Sabine Pass, HD Supply, Melco megadeals lead $5.7 billion primary in busiest session this year

By Paul Deckelman and Paul A. Harris

New York, Jan. 29 - The high-yield market saw its busiest primary session of the year so far on Tuesday, as over $5.7 billion of new U.S. dollar-denominated, purely junk-rated paper from domestic or developed-country issuers were priced in eight tranches.

That easily eclipsed the previous busiest day of 2013, when $4 billion of new paper priced in eight tranches on Jan. 16, according to data compiled by Prospect News.

In fact, it was Junkbondland's busiest session since last fall, when $5.775 billion priced in eight tranches on Oct. 16, according to the data.

Syndicate sources said that three giant-sized offerings led the way: natural gas operator Sabine Pass Liquefaction LLC's $1.5 billion of eight-year secured notes, tool and building products distributor HD Supply, Inc.'s $1.275 billion of seven-year paper and Macau casino powerhouse Melco Crown Entertainment's $1 billion eight-year deal.

Sabine's deal was a regularly scheduled forward-calendar issue, and it gained nearly 2 points in the aftermarket, while HD and Melco were quickly shopped transactions. Melco traded up modestly after it was freed, while HD was not seen initially trading around.

Internet movie and TV programming distributor Netflix, Inc. drove by with an upsized $500 million of eight-year notes, which moved above the 101 bid level after pricing.

Banana giant Chiquita Brands International , Inc. and German carbon black producer Orion Engineered Carbons Finance each did a $425 million bond deal, Chiquita's a quick-to-market eight-year offering. Orion's 6.5-year PIK toggle note transaction priced off the calendar. Both issues firmed in the aftermarket.

Commercial aircraft leasing operator Air Lease Corp. landed unexpectedly with a $400 million seven-year deal, while Beazer Homes USA Inc. priced $200 million of 10-year notes just a day after that deal was announced. Both of those issues also moved up in late trading.

Apart from the issues actually priced, the syndicate sources heard price talk on insulation distributor Unifrax I LLC's $250 million six-year offering, which is scheduled to price on Wednesday.

Fish producer Aquaculture, Inc. began a roadshow for its $250 million eight-year deal, while environmental services company Tervita Corp. was also heard to be hitting the road with a $1.1 billion two-part, dual-currency offering of secured bonds.

Semiconductor industry name Global A&T Electronics Ltd. was shopping a $625 million deal around for possible pricing on Thursday, while tobacco merchant Vector Group Ltd. will hold a Wednesday investor call to market its $375 million eight-year secured deal to would-be buyers.

Traders said that new or recently priced issues dominated the junk bond secondary market on Tuesday, pushing more established credits to the sidelines.

Statistical market performance measures all pointed lower on the day.

Sabine massively upsizes

Sabine Pass, a subsidiary of Cheniere Energy Partners, LP, priced a massively upsized $1.5 billion issue of non-callable eight-year senior secured notes (Ba3/BB+) at par to yield 5 5/8%.

The deal was upsized from $1 billion.

The yield printed on top of yield talk.

Morgan Stanley, Credit Suisse, RBC, Deutsche Bank, SG, Standard Chartered, HSBC, J.P. Morgan, Mitsubishi and Credit Agricole were the joint bookrunners.

The Houston-based liquid natural gas company plans to use the proceeds to pay capital costs in connection with the construction of the LNG train 1 and train 2.

HD Supply drives by

In quick-to-market action, HD Supply priced a $1.275 billion issue of senior notes due July 15, 2020 (Caa1/CCC+) at par to yield 7½%.

The yield printed at the wide end of price talk that was set in the 7 3/8% area.

Bank of America Merrill Lynch, Goldman Sachs, Barclays, J.P. Morgan, Credit Suisse, Deutsche Bank, Wells Fargo and UBS were the joint bookrunners for the debt refinancing.

Melco Crown's $1 billion

MCE Finance Ltd., a subsidiary of Macau's Melco Crown Entertainment, priced a $1 billion issue of eight-year senior notes (B1/BB-) at par to yield 5%.

The yield printed 12.5 basis points below the tight end of the price talk that had been set in the 5¼% area.

Deutsche Bank, ANZ, Merrill Lynch and Citigroup were the joint bookrunners for debt refinancing deal.

Netflix upsizes

Netflix priced an upsized $500 million issue of senior notes due Feb. 1, 2021 (Ba3/BB-) at par to yield 5 3/8%.

The yield printed on top of yield talk.

Morgan Stanley and J.P. Morgan were the joint bookrunners for the quick-to-market deal, which was upsized from $400 million.

The Los Gatos, Calf.-based movie rental business plans to use the proceeds to redeem all of the 8½% senior notes due 2017 and for general corporate purposes. The additional proceeds resulting from the $100 million upsizing will be used for general corporate purposes.

Chiquita atop talk

Chiquita Brands International and Chiquita Brands, LLC priced a $425 million issue of 7 7/8% eight-year senior secured notes (B1/B) at 99.274 to yield 8%.

