Wind megadeal, plus Hilcorp, NGL, Belden drive-bys price; other deals waiting in the wings

By Paul Deckelman and Paul A. Harris

New York, June 24 – With the end of the month, the calendar second quarter and first half coming ever closer, junk market primaryside activity picked up on Tuesday, with some $3 billion of new U.S. dollar-denominated and fully junk-rated paper clattering down the chute, market participants said.

The day’s big deal came from Italy-based wireless, wireline and internet broadband provider Wind Telecomunicazioni SpA, which priced $1.9 billion of new six-year senior secured notes via its Wind Acquisition Finance SA funding subsidiary in a regularly scheduled forward calendar offering, as part of an overall €4 billion three-tranche offering that also included euro-denominated fixed- and floating-rate notes.

On the domestic front, a trio of opportunistically timed and quickly marketed drive-by deals kept junk players hopping.

Houston-based oil and natural gas exploration and production company Hilcorp Energy priced $500 million of 10.5-year notes, which were seen trading near their issue price when they hit the aftermarket.

Out of that same sector, Tulsa, Okla.-based NGL Energy Partners LP did an upsized $400 million of five-year notes.

And St. Louis-based electrical and electronic wire and cable manufacturer Belden Inc. came in with a $200 million issue of 10-year subordinated notes, which moved up when they were freed for trading.

Besides the deals that actually priced, syndicate sources heard price talk emerge on several other deals that are expected to come to market on Wednesday, including Falls Church, Va.-based risk and information services company Altegrity, Inc. doing a five-year secured offering and Scottsdale, Ariz.-based builder AV Homes Inc. with a five-year unsecured deal.

Traders saw little activity away from the new-deal realm, as investors hung onto their existing secondary paper.

Statistical market-performance indicators turned mixed on Tuesday after having been higher for three consecutive sessions before that.

Wind prices megadeal

Primary market news volume remained intense on Tuesday, as four issuers raised $3 billion with a combined four tranches of dollar-denominated notes.

Italy's Wind priced €4,065,000,000 equivalent of six-year senior secured notes (Ba3/BB) in three tranches.

The debt refinancing deal included a €575 million tranche of floating-rate notes that priced at par to yield three-month Euribor plus 400 basis points, at the tight end of the Euribor plus 400 to 425 bps price talk.

A €2.15 billion tranche of fixed-rate notes priced at par to yield 4%, at the tight end of the 4% to 4¼% yield talk.

And a $1.9 billion tranche of fixed-rate notes priced at par to yield 4¾%, at the tight end of the 4¾% to 5% yield talk.

Global coordinator and physical bookrunner Credit Suisse was the left lead on the euro-denominated tranches.

Global coordinator and physical bookrunner Deutsche Bank Securities Inc. was the left lead on the dollar-denominated tranche.

Banca IMI, Barclays, Citigroup, HSBC and SG CIB were also global coordinators.

BNP Paribas, Credit Agricole CIB, ING, Natixis, Alfa-Bank and UniCredit were joint bookrunners for the floating-rate notes only.

Hilcorp at the tight end

In drive-by action, Hilcorp Energy priced a $500 million issue of senior notes due Dec. 1, 2024 (Ba3/BB) at par to yield 5%.

The yield printed at the tight end of the 5% to 5¼% yield talk. Initial guidance was in the 5¼% area.

J.P. Morgan Securities LLC, Deutsche Bank Securities, Wells Fargo Securities LLC, Barclays and BMO Capital Markets Corp. were the joint bookrunners.

The Houston-based energy exploration and production company plans to use the proceeds for general corporate purposes as well as to fund pending acquisitions.

NGL Energy upsized and tight

NGL Energy Partners and wholly owned subsidiary NGL Energy Finance Corp. priced an upsized $400 million issue of non-callable five-year senior notes (B2/BB-/BB-) at par to yield 5 1/8%.

The deal was upsized from $350 million.

The yield printed at the tight end of yield talk in the 5¼% area.

RBS Securities Inc. was the left bookrunner. BNP Paribas, Mitsubishi UFJ, Deutsche Bank Securities, RBC Capital Markets and SunTrust Robinson Humphrey were the joint bookrunners.

The publicly traded Delaware limited partnership, which owns and operates a vertically integrated energy business, plans to use the proceeds to pay down its revolver and for general partnership purposes.

Belden at the tight end

Belden priced a $200 million issue of 10-year senior subordinated notes (Ba2/B+) at par to yield 5¼%.

The yield printed at the tight end of the 5¼% to 5½% yield talk.

Wells Fargo Securities was the left bookrunner. Deutsche Bank Securities, Goldman Sachs & Co. and JPMorgan were the joint bookrunners.

Proceeds will be used for general corporate purposes.

Talking the deals

Setting the stage for what promise to be a busy Wednesday session, Altegrity talked its $550 million offering of five-year senior first-lien secured notes (pro forma ratings B3/B-) to price with a yield in the 9% area on Tuesday.

Books close at Wednesday at the close of business, and the deal is set to price Thursday.

