Revlon, Genesis, trio of add-ons drive by, Genesis trades up; Virgin Media busy on M&A buzz

By Paul Deckelman and Paul A. Harris

New York, Feb. 5 - Opportunistically timed and quickly shopped deals completely dominated the high-yield primary sphere on Tuesday, as issuers sought to take advantage of still-favorable conditions to get their financing needs taken care of, even as the overall junk market continued to come off its recent highs and back up from its recent low yields and tight spreads.

Five issuers brought a total of $1.2 billion of new fully junk-rated, U.S.-dollar denominated paper to market during the session, all of them same-day transactions that priced just hours after having been announced or surfacing on participants' radar screens.

Cosmetics company Revlon Consumer Products Corp. had the day's biggest deal, doing an upsized $500 million of eight-year notes; the new paper stayed around its issue price.

Oil and natural gas operator Genesis Energy LP upsized its own eight-year offering, to $350 million. Those bonds were seen by traders to have firmed solidly when they hit the aftermarket.

There was also a trio of add-on offerings to existing bonds, from cable TV programming provider Starz LLC, with an upsized $175 million of 2019 bonds; from alternative financial services firm Speedy Cash Intermediate Holdings Corp., with $100 million of secured 2018 notes; and from real estate company Crescent Resources LLC, with $75 million of secured 2017 paper. Starz and Speedy Cash firmed a little when those deals broke.

Traders saw secondary gains in some of the issues which had priced late in the day Monday and began trading around on Tuesday, specifically Caesars Entertainment Corp. and Vector Group Ltd.

Away from those deals which have actually priced, syndicate sources heard price talk out on Cooke Aquaculture's eight-year deal, which is expected to come to market on Wednesday. New deals were announced by Martin Midstream Partners LP, which is also expected to price Wednesday, and by NII International Telecom SCA, which will come later in the week.

Traders said that new issues again dominated the secondary market, although there was considerable activity in the bonds of Virgin Media Finance plc on speculation - confirmed on Tuesday evening, well after the close - that Liberty Global Inc. will acquire Virgin, which provides phone, cable and internet service in the United Kingdom.

Statistical measures of junk market performance were mixed, with cash indexes lower but derivatives better.

Revlon upsized drive-by

The Tuesday session saw five issuers bring single-tranche deals - all drive-bys - raising a combined total of $1.21 billion

Revlon Consumer Products priced an upsized $500 million issue of eight-year senior notes (B1/B) at par to yield 5¾%.

The deal priced on top of yield talk and was increased from $400 million.

However the notes gave up ground when release for trading in the secondary market, according to a portfolio manager who declined to play the deal.

The new, par-pricing Revlon 5¾% notes due 2021 were trading at 98 3/8 bid, 98¾ offered, the buy-sider said, adding that there were apparently sellers on the break.

Citigroup was the left bookrunner for the debt refinancing and general corporate purposes deal. BofA Merrill Lynch, Credit Suisse, J.P. Morgan and Wells Fargo were joint bookrunners.

Genesis at the tight end

Genesis Energy, LP and Genesis Energy Finance Corp. priced an upsized $350 million issue of eight-year senior notes (B1/B) at par to yield 5¾%.

The yield printed at the tight end of price talk set in the 5 7/8% area. The amount was increased from an original $300 million.

The new Genesis Energy bonds traded up in the secondary, according to the portfolio manager who spotted them at 101¼ bid, 102 offered, at the close.

Wells Fargo was the left bookrunner. BMO, BofA Merrill Lynch, Citigroup, Deutsche Bank and RBC were the joint bookrunners.

Proceeds, including those resulting from the $50 million upsizing of the notes issue, will be used will to repay the partnership's revolver and for general partnership purposes.

Starz upsizes add-on

Starz, LLC and Starz Finance Corp. priced an upsized $175 million add-on to their 5% senior notes Sept. 15, 2019 (Ba2/BB) at 102 to yield 4.513%.

The reoffer price came on top of price talk while the amount was increased from $150 million.

SunTrust, BofA Merrill Lynch, and Barclays were the joint bookrunners for the add-on.

The Meridian, Colo.-based company plans to use the proceeds to repay debt.

Speedy Cash at the rich end

Speedy Cash Intermediate Holdings priced a $100 million add-on to its 10¾% senior secured notes due May 15, 2018 (existing B3/confirmed B) at 106.25.

The reoffer price came at the rich end of the 106 to 106.25 price talk and resulted in a 9.219% yield to maturity and a 8.948% yield to worst.

Jefferies and UBS were joint bookrunners for the acquisition funding deal.

Crescent prices 10¼% notes

Crescent Resources, LLC and Crescent Ventures, Inc. priced a $75 million tack-on to their 10¼% senior secured notes due Aug. 15, 2017 (Caa1/B-) at 105.5 to yield 8.411%.

Credit Suisse and Jefferies were the joint bookrunners for the quick-to-market general corporate purposes deal.

Cooke Aquaculture sets talk

Looking to the Wednesday session, Cooke Aquaculture talked its $250 million offering of eight-year senior notes (Caa1/CCC+) with a yield in the 9% area.

The books close at 10 a.m. ET Wednesday, and the deal is set to price after that.

Credit Suisse is the bookrunner.

Martin to bring $250 million

Also on Wednesday, Martin Midstream Partners LP and Martin Midstream Finance Corp. plan to host and investor call at 11 a.m. ET to discuss their $250 million offering eight-year senior notes (expected ratings B3/B).

The deal is also expected to price on Wednesday.

Wells Fargo is the left bookrunner for the debt refinancing. BofA Merrill Lynch, RBC, RBS and SunTrust are the joint bookrunners.

