NOVA prices as tone brightens; secondary roars back to close volatile week; energy, coal rally

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, Oct. 17 – The secondary high-yield market had “a major rebound today,” a trader said Friday.

Prices had suffered throughout the week as the broader financial markets swung wildly. In the credit market specifically, the coal and energy sectors took massive hits.

But those names came back in Friday trading.

“Some of the coals were up 5 points, some of the energy names were up 5 points,” a trader said.

Meanwhile, Advanced Micro Devices Inc. was mostly higher on the day, despite reporting earnings that missed expectations.

NOVA Chemicals prices tight

As the capital markets improved on Friday, the high-yield primary market sparked to life with a single issuer pricing a drive-by deal.

NOVA Chemicals Corp. priced a $500 issue of non-callable 10.5-year senior notes (Ba2/BB+) at par to yield 5%.

The yield came at the tight end of yield talk that had been set in the 5 1/8% area.

Barclays, HSBC, RBC Capital Markets, Scotia Capital and TD Securities were the joint bookrunners.

The Calgary, Alta.-based producer and marketer of plastics and chemicals plans to use the proceeds to redeem its existing $350 million of 8 5/8% notes due 2019 and for general corporate purposes.

Signature plans $300 million

Signature Group Holdings, Inc. announced in a Friday press release that it plans to make a private offering of $300 million senior secured bonds as part of the financing for its acquisition of Global Recycling and Specification Alloys (GRSA) business from Aleris Corp.

Deutsche Bank Securities Inc. acted as exclusive financial adviser to Signature. Credit Suisse Securities (USA) LLC and KeyBanc Capital Markets Inc. acted as financial advisers to Aleris.

Financing for the acquisition, valued at $525 million, will also include proceeds from a registered offering of common stock, according to the Friday press release.

Market firms up

After a volatile week, the high-yield bond market posted serious gains in the final trading session of the week.

Still, one source noted that “the market was very thin and trades took place wherever a seller would let bonds go.”

The KDP High Yield Index – which hit a new 52-week low earlier in the week – rose to 71.76, with a 5.65% yield, up from 71.04, with a 5.91% yield, the day before.

That was a little higher than a week earlier. The KDP index had closed the previous week on Oct. 10 at a level of 71.65 and a yield of 5.72%.

The CDX High Yield Series 23 index was meantime up nearly a point at 105.64 bid, 105.76 offered, according to a market source.

The CDX rolled to a new series. The earlier Series 22 index closed the previous week at 105.2 bid, 105.35 offered.

“It was a raging bull market today,” a trader said.

Energy and coal recover

Energy and coal names – which had borne the brunt of the week’s beatdown – came roaring back on Friday.

Halcon Resources Corp.’s 8 7/8% notes due 2020 popped 6 points to 91 while its 9¾% notes due 2020 gained 5¾ points to 92¾.

Linn Energy LLC’s 6¾% notes due 2020 also jumped 5 points to 98, a trader said. Another market source deemed the company’s 7¾% notes due 2021 up 4 points at par.

SandRidge Energy Inc.’s 7½% notes due 2021 were seen finishing up 4½ points to 93½.

And, Samson Investment Co.’s 9¾% notes due 2020 put on nearly 4 points to close at 83¾.

In offshore drilling names, Hercules Offshore Inc. saw a major move upward.

A trader said its 6¾% notes due 2022 closed up by more than 9 points at 66 and its 7½% notes due 2021 finished up 10 points higher at 70.

Ocean Rig UDW Inc.’s 6½% notes due 2017 were meantime almost 4 points better at 93.

In the mining sector, Cliffs Natural Resources Inc.’s 4.8% notes due 2020 ended the day up 6 points at 71, while Quicksilver Resources Inc.’s 11% notes due 2021 improved 3½ points to 58.

Among coal names, Arch Coal Inc.’s 7¼% notes due 2020 were seen increasing a whopping 12¼ points to 52¾. The 8% notes due 2019 gained 6 points to end around 71.

Alpha Natural Resources, Inc.’s bonds finished up 5 to 6 points, a trader said, seeing the 6¼% notes due 2021 up 6 cents at 53 and the 7½% notes due 2020 up “5 and change” points to 85¼.

At another desk, a market source called the Alpha 6¼% notes up 4½ points at 52½ bid.

AMD earnings miss

Advanced Micro Devices released its quarterly results late Thursday and come Friday the company’s debt was trading mixed.

One trader said AMD’s 7% notes due 2024 were up 3½ points at 88½. Another source pegged the 7¾% notes due 2020 at 92¾ – down ¼ point – and the 7½% notes due 2022 at 90½, up ½ point.

The market was already concerned about the chipmaker’s earnings results when it suddenly switched chief executive officers the week before.

Lisa Su took over from Rory Read on Oct. 8.

For the third quarter, AMD’s results missed expectations. The company reported earnings per share of 3 cents on revenue of $1.43 billion. While revenue was up year over year, it still missed predictions of earnings of 4 cents per share on revenue of $1.473 billion.

Looking to the fourth quarter, the company is projecting revenue between $1.2 billion to $1.29 billion – though analysts’ average estimates had been higher at $1.48 billion.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.