Trinseo mega deal, Coeur d'Alene price, move up; new Jaguar jumps; funds gain $512 million

By Paul Deckelman and Paul A. Harris

New York, Jan. 24 - Trinseo Materials Operating SCA was heard by high-yield syndicate sources to have priced a $1,325,000,000 issue of six-year secured notes on Thursday. The materials company's new bonds were seen up by 2 points when they began trading around.

The day's other dollar-denominated, junk-rated pricing came from precious metals miner Coeur d'Alene Mines Corp., which did an upsized $300 million of eight-year notes, which also rose about 2 points in the aftermarket.

Demonstrating the new-issue market's overall firm tone, traders also saw strong upside in the new deal from Jaguar Land Rover Automotive plc, the British luxury carmaker that priced an upsized $500 million of 10-year notes late in Wednesday's session.

Another European issuer coming to market with a new deal was Italy's Zobele Holding SpA, which priced a €180 million issue of five-year secured notes.

Away from the transactions that have actually priced, Spain's Abengoa Finance SAU and Germany's Orion Engineered Carbons Finance were shopping offerings around to prospective investors. Abengoa is expected to price on Friday along with a deal from fellow Spanish issuer ENCE Energia y Celulosa SA.

Back among the domestic borrowers, the syndicate sources heard price talk on deals from WEX Inc., DigitalGlobe, Inc. and Apex Tool Group, LLC, all of which are expected to price Friday.

In the secondary arena away from the new deals, Nokia Corp.'s bonds were better after the Finnish cellphone manufacturer reported a quarterly profit versus a year-ago loss and said it would conserve cash by suspending its equity dividend.

Statistical indicators of market performance were mixed, though with an upside bias.

And flows of fresh cash into and out of high-yield mutual funds and exchange-traded funds - seen as a reliable barometer for overall Junkbondland liquidity trends - notched their third consecutive weekly gain, according to one of the major agencies that track such fund flows.

AMG sees $512 million inflow

As Thursday's session was winding down, junk market participants familiar with the fund-flow statistics generated by AMG Data Services, Inc. reported that in the week ended Wednesday, $512 million more came into those funds than left them.

It was the third consecutive inflow seen by Arcata, Calif.-based AMG, a unit of the Lipper analytics division of Thomson Reuters Corp., including the $571 million cash addition recorded last week, ended Jan. 16. During that three-week stretch, inflows have totaled nearly $2.2 billion, according to a Prospect News analysis of the figures, about half of it attributable to the giant-sized $1.12 billion cash injection recorded in the week ended Jan. 9, the first inflow seen in the new year.

Those inflows, in turn, have followed three consecutive weeks of outflows dating back to mid-December that totaled about $1.17 billion, according to the analysis, and including the $473 million cash loss recorded for the first reporting week of the year, ended Jan.2

Four weeks into the new year, net inflows so far have amounted to about $1.7 billion, according to the analysis.

The return to positive funds-flow figures is in line with the pattern of strength seen over most of last year, when cumulative net inflows for the year totaled an estimated $28 billion, according to the analysis, with inflows to the funds recorded in 39 weeks of the year and outflows in the remaining 13 weeks.

EPFR marks $615 million inflow

Those Lipper inflows are also in line with similar cash injections recorded by the other major fund-tracking service, Cambridge, Mass.-based EPFR Global. That agency said that in the latest reporting week, also ended Wednesday, $615 million more came into the funds that it tracks than left them.

It was the fifth consecutive inflow seen by the service, including the $1.12 billion that came into the funds last week. Inflows during that time, which also includes the final reporting week of 2012, have totaled some $3.8 billion, according to a Prospect News analysis of the figures.

It was also the fourth consecutive inflow seen so far in the new year, against no outflows; that net inflow total was about $3.66 billion, according to the analysis.

EPFR and Lipper calculate their respective fund-flow statistics using different methodologies; EPFR includes some non-U.S. domiciled mutual funds and ETFs in its tabulations, while the Lipper number is purely domestic funds. Despite the differences in the actual numbers, the two services' weekly results usually point in the same direction, although that was not the case as 2012 ended and 2013 opened, when EPFR was seeing net inflows and Lipper was recording net outflows.

Reporting only U.S. funds that it tracks - a category usually more closely aligned with the Lipper totals - EPFR saw a $442 million outflow in the latest week, which had followed a $246 million inflow the week before.

In 2012, EPFR's overall figure showed a cumulative net inflow of some $72.3 billion. According to the Prospect News analysis of the data, EPFR recorded 42 weeks of inflows last year, against just 10 weeks over outflows.

Cumulative fund-flow estimates, whether from EPFR or from AMG/Lipper, may be revised upward or downward or be rounded off and could include unannounced revisions and adjustments to figures from prior weeks.

The continued flow of fresh cash into junk - and the mutual funds and ETFs represent but a small, though very observable and quantifiable percentage of the total amount of investor money coming into the junk market - has been seen by analysts as a key element behind the high-yield secondary market's strong performance last year versus other fixed-income asset classes and its record active new-deal pace, which easily topped the $300 billion mark - patterns of primary activity and secondary strength that have continued into the new year so far.