NII starts roadshow

NII International Telecom SCA began a roadshow on Tuesday for a $400 million offering of 6.5-year senior notes.

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

J.P. Morgan, Credit Suisse, Goldman Sachs and Morgan Stanley are the joint bookrunners.

The Reston, Va.-based wireless communications services provider plans to use the proceeds for general corporate purposes.

Genesis jumps in aftermarket

When Genesis Energy's new 5¾% notes due 2021 were freed for secondary dealings, a trader saw the Houston-based oil and natural gas exploration and production company's quickly shopped $350 million deal push up to 101¾ bid, 102¼ offered - well up from the par level where the bonds had priced.

A second trader saw those bonds do even better than that, quoting them going out in a 102 to 102½ bid context.

Revlon trades near issue

Several traders also saw markets in Revlon's new 5¾% notes due 2021, which had priced at par.

One saw the New York-based cosmetics company's quick-to-market $500 million deal at par bid, 100½ offered, while a second had them a little better, at 100¼ bid, 101 offered.

However, another trader said they had traded into a par bid and were left at 99 7/8 bid, par offered.

Add-ons improve a little

Among the trio of smallish drive-by add-on deals that priced on Tuesday, a trader pegged Starz LLC's 5% notes in a 102 to 102¼ context, versus the 102 level at which the Englewood, Colo.-based cable TV channel operator's issue came to market

He also saw Wichita, Kan.-based alternative financial services provider Speedy Cash's addition to its 10¾% notes at 106¾ bid, 107 offered, up a little from their 106.25 pricing level.

He did not see any dealings in Charlotte, N.C.-based real estate firm Crescent Resources' additional 10¼% notes.

Caesars moves up...

Among the deals that priced during Monday's session, a trader said that Caesars Entertainment's 9% notes due 2020 were better, seeing the Las Vegas-based casino giant's $1.5 billion add-on to its existing '20s at 98 5/8 bid, 98¾ offered.

That was up from the 97.5 level at which the company's Caesars Operating Escrow LLC and Caesars Escrow Corp. subsidiaries had priced that quick-to-market deal to yield 9.497%. The bonds had come to market too late in the day on Monday for any trading at that time.

But the former Harrah's Entertainment's existing bonds were seen continuing to gyrate around as investors reacted to the new megadeal.

A market source said that its widely held 10% notes due 2018, which on Monday had firmed slightly, gave it all back on Tuesday and then some, finishing down nearly 3 points on the day at 66¾ bid.

A second trader saw those same bonds closing around the same level but called them down around 1 7/8 points.

But at another desk, a source saw the company's 8½% notes due 2020 - which had fallen about 3 points on Monday to the 98 level - recover 2 of those points, moving back up to par.

...as does Vector

One of Monday's other pricings, for Miami-based tobacco and real estate holding company Vector Group, was seen having moved up a little when the bonds were freed to trade.

A trader located them at 100 7/8 bid, 101 1/8 offered.

That $450 million of 7¾% senior secured notes due 2021 had priced at par after the deal was upsized from an originally announced $375 million. The issue came to market too late on Monday for any kind of aftermarket at that time.

Virgin bonds gyrate on deal talk

A trader said that the name of the game on Tuesday was "all new issues, buddy," seeing no real features in the secondary market away from the new deals.

However, another trader noted some very active dealings in Virgin Media's bonds, on speculation that the New York-based provider of phone, cable and internet service in the United Kingdom was nearing an agreement with international media giant Liberty Global on an acquisition transaction - a deal which was, in fact, announced on Tuesday evening, well after the market closed.

But while Virgin shareholders were clearly pleased at the prospect - its Nasdaq-traded stock jumped $6.92, or 17.89%, to close at $45.61 on 18 times the usual volume - the company's bondholders were decidedly less enthusiastic.

A market source saw Virgin's 4 7/8% notes due 2022 edge up ¼ point to par bid in round-lot trading, with over $68 million of those bonds changing hands.

Virgin's 8 3/8% notes due 2019 actually fell 1 7/8 points, to 110 7/8 bid, on round-lot volume of over $23 million.

And its 5¼% notes due 2022 did even worse, plummeting some 4½ points to 101¼ bid, on volume of $21 million.

Arch trades off

Elsewhere in the non-new-deal secondary, Arch Coal Inc.'s 7¼% notes due 2020 were seen down 1¼ points, ending at 88¼ bid, after the St. Louis-based coal operator reported that it slid into the red during the fourth quarter versus a year-earlier profit.

However, company executives noted that Arch had a strong liquidity position as a result of several capital markets transactions it did during the quarter, and plans to make de-levering its main focus should an expected pickup in the coal business result in greater cash flow (see related story elsewhere in this issue).

Market measures struggle on

Statistical junk market performance indicators were mostly lower for a second straight session and for the fifth session in the last six on Tuesday, a bad-luck run interrupted only by solid gains on Friday.

The Markit Series 19 CDX North American High Yield index did manage a gain of 5/16 point Tuesday to end at 102¼ bid, 102 3/8 offered, after having lost ¾ point on Monday.

But the KDP High Yield Daily Index was on a downside track for a second straight session, losing 18 basis points Tuesday to end at 75.36, on top of Monday's 16 bps slide.

Its yield rose for a second straight session, up 5 bps to end at 5.67%, on top of Monday's 7 bps rise.

And the widely followed Merrill Lynch High Yield Master II index dropped by 0.102% Tuesday after losing 0.115% on Monday.

Tuesday's loss dropped its year-to-date return to 1.20% from Monday's 1.303%, and well down from its peak level for 2013 so far of 1.991%, set last Monday, Jan. 28.

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