Market kicks off month, quarter mixed; Quicksilver shale sale boosts bonds; Momentive rises

By Stephanie N. Rotondo and Paul A. Harris

Phoenix, April 1 - The first day of the new month and quarter wasn't all that exciting for high-yield bonds, traders reported.

"I thought today was one big April Fool's joke," one trader said. On top of lackluster trading, he said there was no new issuance. "I didn't even see much in the pipeline."

Holidays and vacations were keeping people from their desks, he said, which was "not in our favor for getting much done."

The big mover of the day was Quicksilver Resources Inc. On Friday, while the market was enjoying the beginning of a long holiday weekend, the company announced the sale of a 25% stake in its Barnett Shale assets. Come Monday, the market pushed the company's bonds up as much as 8 points, according to one trader.

Meanwhile, Momentive Performance Materials Inc. reported earnings on Monday. Despite a wider loss, the retirement of debt gave investors something to cheer about, and the bonds rose at least a point on the day.

One trader said the market was generally mixed on Monday, though perhaps toward the downside.

"I thought it was maybe a little soft to start out the month," he said.

But another trader said there were "no real movers on the downside" during the day's trading session.

Market indicators seemed to support the idea of a mixed marketplace.

The KDP High Yield index fell to 75.56, as yield widened to 5.53%. That compared to Friday's reading of 75.59, with a yield of 5.51%.

The CDX North American High Yield index put on 3/32 of a point, a market source reported, quoting the index at 103 3/32 bid, 103 7/32 offered.

CrownRock's $350 million

No issues were priced as the first week of April got under way in the primary market.

There were two new deal announcements.

CrownRock, LP and CrownRock Finance, Inc. plan to price a $350 million offering of eight-year senior notes later this week.

Credit Suisse Securities (USA) LLC and Mitsubishi UFJ are the joint bookrunners.

The Rule 144A and Regulation S for life notes become callable in three years at par plus 75% of the coupon. The notes feature a three-year 35% equity clawback and a 101% poison put.

A special call at 110% comes into effect if a change of control takes place before July 1, 2014.

The Midland, Texas-based energy company plans to use the proceeds to repay debt and for general corporate purposes.

CrownRock develops oil and gas properties in the Permian Basin and Rocky Mountain regions of the United States.

Bonanza Creek eight-years

Bonanza Creek Energy, Inc. plans to price a $250 million offering of eight-year senior notes this week.

Wells Fargo Securities LLC is the left bookrunner. J.P. Morgan Securities LLC, KeyBanc Capital Markets and RBC Capital Markets are the joint bookrunners.

BMO Securities is the lead manager.

Iberia, Scotia Capital, SG CIB, Capital One Southcoast, Credit Agricole CIB, Global Hunter Securities and SunTrust Robinson Humphrey are the co-managers.

The Rule 144A and Regulation S with registration rights notes come with four years of call protection.

Credit ratings remain to be determined.

Proceeds will be used to repay all outstanding borrowings under the revolver. About $191.5 million remains outstanding as of March 28.

Proceeds will also be used general corporate purposes, which may include funding the drilling and development program and capital expenditures.

Bonanza Creek is an independent energy company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States.

Quicksilver boosted by sale

A trader said that Quicksilver Resources' bonds were heading higher following news out Friday of an asset sale.

He called the 11¼% notes due 2016 up 3½ points at 1051/4, while the 9 1/8% notes due 2019 were up 3 points at 961/4. The trader also saw the 8¼% notes due 2014 rising over 2½ points to 1011/2.

However, it was the 7 1/8% notes due 2016 that were up the most, climbing 8 points to 923/4, versus previous levels of 841/2.

On Friday, the Fort Worth, Texas-based oil and gas exploration company announced it had reached an agreement to sell a 25% stake in its Barnett oil and shale assets to TG Barnett Resources LP, a wholly owned subsidiary of Tokyo Gas Co. Ltd.

Quicksilver will receive $485 million from the sale, which is expected to close on April 30. The company will use the funds to reduce outstanding debt.

Going forward, Quicksilver will remain operator of the asset and capital spending will be shared proportionally.

Momentive debt rises

Momentive Performance Materials released its quarterly earnings on Monday, and the bonds reacted favorably to the numbers.

A trader called the debt up 1 point to 1½ points, seeing the 9% notes due 2021 trade around "77ish" and the 10% notes due 2020 at 101.

For the fourth quarter of 2013, the Waterford, N.Y.-based specialty chemical company reported net sales of $566 million, down from $596 million the year before. Operating loss, however, improved to $3 million, versus $28 million in 2011.

Overall net loss was $131 million, wider than 2011's fourth-quarter loss of $95 million. The increased loss was due to the extinguishment and exchange of debt.

For the year, net sales fell to $2.36 billion from $2.64 billion. Net loss was $365 million, compared to $141 million the prior year.

But despite the sales decline, the company pointed out that it had paid down a significant amount of debt, leaving it with no major maturities until 2016.

Momentive had $362 million of liquidity as of the end of 2012.

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