York Risk brings add-on, Lennar seen on tap; busy trading in new Navient megadeal; oils off

By Paul Deckelman and Paul A. Harris

New York, Nov. 4 – The pace of primary activity in the high-yield market lessened drastically on Tuesday.

Market sources heard of only one pricing – and that one was a smallish add-on brought by York Risk Services Holding Corp., a provider of risk management, claims management and managed care services, to the issue that it sold last month.

That held the day’s tally of new dollar-denominated, fully junk-rated paper from domestic or industrialized-nation issuers to just $45 million in one tranche, versus the $1.3 billion that came to market on Monday in three tranches, most of it coming from one issuer, Navient Corp.

Besides that sole pricing, there was a lessened pace as well in the forward calendar, with just one issue joining the pipeline – homebuilder Lennar Corp., whose $350 million five-year offering is expected to price on Wednesday. That was in contrast to a slew of prospective deals that surfaced during Monday’s session for future pricing.

Among issues already being shopped around, price talk emerged on MSCI Inc.’s 10-year offering; market-watchers expect the company, a provider of investment decision support tools to investors, to price its deal alongside Lennar’s on Wednesday.

Among the issues that have already priced, traders saw both tranches of Tuesday’s two-part Navient megadeal trading actively at levels around their respective discount issue prices.

Charter Communications, Inc., Media General Inc. and K. Hovnanian Enterprises, Inc.’s recent issues also saw brisk trading volumes.

That was also the case for the several tranches that energy operator California Resources Corp. priced in September; those CalRes bonds were seen sharply lower in active trading in apparent reaction to a renewed slide in oil prices.

Existing bonds of other high-yield energy-space names such as Halcon Resources Corp., Linn Energy LLC and Samson Investment Co. also traded off in active dealings as the whole oil-and-gas sector retreated.

Statistical indicators of market performance turned lower across the board on Tuesday after having been better in each of the previous two sessions.

York Risk taps 8½% notes

York Risk Services priced Tuesday's sole dollar deal, a $45 million add-on to its 8½% senior notes due Oct. 1, 2022 (Caa2/CCC+) that came at par to yield 8.497%.

The reoffer price came on top of price talk.

Morgan Stanley and BofA Merrill Lynch were the joint bookrunners for the quick-to-market acquisition financing.

Meanwhile in the crossover market, General Motors Co. priced $2.5 billion of senior notes (Ba1/BBB-/BB+) in tranches that were talked and priced at spreads to Treasuries, investment grade-style: $500 million of 4% notes due 2025 priced at Treasuries plus 175 basis points, $750 million of 5% notes priced at 205 bps, and $1.25 billion of 5.2% notes priced at 220 bps.

And in another crossover deal that came high grade-style, Owens Corning priced a $400 million issue of 4.2% 10-year senior notes (Ba1/BBB-/BBB-) at Treasuries plus 210 bps.

Talking the deals

Lennar talked a $350 million offering of non-callable five-year senior notes (expected ratings Ba3/BB) to yield in the 4 1/8% area.

The talk comes in line with earlier guidance.

The deal is set to price Wednesday.

RBS, BofA Merrill Lynch, BMO, Citigroup, Deutsche Bank, J.P. Morgan, RBC, UBS and Wells Fargo are the joint bookrunners.

Elsewhere, MSCI talked its $800 million offering of 10-year senior notes (Ba1/BB+) to yield in the 5½% area.

The offering is also expected to price Wednesday.

JPMorgan, Morgan Stanley and Goldman Sachs are the joint bookrunners.

Lindorff two-part add-on

The Tuesday session also saw news emanate from the European high-yield primary.

Norway's Lindorff Group priced a €250 million two-part add-on deal (B2/BB-).

The Oslo-based financial information and services company priced a €150 million add-on to its 7% senior secured notes due Aug. 15, 2021 at 100.75 to yield 6.925%. The reoffer price came at the rich end of the 100.5 to 100.75 price talk. The tranche size came at the low end of the €150 million to €175 million proposed range.

Lindorff also priced a €100 million add-on to its Euribor plus 550 bps floating-rate secured notes due Aug. 15, 2020 at 98.75.

The reoffer price came at the rich end of the 98.5 to 98.75 price talk. The tranche size came at the high end of the €75 million to €100 million proposed range.

Goldman Sachs International was the global coordinator and physical bookrunner. Deutsche Bank and Nordea were the joint bookrunners.

VUE taps FRN

VUE Entertainment priced a €70 million add-on to the Vougeot Bidco plc Euribor plus 525 bps floating-rate notes due July 15, 2020 (expected ratings B2/B) at 97.5.

The reoffer price came at the cheap end of the 97.5 to 98 price talk.

Morgan Stanley was the sole bookrunner.

Waste Italia starts roadshow

Waste Italia SpA began a roadshow in London on Tuesday for its €200 million offering of five-year senior secured notes.

The deal, via sole bookrunner Jefferies, is set to price during the week ahead.

Proceeds will be used to repay debt, to fund acquisitions and for general corporate purposes.

York Risk new paper unseen

In the secondary arena, traders did not see any activity Tuesday in York Risk Services’ new 8½% add-on notes due 2022.