Goldman Sachs is the left bookrunner. Credit Suisse Securities (USA) LLC and Macquarie Capital are the joint bookrunners.

And AV Homes talked its $200 million offering of five-year senior notes (expected Caa1/confirmed B-) to yield in the 8½% area.

There are also covenant changes, and registration rights were added to the Rule 144A and Regulation S deal. Previously in the market as Rule 144A and Regulation S for life, the notes now have registration rights that will remain in effect for one year.

Books close at 2 p.m. ET on Wednesday, and the deal is set to price thereafter.

JPMorgan, Citigroup Global Markets Inc., RBC Capital Markets, Credit Suisse Securities and Deutsche Bank Securities are the joint bookrunners.

Belden bonds gain

In the secondary market, a trader said that the new Belden 5¼% senior subordinated notes due 2024 firmed solidly when they reached the aftermarket.

He saw the wire and cable producer’s paper having advanced to a 100 7/8 to 101 bid context, up from the par level at which the quick-to-market deal had priced.

He meantime saw the new Hilcorp Energy 5% notes due in December of 2024 trading between 100¼ and 100½ bid, versus that drive-by deal’s par issue price.

The trader did not see any immediate dealings in either new NGL Energy 5 1/8% notes due 2019 or in Wind Acquisition Finance’s 4¾% senior secured notes due 2020.

Nielsen notes steady

In the deals which came to market on Monday, a trader saw Nielsen Finance LLC and Nielsen Finance Co.’s 5% notes due 2022 trading at 101 bid, 101½ offered.

That was unchanged from the level at which those bonds had traded late Monday after the issuers – financing subsidiaries of New York-based television ratings and consumer information provider Nielsen Co. B.V. – brought that quickly shopped $800 million add-on to their existing 2022 notes to market at 100.375, to yield 4.923%.

He also saw WCI Communities Inc.’s 6 7/8% notes due 2021 up ¼ point at 103 bid, 103½ offered.

The Bonita Springs, Fla.-based homebuilder’s quick-to-market $50 million add-on to its existing notes had priced Monday at 102.5 to yield 6.295%, and the notes were quoted later that session at 102¾ bid, 103¼ offered in initial aftermarket activity.

Ardagh easing continues

Traders saw the new Ardagh Packaging Finance plc / Ardagh Holdings USA Inc. notes that priced on Friday continuing to ease a little from their initial post-pricing aftermarket gains.

Its senior secured floating-rate notes due in December 2019 were seen off 1/8 point on Tuesday at 100 1/8 bid, 100 3/8 offered.

A second trader saw the notes at par bid, on volume of more than $4 million.

Those levels were well down from 101 to 101½ bid context at which the notes had traded on Friday after the issuer companies – financing units of Dublin-based glass and metal packaging products maker Ardagh Group – had priced that $1.11 billion tranche of the notes at par to yield 300 bps over the three-month Libor rate. The tranche had been massively upsized from an originally shopped $430 million. The bonds had begun retreating a little from their initial gains on Monday and continued to soften on Tuesday.

A trader meantime saw Ardagh’s new 6% senior unsecured notes due 2021 off ¼ point on the day, around 100¼ bid, 100¾ offered.

Ardagh had priced $440 million of those notes at par, with no upsizing. On Friday, and again on Monday, they had been seen around 100½ bid, 101 offered. A second located them at 100 5/8 to 101.

Besides the dollar-denominated bonds, Ardagh had also priced €1.16 billion of 4¼% senior secured notes due in January of 2022 at par.

Quiet session seen

Although primary activity picked up to $3 billion in four tranches from the $854 million that had come to market in three tranches on Monday, according to data compiled by Prospect News, a trader opined that “away from the calendar, it was pretty dull.”

He said that “nobody in the secondary [market] was really selling anything.”

TXU trades around

Bonds of Energy Future Holdings – the troubled Texas utility operator and merchant power provider formerly known as TXU Corp. – “were trading around,” the market source said.

He saw the 11¾% second-lien notes due 2022 issued by its Energy Future Intermediate Holding Co. LLC subsidiary get as good as a 126 to 127 context on Tuesday, well up from prior levels in the lower 120s previously.

One of the more active credits in the company’s complex capital structure – its Texas Competitive Electric Holdings Co. LLC 10¼% notes due 2015 – were seen having moved up to just under the 13½ bid level on mid-afternoon volume of over $10 million, putting them fairly high on the junk Most Actives list for the day.

He noted that the latter bonds “haven’t traded since last week, and they traded [then] with a 12-handle. They were trading at 13½ today.”

“I guess that was a decent move, given the low dollar price nature of that bond,” he added.

Elsewhere among the TXU credits, Energy Future Intermediate’s 10% notes due 2020 edged up to 9¼ bid from 9 1/8 previously.

Texas Competitive Electric’s 15% notes due 2021 firmed to 44 bid from 42¾ at the end of last week.