Trinseo, at the tight end

Two issuers completed single-tranche dollar-denominated deals, raising a combined total of $1.63 billion, during the Thursday primary market session.

The lion's share of that amount came in the form of a megadeal from Trinseo Materials Operating and Trinseo Materials Finance, Inc.

Trinseo priced a $1,325,000,000 issue of six-year senior secured notes (B1/B+) at par to yield 8¾%, at the tight end of the 8¾% to 9% yield talk.

Deutsche Bank Securities Inc. was the left bookrunner for the debt refinancing.

Barclays, HSBC Securities (USA) LLC, Goldman Sachs & Co., Scotia Capital (USA) Inc., BMO Securities, Mizuho Securities USA Inc. and SMBC were the joint bookrunners.

Coeur d'Alene Mines upsizes

In drive-by action, Coeur d'Alene Mines priced an upsized $300 million issue of eight-year senior notes (B3/BB-) at par to yield 7 7/8%.

The yield printed at the tight end of yield talk set in the 8% area.

Barclays ran the books for the deal, which was upsized from $200 million.

The Coeur d'Alene, Idaho-based silver and gold mine developer and operator plans to use proceeds to fund internal and external growth initiatives and for general corporate purposes.

Zobele secured deal

In Europe, Italy's Zobele Holding priced a €180 million issue of five-year senior secured notes (B2/B) at par to yield 7 7/8%, at the tight end of price talk that was set in the 8% area.

Joint global coordinator Goldman Sachs International will bill and deliver. Unicredit was also a joint global coordinator.

Proceeds will be used to repay debt.

Talking the deals

Dealers set the stage for a busy Friday session in both Europe and the United States. The announced calendar contains $1.3 billion and €180 million in five deals.

DigitalGlobe talked its $500 million offering of eight-year senior notes (B1/BB) with a yield in the 5 3/8% area.

The order books were scheduled to close at 5 p.m. ET on Thursday.

The deal is in the market via joint bookrunners Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Bank of Tokyo-Mitsubishi UFJ Ltd. and Citigroup Global Markets Inc.

Apex Tool Group and BC Mountain Finance Inc. talked their $450 million offering of eight-year senior notes (B3/B-) to yield 7% to 7¼%.

The Apex deal is a blowout, an investor said on Thursday morning.

Goldman Sachs is the left lead bookrunner. Barclays, Citigroup, Deutsche Bank, Morgan Stanley and RBC are the joint bookrunners.

WEX talked its $350 million offering of 10-year senior notes (Ba3/BB) to yield 4¾% to 5%.

Wells Fargo is the left bookrunner. Merrill Lynch, SunTrust and RBS are the joint bookrunners.

Spain's ENCE Energia y Celulosa talked its €250 million offering of seven-year senior secured notes (B1//) to yield 7¼%.

Joint bookrunner Deutsche Bank will bill and deliver. BBVA, Banesto, Bankia, Barclays and Citigroup are also joint bookrunners.

Abengoa expected Friday

Spanish conglomerate Abengoa Finance held an investor conference call on Thursday afternoon in Europe to discuss a €250 million offering of five-year notes (B1/B+), which are also expected to price on Friday.

The deal is being led by HSBC, Credit Suisse, Merrill Lynch, Bankia, Santander and SG.

The Seville-based company plans to use the proceeds to refinance debt.

From elsewhere in Europe, Germany's Orion Engineered Carbons Finance plans to start a roadshow on Friday in London for its $390 million offering of six-year PIK toggle notes (expected ratings Caa1/CCC+).

The roadshow moves to the United States for presentations on Monday and Tuesday, and the issue is expected to price during the week ahead.

Goldman Sachs is the physical bookrunner. Barclays, JPMorgan and UBS are the joint bookrunners.

Proceeds will be used to fund a distribution to shareholders.

Day's deals push higher

In the secondary market, traders saw the new Trinseo Materials mega deal firm smartly when it was freed for trading, with several pegging the Berwyn, Pa.-based materials company's 8¾% senior secured notes due 2019 around 102 bid, well up from their par pricing level.

A trader also saw the Coeur d'Alene 7 7/8% notes due 2021 straddling that same 102 bid, up from the par level where the Idaho-based precious metals miner's quickly shopped deal had come to market.

The cat roars

A trader saw Wednesday's drive-by deal from British luxury carmaker Jaguar Land Rover trading Thursday at 103 bid, 103½ offered.

That was well up from the par level at which that $500 million offering had priced after having been upsized from its original $400 million amount. The bonds had come to market too late on Wednesday for any aftermarket dealings at that time.

Smurfit Kappa lower

However, another Wednesday offering - Smurfit Kappa Acquisitions' new euro-denominated issue of 4 1/8% senior secured notes due 2020 - was bucking the generally positive trend among the newly priced issues. A market source said those bonds dropped in Thursday's trading, although the company's existing euro tranches were better on the day.

The Dublin-based paper packaging manufacturer sold €400 million of the seven-year notes at par Wednesday, with the bonds quoted down at 98 5/8 bid, 99 1/8 offered on Thursday.