The yield printed on top of yield talk.

Merrill Lynch, Wells Fargo, Goldman Sachs and Barclays were the joint bookrunners for the debt refinancing.

Orion PIK toggle deal

Orion Engineered Carbons Finance priced a upsized $425 million issue of 9¼% six-year PIK toggle notes (Caa1/CCC+) at 99.00 to yield 9.46%.

The deal was upsized from $390 million.

The yield came slightly below the tight end of the 9½% to 9¾% yield talk.

Goldman Sachs was the physical bookrunner. Barclays, JPMorgan and UBS were the joint bookrunners.

Proceeds will be used to fund a distribution to shareholders.

Air Lease at the wide end

Air Lease priced a $400 million issue of senior notes due March 1, 2020 at par to yield 4¾%, at the wide end of the 4 5/8% to 4¾% yield talk.

Merrill Lynch, Deutsche Bank and J.P. Morgan were the lead bookrunning managers for the quick-to-market deal.

BMO, Citigroup, Credit Suisse, RBC, RBS and Wells Fargo were bookrunning managers.

The notes were priced without ratings. However, they feature a coupon step up if they are not rated in the next 12 months.

The commercial aircraft leasing company plans to use the proceeds to fund the acquisition of commercial aircraft and for general corporate purposes.

Beazer Homes 10-year notes

Beazer Homes priced a $200 million issue of 10-year senior notes (Caa2/CCC) at par to yield 7¼%.

The yield printed on top of yield talk.

Credit Suisse was the bookrunner for the debt refinancing deal.

Tervita starts Wednesday

Tervita plans to start a roadshow on Wednesday for its $1.1 billion-equivalent offering of senior secured notes due November 2018 (expected ratings B2/B-).

The notes are being offering in dollar and Canadian dollar-denominated tranches, with tranche sizes to be determined.

The deal is set to price late in the Feb. 4 week.

Joint global coordinator and physical bookrunner RBC will bill and deliver for the debt refinancing deal.

Goldman Sachs is a joint global coordinator and joint bookrunner.

TD and Deutsche Bank are also joint bookrunners.

Global A&T's $625 million

Global A&T Electronics plans to offer $625 million senior secured notes due 2019 (expected ratings B1/B) during Thursday's session.

The Singapore-based semiconductor company held an investor call on Tuesday.

Merrill Lynch, Credit Suisse, J.P. Morgan and UBS are the joint bookrunners for the debt refinancing.

Vector sets Wednesday call

Vector Group plans to host an investor call at 12:30 p.m. ET on Wednesday to discuss its $375 million offering of eight-year senior secured notes.

The deal is expected to price early in the Feb. 4 week.

Jefferies is the bookrunner for the debt refinancing.

Cooke starts roadshow

Cooke Aquaculture, Inc. started a roadshow on Tuesday for its $250 million offering of eight-year senior notes via sole bookrunner Credit Suisse.

The Blacks Harbour, New Brunswick-based company plans to use the proceeds to repay its revolver and a portion of its term loan as well as for general corporate purposes.

Unifrax talked a downsized $205 million offering of six-year senior notes (Caa1/B-) to yield 7½% to 7¾%.

Goldman Sachs, Wells Fargo and KeyBanc are the joint bookrunners.

OTE brings five-year deal

Greece's OTE plc announced in a Tuesday press release that it proposes to sell five-year fixed-rate eurobonds via its euro medium-term notes program.

The deal was the subject of a Tuesday conference call in Europe hosted by BNP Paribas, Deutsche Bank and HSBC, according to a debt capital markets source in London.

The notes would be guaranteed by Hellenic Telecommunications Organization SA, which is rated at Caa1 by Moody's Investor Services and B- by Standard & Poor's.

At the same time the Athens-based telecom announced the proposal to sell the new notes, it also announced a tender offer for its existing notes maturing in 2013 and 2014 at prices of par and 102, respectively, subject to completion of the new notes sale.

Infinis starts Wednesday

Also during the European session, Infinis plc plans to start a roadshow on Wednesday for its £350 million offering of six-year senior notes.

Joint bookrunner Deutsche Bank will bill and deliver. Credit Suisse is also a joint bookrunner.

Proceeds will be used to refinance debt, as well as to make a distribution to Infinis Energy Holdings Ltd. (IEHL) and to partially fund the acquisition of landfill gas assets owned by other subsidiaries of IEHL.

Sabine shows strength

When the day's flood of new paper reached the secondary market, a trader said that Sabine Pass Liquefaction's 5 5/8% senior secured notes due 2021 "traded well," quoting the Houston-based liquid natural gas company's issue at 1015/8 bid, 101 7/8 offered.

A second trader pegged those bonds at 101¾ bid, 102 offered, well up from the par level at which the upsized megadeal had priced earlier in the session.

Melco muddles along

On the other hand, Melco Crown Entertainment's $1 billion of 5% notes due 2021 "didn't go so well," one of the traders said, quoting the issue at 100 3/8 bid, 100 5/8 offered, not much removed from the par issue price.

