Week ahead looks active; recent Ultra Petroleum, Air Methods mixed; NOVA down after asset purchase

By Colin Hanner and Paul A. Harris

Chicago, April 17 – It was another lethargic session in the high-yield secondary market on Monday, traders said, with the quietness of the holiday weekend extending into a session dominated by bonds staying close to where they started, but the week ahead in the primary market looked to be active, with Laureate Education, Inc.’s $800 million senior note offering – expected to price in the middle or later part of the week – the largest in the works.

“There just wasn’t really that much trading at all,” a trader said, adding that the holiday weekend, paired with vacations, has kept markets stagnated. Plus, the past week has been host to a “lot of geopolitical risks, so people aren’t jumping back into it very quickly,” the trader said.

The recent issue from Ultra Petroleum Corp. – which includes $700 million of five-year notes which priced at par to yield 6 7/8% and $500 million of 7 1/8% eight-year notes priced at 98.507 to yield 7 3/8% – were flat or down fractionally on the day.

Air Methods Corp., which priced a downsized $500 million calendar offering of eight-year notes on Thursday, was up slightly on the day.

Plastics and chemical company NOVA Chemicals Corp. bonds were down after the company announced an asset purchase on Monday morning.

Health care stocks slid after Hospital Corporation of America announced a dismal forecast of its first quarter earnings, though health care bonds on the whole were largely unaffected, a trader said.

Quorum Health Corp. was unchanged, while Tenet Healthcare Corp. saw about a round-number loss on the session.

And Hertz Global Holdings, Inc. was “trading, but it was relatively unchanged,” on the session, a trader said.

Laureate brings $800 million

Dealers set the stage for an active week in the new issue market on Monday.

Much of the session's announced business is set to price in the middle-late portion of the present week.

Laureate Education began a roadshow on Monday for an $800 million offering of eight-year senior notes, according to a market source.

Initial guidance has the deal shaping up with an 8% yield.

The Rule 144A and Regulation S for life deal is expected to price on Friday.

JP Morgan Securities LLC, Barclays, BMO Securities, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., KKR and Macquarie Capital are the underwriters.

The notes become callable after three years at par plus 75% of the coupon.

The Baltimore-based global network of degree-granting higher education institutions plans to use the proceeds to refinance its term loan B and senior notes due 2019.

EW Scripps starts Tuesday

EW Scripps Co. plans to start a roadshow on Tuesday for a $400 million offering of eight-year senior notes (expected ratings Ba2/BB), according to a syndicate source.

The Rule 144A and Regulation S for life deal is set to price later this week.

Wells Fargo Securities LLC is the left bookrunner. BofA Merrill Lynch, JP Morgan Securities LLC and SunTrust Robinson Humphrey are the joint bookrunners.

Fifth Third, PNC Capital Markets and US Bancorp are the co-managers.

The notes become callable after three years at par plus 75% of the coupon.

The Cincinnati-based broadcasting company plans to use the proceeds to repay its $391 million term loan B, with any remaining proceeds to be used for general corporate purposes.

Booz Allen eight-year deal

Booz Allen Hamilton Holding Corp. began a roadshow on Monday for its $350 million offering of eight-year senior notes (B1/B+), according to a market source.

Initial guidance has the deal coming with a yield in the mid 5% area, the source added.

The Rule 144A and Regulation S, which is being led by BofA Merrill Lynch, is set to price on Friday.

The notes come with three years of call protection.

The issuing entity will be wholly owned subsidiary Booz Allen Hamilton Inc.

The McLean, Va.-based company plans to use the proceeds to repay its revolving credit facility, with any remaining proceeds to be used for working capital and other general corporate purposes including the repayment of all or a portion of the outstanding deferred payment obligation established in connection with the acquisition of Booz Allen by the Carlyle Group in 2008.

The prospective issuer provides management and technology consulting services and engineering services to governments, corporations and not-for-profit organizations.

Cumberland Farms roadshow

Cumberland Farms, Inc. began a roadshow on Monday for a $300 million offering of eight-year senior notes (B3), according to a market source.

The deal is expected to price in the middle part of the present week.

BofA Merrill Lynch is the lead.

The notes come with three years of call protection.

The Westborough, Mass.-based regional chain of convenience stores plans to use the proceeds to repay $191 million of existing debt, putting $107 million of cash on the company's balance sheet.