Smurfit Kappa's 5 1/8% senior secured notes due 2018, which priced back on Sept. 5 of last year at par in a €200 million offering, traded at 105 bid, 106 offered, the source said.

Two more established tranches dating back to 2009 and co-issued by Smurfit Kappa Group plc also were better on the day.

The 7¼% senior secured notes due 2017 traded at 105¾ bid, 106¾ offered, while the companies' tranche of 7¾% senior secured notes due 2019 was quoted at 110½ bid, 111½ offered.

Denbury bonds busy

New deals made up two of the most actively traded issues seen in the junk world on Thursday.

A market source said that Tuesday's $1.2 billion issue of 4 5/8% notes due 2023 from Denbury Resources Inc. gained 1/8 point on Thursday to end at 100½ bid, on volume of $13 million, making it one of the most active purely junk issues, although that volume level was well down from Wednesday, when that $1 billion deal had racked up well over 100 trades on the day, many of them round lots of $1 million or more.

A second trader saw the bonds on Thursday trading at par bid, 100¼ offered.

Denbury, a Plano, Texas-based oil and gas exploration and production company, had priced its quick-to-market mega deal at par on Tuesday.

Sallie Mae stays active

An even more active issue on Thursday was SLM Corp.'s new 5½% notes due 2023; that split-rated (Ba1/BBB-/BBB-) issue racked up over $60 million of trading, although a good portion of that was attributed to high-grade accounts looking to the crossover credit as a yield play rather than traditional high-yield investors.

A market source saw the bonds at 99 3/8 bid, calling that up 7/8 point on the day.

Another trader saw them up a more conservative 3/8 point at 99 bid, 99½ offered.

The Newark, Del.-based education loan provider popularly known as Sallie Mae had priced that $1 billion tranche of bonds on Wednesday at 98.12 as part of its quick-to-market two-part $1.5 billion deal. They had pushed up to the 98 5/8 bid, 98 7/8 offered level in initial aftermarket dealings, a trader said.

The other half of that big drive-by deal - the company's $500 million add-on to its existing 3 7/8% notes due 2015 - traded at 104 bid on Thursday on $13 million of turnover, up about ¾ point.

DuPont trades up

Elsewhere among recently priced deals, DuPont Performance Coatings' euro and dollar tranches sold on Jan. 16 remain higher in trading, a source said on Thursday.

The company's €250 million issue of 5¾% senior secured notes due 2021 traded up to 100½ bid, 101¼ offered.

The issue had priced at par back on Jan. 16.

The company's dollar tranche of 7 3/8% senior unsecured notes due 2021 was better at 103 bid, 104 offered, the source said. It had sold $750 million of the notes at par.

The two tranches of notes were sold via Flash Dutch 2 BV and U.S. Coatings Acquisition Inc. as part of the financing for Carlyle Group's acquisition of DuPont Performance Coatings, a Wilmington, Del.-based supplier of vehicle and industrial coating systems, from chemicals giant E.I. DuPont.

Nokia up on results

In the secondary market away from the new deals, Nokia's debt was on the rise Thursday after the company reported its first quarterly profit in nearly two years.

One trader called the 5 3/8% notes due 2019 up over half a point at 99 3/8, while the 6 5/8% notes due 2039 rose over a point to 951/2.

The trader remarked that the paper was up more intraday but settled back in to the closing levels.

Another trader called the name "pretty active," seeing the 2019 securities at 99½ and the 2039 issue at 951/2.

A market source said that over $25 million of the 2019 paper had changed hands and over $14 million of the 2039s.

For the last quarter of 2012, the Finnish telecommunications manufacturer reported a profit of €202 million, which compared to a loss of €1.1 billion the year before. However, sales were down 20%, mostly due to a phase-out of older smartphones.

But sales of the new Lumia line improved in the fourth quarter to 4.4 million units, compared to 2.9 million units in the third quarter, although they still trailed sales of the Apple iPhone and Android phones.

During its conference call, Nokia executives pointed to the company's healthy cash position, helped by last fall's big convertibles sale. (See related story elsewhere in this issue.)

Nokia's New York Stock Exchange-traded shares dropped 38 cents, or 8.19%, to $4.26, mainly because the company said that it would nix dividend payments in 2013 in order to shore up liquidity. The effort is expected to save €750 million.

Market measures stay strong

Statistical junk market performance indicators were mixed but with a positive bias for a sixth straight session on Thursday.

The Markit Series 19 CDX North American High Yield index lost 1/16 point to close at 102 9/16 bid, 102¾ offered, after having gained 3/32 point on Wednesday, its fourth straight gain.

But the KDP High Yield Daily index rose by 9 bps Thursday to end at 76.14, after having jumped by 14 bps Wednesday. It was its fourth straight gain.

The widely followed Merrill Lynch U.S. High Yield Master II index was up for a seventh straight session on Thursday, gaining 0.092% , after rising 0.139% Wednesday.

That lifted its year-to-date return to 1.90%, a new peak level for the year so far, eclipsing the old mark, 1.806%, which had been notched on Wednesday.

Cristal Cody and Stephanie N. Rotondo contributed to this review

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