Two-part Micron Technology deal drives by to open week; calendar builds, Charter up

By Paul A. Harris and Paul Deckelman

New York, April 27 – The high-yield primary sphere opened the new week on a relatively quiet note on Monday in terms of issues pricing, with just one transaction completed by the close.

Semiconductor manufacturer Micron Technology, Inc. priced a quickly shopped two-part offering of 8.75- and 10.75-year senior notes, with one tranche upsized and the other downsized, for a total of $1 billion of new junk-rated, dollar-denominated paper.

That was something of a comedown after Friday’s session, when $4.31 billion of bonds had come to market in five sessions – although most of that issuance was attributable to just one giant-sized deal, from German auto parts manufacturer ZF Friedrichshafen AG.

But Monday’s primary still generated a considerable volume of other news anyway, with Quicken Loans, Inc. and Extended Stay America, Inc. hitting the road to market new issues. High yield syndicate sources also heard of a re-marketing of Global Cash Access Inc.’s 10% notes due 2022.

The euro-denominated market forward calendar was also building, with upcoming offerings from Crown European Holdings SA and Cirsa Funding Luxembourg, SA.

The new Micron Technology notes arrived too late in the session for any meaningful aftermarket activity.

Among recently priced deals, Charter Communications, Inc.’s multi-part offering was seen solidly higher, in the wake of the demise of rival cable operators Comcast Corp. and Time-Warner Cable Inc.’s planned $45 billion merger, a development which re-opens the door for a possible combination of Charter and Time Warner.

Statistical measures of secondary market performance turned mixed on Monday after having been higher on Friday, the third mixed day in the last four sessions.

Micron Technologies drives by

Micron Technology priced Monday’s sole deal in the primary market.

The company brought $1 billion of senior notes (Ba3/BB) in a two-part Monday drive-by deal which saw $50 million of proceeds shifted to the shorter maturity tranche from the long maturity tranche.

The deal included an upsized $550 million tranche of notes due Jan. 15, 2024 which priced at par to yield 5¼%. The tranche was increased from $500 million. The yield printed at the wide end of yield talk that had been set in the 5 1/8% area.

In addition, a downsized $450 million tranche of notes due Jan. 15, 2026 priced at par to yield 5 5/8%. The long-duration tranche was reduced from $500 million. The yield printed at the wide end of yield talk set in the 5½% area.

Morgan Stanley, Goldman Sachs and Credit Suisse were the joint bookrunners.

The Boise, Idaho-based semiconductor manufacturer plans to use the proceeds to repay debt including its convertible notes and for general corporate purposes.

Quicken starts roadshow

Quicken Loans plans to run an investor roadshow during the present week for a $1.25 billion offering of 10-year senior notes (Ba2/BBB-).

Credit Suisse is the lead left bookrunner. J.P. Morgan is the joint bookrunner.

The Detroit-based online lender plans to use the proceeds to fund a distribution to Rock Holdings, its parent, and for general corporate purposes.

Extended Stay starts Tuesday

Extended Stay America plans to start a roadshow on Tuesday for a $500 million offering of 10-year senior notes (expected ratings B3/BB-).

The debt refinancing deal is set to price at the end of the present week.

Deutsche Bank is the left bookrunner. Citigroup, Goldman Sachs, J.P. Morgan, Barclays and Credit Suisse are the joint bookrunners.

Global Cash re-marketing

Dealers are re-marketing Global Cash Access’ $350 million of 10% senior notes due Jan. 1, 2022 (Caa1/CCC+).

The deal is shaping up with a yield in the 12% area, and is set to price late this week, according to a trader who remarked that the big yield appears to be causing high-yield investors to take notice.

The original issue priced at 98.921 to yield 10.21% on Dec. 18, 2014.

BofA Merrill Lynch is the left bookrunner. Deutsche Bank is the joint bookrunner.

The company will not receive proceeds from the re-marketing. Proceeds from the initial transaction were used to fund the acquisition of Multimedia Games Holding Co. Inc.

Crown expected Tuesday

The European market had primary market news on Monday as well.

Crown European Holdings plans to sell €600 million of 10-year senior notes (expected ratings Ba2/BB) on Tuesday.

Joint physical bookrunner BNP Paribas will bill and deliver. BofA Merrill Lynch is also a joint physical bookrunner.

BBVA, Credit Agricole CIB, Deutsche Bank Securities Inc., HSBC Bank, Banco Santander, UniCredit and Wells Fargo are joint bookrunners.

The Paris-based manufacturer of packaging products for consumer goods plans to use the proceeds to refinance bank debt.

Cirsa starts roadshow

Spanish gaming firm Cirsa Funding Luxembourg began a roadshow on Monday for a €500 million offering of eight-year senior notes (B3).