The TXU paper was bouncing around at higher levels as the company – which had been acquired in a $46 billion leveraged buyout in 2007 but which was forced into bankruptcy earlier this year, staggering under that giant debt load – rejected a $2.3 billion strategic financing and restructuring proposal from investor NextEra and a group of second-lien noteholders.

According to a preliminary objection filed Monday with the U.S. Bankruptcy Court for the District of Delaware by Computershare Trust Co., NA and Computershare Trust Co. of Canada, the trustee for Energy Future Intermediate Holding’s second-lien notes, EFIH, had agreed to negotiate with the second-lien noteholders after they submitted an alternative financing proposal on May 12.

However, shortly after advisers to the EFIH second-lien group met with the company’s management and representatives on May 30 to discuss the proposal, EFIH asked parties to submit their “final and best” offers for second-lien financing.

The joint financing proposal and new restructuring plan was submitted by NextEra and the noteholders on June 18 and revised on Monday “to further improve the terms and address the few concerns the debtors’ advisors had mentioned.”

Computershare said it was told that EFIH intends to move forward with the proposal submitted by holders of its unsecured senior toggle notes.

But Compushare asserted that the joint proposal from NextEra “is superior both in cost of financing and value to EFIH’s estate and its creditors.”

Specifically, the trustee said the second-lien/NextEra proposal includes significantly lower interest and rates, superior enterprise valuation of equity conversion/investment, enhanced recoveries to all key creditor constituencies, facilitation of the debtors’ tax strategy and improved executability.

Verso stays busy

Elsewhere, a trader said that Verso Paper’s 11¾% 1.5-lien notes due 2019 “continue to creep up.”

He saw the bonds on Tuesday “moving towards the high 80s, and trading at 88 today.”

In contrast, he said, “yesterday [Monday], they were around 85 – so those continue to go up.”

At another shop, a trader pegged those bonds at 87 5/8 bid going home, which he said was a 2 3/8-point gain on the session.

He said that round-lot volume of more than $10 million “put it among the most actives.”

On the other hand, Verso’s 8¾% second-lien notes due 2019, recently languishing in the mid-40s, slid to 40¼ bid on Tuesday, a drop of nearly 3 points. Volume was more than $9 million.

Verso’s New York Stock Exchange-traded shares, meantime, dipped by 15 cents, or 7.65%, on Tuesday to end at $1.81, although volume of about 79,000 shares was only about one-fourth of the usual daily turnover in the name.

The bonds and shares have been gyrating around since Friday, when Moody’s Investors Service cut Verso’s ratings to Caa3 from B3 and warned that it expects a distressed exchange or a bankruptcy filing if Verso is unable to close on its previously announced $1.4 billion deal to buy sector peer NewPage Holdings.

Moody’s further said that Verso has been unsuccessful so far in obtaining a distressed debt exchange that’s a prerequisite for the deal, and still must gain federal regulatory approval for the transaction, which was announced back in January.

Caesars seen lower

A trader said that Caesar’s Entertainment’s 10% notes due 2018 “keep dipping.”

He said that the big gaming operator’s legacy Harrah’s Entertainment Operating Co. bonds were trading Tuesday at 38½, which he called “down a little bit.”

Another trader said the bonds had dipped to 38¾ bid, calling that down ¾ point on the session.

And yet another market source saw them going out at 39¼ bid, calling that a ¾ point loss.

Market indicators turn mixed

Statistical indicators of junk market performance meanwhile, turned mixed on Tuesday, after having been higher across the board on Thursday, Friday and again on Monday.

The KDP High Yield Daily index was unchanged at 75.05 after having been up for the previous three sessions including Monday, when it rose by 5 bps.

Its yield, though, saw its second straight narrowing, having come in by 3 bps to end at 4.93%, on top of the 1-bp decline seen on Monday.

The Markit CDX Series 22 index was off by ¼ point on Tuesday to close at 108 27/32 bid, 108 29/32 offered. On Monday, the index had gained 1/16 point after having been unchanged on Friday and having risen over the two sessions before that.

Meanwhile the widely followed Merrill Lynch High Yield Master II index managed to eke out its15th straight advance on Tuesday, rising by 0.01%, after having been up by 0.072% on Monday.

Small as it was, the latest gain still lifted its year-to-date return to 5.727%, its 14th straight new peak level for 2014, eclipsing the old mark of 5.716% that had been set on Monday.

Its yield-to-worst declined to 4.847%, a fourth consecutive new low for the year as well as an all-time low level. It was down from Monday’s 4.848%, its previous 2014 and all-time low.

However, its average issue price declined slightly to 105.9529 from Monday’s 105.9617, which was its third straight new high for the year.

And its spread- to-worst over comparable Treasury issues widened a little to 355 bps from Monday’s 353 bps, which was its third successive new tight level for 2014.

Although junk bond yields are currently at their all-time lows, spreads remain up by more than 100 bps from their historical tight levels around 250 bps over comparable Treasuries, first set back in 1997 and then matched in 2007.

Caroline Salls contributed to this review.

© 2015 Prospect News.
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