They also did not see any of the Parsippany, N.J.-based risk and claims management company’s existing 8½% notes, some $270 million of which, issued by special-purpose vehicle Onex York Acquisition Corp., had priced at par on Sept. 17.

Those notes had most recently been quoted in early October in a 100½-to-101 context.

Navient trades near issue price

Among the deals that priced on Monday, several traders saw Navient’s two-part megadeal trading around the tranches’ respective issue prices.

“Both tranches traded a fair amount,” one trader said.

The traders saw its 5% notes due 2020 trading around par bid, with around $60 million changing hands, making them among the most actively traded credits in Junkbondland on Tuesday.

At the same time, they saw the company’s 5 7/8% notes due 2024 trading around the 99 bid mark, with over $40 million of turnover.

Navient, a Newark, Del.-based provider of financial products and services for the education lending business, priced $500 million of each issue on Monday in a quick-to-market offering. The 5% notes priced at 99.365 to yield 5 1/8%, while the 5 7/8% notes priced at 99.075 to yield 6%.

The notes priced too late in the day on Monday for any kind of aftermarket at that time, with Tuesday’s volume levels reflecting that pent-up demand for the paper.

Standard Pacific stronger

Monday’s other deal – from Irvine, Calif.-based homebuilder Standard Pacific Corp. – was seen trading pretty actively for a second straight session on Tuesday.

A market source called those 5 7/8% notes due 2024 gainers by ½ point, seeing them get as good as 101½ bid.

Another trader pegged the bonds at 101¼ on volume of over $15 million, landing the bond on the junk Most Actives list.

On Monday, that quickly shopped $300 million offering had priced at par and had moved up to around the 101 bid mark when the bonds were freed to trade. Volume of over $20 million was the most of any high-yield credit on Monday.

Recent deals active

Among other recently priced issues, Charter Communications’ 5¾% notes due 2024 were quoted by a market source at 101, up ¼ point on the day, on active volume of more than $14 million.

The Stamford, Conn.-based cable and broadband service provider priced that $2 million tranche at par last Wednesday as part of a $3.5 billion dual-tranche drive-by deal that also included $1.5 billion of 5½% notes due 2022, which also priced at par, but which did not trade on any sizable volume on Tuesday.

Charter’s existing 5¾% notes due Jan. 15, 2024 – the new bonds mature on Dec. 1 of that year – were meanwhile seen off ½ point at 102 1/8 bid on volume of over $17 million.

Media General’s 5 7/8% notes due 2022 were seen 3/8 point better on Monday at 101¼ bid on volume of more than $17 million.

The Richmond, Va.-based television station group owner and digital media publisher priced $400 million of those notes on Friday at 99½ to yield 5.954% after the deal was upsized from $300 million originally.

Friday’s other offering, from Red Bank, N.J.-based homebuilder K. Hovnanian Enterprises, Inc., was seen about unchanged at 100½ bid, with more than $10 million of the notes having moved around.

The company priced $250 million of those notes at par after upsizing that quickly shopped transaction from an originally announced $200 million.

Oil names slip-sliding

Continued weakness in world energy prices – a barrel of oil now trades below $80 on the major exchanges – once again greased the skids under high-yield energy credits.

For instance, traders noted that all three tranches of California Resources’ gigantic $5 billion three-part offering were lower in very active trading Monday.

The Los Angeles-based exploration and production company’s 6% notes due 2024 fell by more than 3 points on the session to end just under 99½ bid on volume of more than $60 million, matching or exceeding even Navient.

Its 5% notes due 2020 lost 2 points, closing at 99 bid, with over $18 million having traded, while its 5½% notes due 2021 ended at 99½ bid, down 2½ points, on volume of over $15 million.

Among other energy names losing ground were Samson Investment’s 9¾% notes due 2020, quoted down nearly 2 points at 69¾ bid on volume of over $18 million, Halcon Resources’ 8 7/8% notes due 2021, which lost more than 4 points to end at 77 5/8 bid with over $14 million traded, and Linn Energy’s 6½% notes due 2019, which lost nearly 3 points to end just above 91 on volume of over $13 million. Houston-based Linn meantime reported third-quarter results on Tuesday, and its executives discussed on their conference call the company’s liquidity position and expected future debt repayments from asset-sale proceeds (see related story elsewhere in this issue).

Indicators turn lower.

Statistical indicators of junk market performance were weaker across the board on Tuesday after having been on the upside for a second consecutive session on Monday.

The KDP High Yield Daily index slid by 21 basis points to end at 72.3 after having risen on Monday by 3 bps, its second straight rise.

Its yield rose by 8 bps to 5.34% after having come in for five successive sessions, including Monday’s 2-bps easing.

The Markit CDX North American High Yield Series 23 index lost 3/16 point on Tuesday to close at 106¾ bid, 106 7/8 offered. It had been unchanged on Monday at 106 31/32 bid, 107 1/32 offered.

The Merrill Lynch U.S. High Yield Master II index lost 0.243%, its first downturn after two straight advances, including Monday’s 0.029% improvement.

The latest loss left the index’s year-to-date return at 4.562%, down from Monday’s 4.817%.

Despite the more negative tone, according to the Finra-Bloomberg Active US High Yield Bond index, Monday’s junk market volume rose to $3.32 billion from $2.496 billion on Monday.

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