Clearwater Foods roadshows this week

Clearwater Seafoods Inc. began a roadshow on Monday in Toronto for its $250 million offering of eight-year senior notes (expected ratings B3/B+), according to a syndicate source.

The roadshow travels to New York on Tuesday, to Boston on Wednesday and to the West Coast of the United States on Thursday and Friday.

The Rule 144A and Regulation S for life offer is expected to price on Friday.

Wells Fargo Securities LLC is the left bookrunner. BMO Securities and BofA Merrill Lynch are the joint bookrunners. Rabo Securities is the senior co-manager. Scotia Capital is the co-manager.

The notes become callable after three years at par plus 75% of the coupon.

The Bedford, Nova Scotia-based vertically integrated seafood harvester, processor and distributor plans to use the proceeds, together with expected borrowings under a new term loan revolver, to repay certain debt under its existing credit facilities, with the remainder, if any, to be used for general corporate purposes.

Recent issues trade

Recent issues were atop the most-active list, but did not veer from Thursday’s levels, traders said.

Ultra Petroleum’s 7 1/8% notes due 2025 were unchanged at 99 1/8, a trader said, adding they were the most actively traded notes in the secondary market. A market source quoted the notes with a 98 7/8 bid, 99 3/8 offer.

Its 6 7/8% notes due 2022 were down 3/8 point to par-and-a-half, a trader said. A market source quoted the notes with a 100¼ bid, 100¾ offer.

Air Methods, a provider of air medical transportation and air tourism services, was up ¼ point in its 8% notes due 2024, which were quoted with a 100¼ bid, 100½ offer.

NOVA trades down

After announcing it would be purchasing Williams Olefins LLC, which includes a majority stake in a Geismar, La.-based olefins plant complex, NOVA Chemical saw a ¾-point downtick in its bonds, a trader said.

The transaction is for $2.1 billion in cash, a news release said.

Health care largely unaffected

“Health care reported some earning weakness, but it really didn’t affect it that badly,” a trader said, referring to HCA Holdings’ below-forecasted earnings and revenue for first quarter figures. The company cited government insurance over employer plans as a stranglehold to profit.

Though stocks of other health care-focused companies were down as a result, bonds did not seem to feel the same effects.

Quorum Health’s 11 5/8% notes due 2023 – up 3 points after fourth quarter results on Friday – were unchanged at 89¼. After close, the company announced it launched a $400 million exchange offer for the 11 5/8% notes.

And Tenet Healthcare’s 6¾% notes due 2023 were down 7/8 point to 96, a trader said.

Mixed on the airwaves

San Antonio media and entertainment company iHeartCommunications, Inc.’s 9% notes due 2021 were up ½ point to 77½.

Telecommunications company Charter Communications Inc.’s 5 1/8% notes due 2027 were up 1/8 point to par.

Wireless network operator T-Mobile USA, Inc.’s 6½% notes due 2026 were down ½ point to 109.

In energy

Cleveland, Ohio-based iron ore producer Cliffs Natural Resources Inc.’ 5¾% notes due 2025 were down ¼ point to 94, a trader said.

Houston-based offshore driller Atwood Oceanics, Inc.’s 6½% notes due 2020 were unchanged at 89¼.

And Houston-based electric provider Dynegy Inc.’s 7 3/8% notes due 2022 were down ¾ point to 96.

High-yield roundup

One of the most active issues of the day was Hertz Global’s 7 3/8% notes due 2021, which were up ¼ point to 96¼, a trader said.

Chemical company Ashland Inc.’s 4¾% notes due 2022 were down ¼ point to 103½.

Discount variety stores Dollar Tree, Inc.’s 5¾% notes due 2023 were up 1/8 point to 106 1/8.

Entertainment and hospitality company MGM Resorts International’s 6¾% notes due 2020 were unchanged at 110½.

Market indexes down

The KDP High Yield Daily index was down by 4 basis points to finish at 71.95, its fourth consecutive loss following four straight gains.

Its yield was unchanged for the third-straight session at 5.24%.

The Markit CDX Series 28 index was down more than 1/8 point on Monday, following a gain on Thursday that disrupted four straight setbacks.

It finished with a 106.73 bid, 106 4/5 offer.

On Thursday, it firmed by 3/32 point to finish at 106 27/32 bid, 107 29/32 offered after having dropped by nearly ¼ point on Wednesday.

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