A second trader agreed that the Macau-based gaming concern's new bonds "didn't go far," also seeing them going out around 100 3/8 bid, 100 5/8 offered.

The day's other megadeal-sized offering - Atlanta-based tool and building products distributor HD Supply's quick-to-market 7½% notes due 2020 - priced late in the session and were not seen trading around in the secondary realm.

Day's deals trade up

Among the more normal-sized offerings, a trader said he saw Netflix's 5 3/8% notes due 2021 offered at 1013/4, "but I don't think there's better than a 100½ bid."

However, another trader later in the session was quoting the Los Gatos, Calf.-based internet movie and TV programming distributor's upsized deal at 101¼ bid, 101¾ offered, versus their par issue price.

Chiquita Brands' new 7 7/8% notes due 2021 were seen by a trader at 101¾ bid, 102 offered - well up from the 99.274 level at which the Charlotte, N.C.-based banana and fresh produce distributor had priced that quick-to-market $425 million of the notes.

A trader saw Orion Engineered Carbons' 9¼% senior PIK toggle notes due 2019 having moved up a little to 99 3/8 bid, 99 5/8 offered, after the German producer of carbon black pigments had priced its upsized $425 million offering at 99.

Air Lease Corp.'s 4¾% notes due 2020 gained a little bit of altitude, a trader said, locating the bonds in a 1001/4-to-100½ context, although he later said they had traded into a 100¼ bid and were going out around 100 1/8 bid, 100 3/8 offered.

Beazer Homes' 7¼% notes due 2023 "traded well," opined a market source, who saw the Atlanta-based homebuilder's deal at 101½ bid, 102 offered, while another source quoted them at 101¼ bid, 101¾ offered, versus the quick-to-market issue's par pricing level.

Monday deals go both ways

Among the new issues that priced on Monday, a trader said that Atlas Pipeline Partners, LP's 5 7/8% notes due 2023 had firmed a little early in the session when they were freed to trade, but then "they fell back down to par."

A second trader said: "A lot of bonds were trading in the morning" at 100¼ bid, "first thing off the bat."

However, he said that as the day wore on, they came off that peak and were going out around par in a locked market, or maybe bracketing the par level.

"There definitely were more sellers, but I guess the underwriters were taking them."

The Pittsburgh-based midstream natural gas company, along with its Atlas Pipeline Finance Corp., unit, priced $650 million of the notes - upsized from an originally announced $450 million - in a quick-to-market deal that priced at par. It came too late in Monday's session for any real trading.

In contrast, Monday's other deal, from Houston-based homebuilder Weekley Homes LLC, was seen by a trader continuing to more than hold its own in the secondary arena.

That $200 million forward-calendar deal, co-issued by Weekley Finance Corp., had priced at par on Monday and moved up above the 102 bid level in initial aftermarket dealings. On Tuesday, the trader saw the notes at 102¼ bid, 102¾ offered.

Euro notes lower

In the market for recent euro-denominated paper, market sources said those issues moved lower on the day, while trading remains active.

"We're definitely seeing elevated volumes," a bond source in London said on Tuesday. "Very high volumes do mean a very good window to access."

Smurfit Kappa Acquisitions' 4 1/8% senior secured notes due 2020 fell to 97.645, down from 98 5/8 on Monday, bond sources said.

The company sold €400 million of the notes at par on Jan. 23.

Smurfit Kappa is a Dublin, Ireland-based paper-based packaging manufacturer.

Ardagh lower

The 5% tranche of senior secured notes due 2022 that Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. priced earlier in the month traded lower at 99 1/8, according to a bond source on Tuesday.

The companies sold €250 million of the notes at par along with two U.S. dollar-denominated tranches on Jan. 16.

Ardagh is a Dublin, Ireland-based supplier of glass and metal packaging.

Market measures head south

A trader said that while Tuesday was "a busy day on the new-issue front, there was nothing going on in the secondary market" away from the new paper .

"There was a flurry of accounts occupied by the calendar. Most of the secondary away from that was last week's new deals."

Overall, statistical junk market performance indicators were lower for a second consecutive session on Tuesday.

The Markit Series 19 CDX North American High Yield index lost 1/32 pf a point on Tuesday to end at 102¾ bid, 102 13/16 offered, its second consecutive loss. It had dropped by 5/32 point on Monday.

The KDP High Yield Daily index also posed a second straight loss on Tuesday, falling by 9 basis points to end at 76.08. That followed Monday's 6 bps loss. Its yield rose by 3 bps on Tuesday to 5.42%, its second straight increase, after having edged up by 1 bp on Monday.

And even the widely followed Merrill Lynch U.S. High Yield Master II index, which had been rising in a long winning streak, ended on the downside on Tuesday. It lost 0.172%, marking its first downturn after nine consecutive sessions of gains, including Monday's 0.021% advance.

The loss left its year-to-date return at 1.815%, down from Monday's 1.991% reading, the peak level for the year so far.

Cristal Cody contributed to this review

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