The roadshow continues on Tuesday.

Subsequent timing and price talk were pending at press time on Monday.

Deutsche Bank is the bookrunner for the debt refinancing deal.

Condottee d’Acqua roadshow

Italian construction company Societa Italiana per Condotte d’Acqua SpA began roadshowing €300 million of seven-year senior notes (expected ratings B2/B+).

Marketing wraps up on Friday and the deal is expected to price during the May 4 week.

Global coordinator Credit Suisse will bill and deliver. UniCredit is also a global coordinator. Banca IMI, Banca Akros and Barclays are joint bookrunners.

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

Micron a late arrival

Traders said that the Micron Technology 5¼% notes due 2024 and 5 5/8% notes due 2026 did not have much of an aftermarket presence, owning to their having priced relatively late in Monday’s session.

Quiet session seen

A trader characterized Monday’s session as “very quiet.”

He said that Junkbondland “kind of opened up with a firm tone, then it traded higher” – but then “equities sold off, Treasuries sold off, oil was off,” as investors squared up their positions head of the two-day meeting of the Federal Reserve’s policy-setting Federal Open Market Committee.

He added that “the whole market feels like it turned a little bit,” but with nothing really standing out from his point of view.

Although oil prices were lower – U.S. benchmark West Texas Intermediate crude for June delivery was being quoted on the New York Mercantile Exchange down 76 cents a barrel, or 1.33%, at $56.23 – recent energy-oriented new issues seemed to be holding their own.

He saw Carrizo Oil & Gas Inc.’s 6¼% notes due 2023 “hanging in there,” around 102 bid, while Halcon Resources Corp.’s 8 7/8% senior secured second-lien notes due 2020 were around the 103 bid mark.

A trader at another desk meantime saw the Halcon bonds up 5/8 point at 103¼ bid, 103¾ offered, while seeing the Carrizo paper unchanged around 101¾ bid.

Houston-based oil and natural gas exploration and production company Carrizo priced $650 million of its notes at par on April 14, after the quickly shopped deal was upsized from an originally announced $600 million.

Houston-based E&P operator Halcon’s $700 million quick-to-market deal priced at par on April 21, after having been upsized from $500 million originally.

Both credits traded up strongly from the get-go, surpassing the 102 bid mark in initial aftermarket dealings and then holding those gains and adding to them subsequently.

Charter up on M&A speculation

A trader said that Charter Communications’ 5 7/8% notes due 2027 were up by 1½ points on the session at 99 bid, 99½ offered.

He saw the Stamford, Conn.-based cable, broadband and phone service provider’s 5 3/8% notes due 2025 at 98 7/8 bid, 99 7/8 offered, which he said was “up more than 2 points” from Friday’s levels.

Charter had priced $800 million of the 5 7/8% notes at par in a drive-by deal on April 15, upsized from $500 million, and had priced $750 million of the 5 3/8% notes at par two days earlier, April 13, as part of a quickly shopped $1.9 billion two-part offering that also included $1.15 billion of 5 1/8% notes due 20203, which also priced at par.

After holding steady for several sessions, all three Charter tranches had dipped below their issue price, falling off the par level by several points.

But on Monday, the bonds were seen better against a backdrop of speculation that Charter might be able to revive its efforts to acquire larger rival Time Warner Cable. Charter made a failed effort at a hostile takeover of Time Warner Cable last year, causing the latter company to ally with white knight Comcast in what was to have been a $45 billion takeover deal. Charter was to have had a minor piece of that combination, agreeing to buy some systems the other two companies proposed to shed in order to satisfy anti-trust concerns.

However, Comcast last week withdrew its offer after federal regulators expressed objections to the combination, which would have created one of the largest combined media companies in the world.

Indicators turn mixed

Statistical indicators of junk market performance turned mixed on Monday after having been mostly better on Friday; Monday’s was the third mixed session in the last four.

The KDP High Yield Daily Index was up by 4 basis points on Monday to end at 71.83, after having been unchanged on Friday and lower on Thursday.

Its yield came in by 1 bp to 5.13%, after having been unchanged on both Thursday and Friday.

But the Markit Series 24 CDX North American High Yield Index eased by 1/32 point on Monday to close at 107 15/32 bid, 107 17/32 offered, after having gained 1/16 point on Friday. Monday’s downturn was its second decline in the last three sessions.

The Merrill Lynch U.S. High Yield Master II Index advanced by 0.053% on Monday, its third straight gain and fifth such improvement in the last six sessions. It had also been up by 0.090% on Friday.

The latest rise lifted the index’s year-to-date return to 3.952% – its second consecutive new peak level for the year – from Friday’s 3.897%, the previous high-water mark.

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