holdings’ 5 7/8% senior secured notes due in March of 2025 were far and away the busiest issue in the junk world, with over $180 million heard to have traded.

A trader saw the bonds going home at 100 ½ bid, and called that about unchanged on the day.

Another trader said the notes had edged up about ¼ point.

Cheniere, a Houston-based liquefied natural gas company, priced $1.5 billion of the notes at par on Monday, after that quickly shopped offering was upsized from an originally announced $1 billion.

More than $28 million traded on Monday right after pricing, finishing at 100½ bid.

NCL cruises higher

Monday’s other new deal – from Miami-based cruise ship operator NCL Corp. – was trading around on Tuesday, though on nowhere near the volume of the Cheniere deal.

About $28 million of that paper traded, gaining about ¼ point to end at 100¼ bid.

The company had priced $700 million of the notes at par in an unscheduled offering on Monday.

They were unchanged in initial aftermarket dealings on volume of more than $35 million.

Indicators extend gains

Statistical market performance measures remained higher across the board on Tuesday for a third consecutive session and for a fourth session in the last five trading days; they had strengthened on Friday, after having been mixed on Thursday, and stayed stronger on Monday and again on Tuesday.

For a second consecutive session, the KDP High Yield index climbed by 16 basis points on Tuesday, replicating Monday’s gain, as it closed at 70.92, its fifth straight gain and its 10th such advance in the last 11 sessions, including a recent streak of five consecutive gains.

Its yield came in by 5 bps to close at 5.64%, following three straight sessions during which it had tightened by 3 bps each of those days. It was the yield’s eight straight narrowing and ninth decline in the last 10 sessions.

The Markit Series 27 CDX index firmed by 3/8 point on Tuesday ending at 105 13/32 bid, 105 7/16 offered, its third straight rise and fourth improvement in the last five sessions. On Monday, it had gained 9/32 point.

The Merrill Lynch High Yield index rose for a fifth straight day, advancing by 0.312%, on top of Monday’s 0.234% upturn.

That lifted its year-to-date return to 15.94% from 15.58% on Monday, although those levels are still below the index’s peak level for this year of 16.768%, established on Oct. 25.

© 2015 Prospect News.
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