Giant GM Financial deal leads $4.1 billion day; Seven Generations jumps in aftermarket

By Paul Deckelman and Paul A. Harris

New York, May 7 - The high-yield market saw one of its heaviest new-issuance days on Tuesday, according to syndicate sources, with some $4.125 billion of new dollar-denominated, junk-rated paper from domestic or industrialized-country issuers come to market in seven tranches.

According to data compiled by Prospect News, it was the fourth-biggest primary session of the year in terms of volume and the biggest since March 20, when $4.275 billion came to market in five tranches.

One deal accounted for more than half of the day's total. General Motors Financial Co. - the financial unit of the eponymous automotive giant - came to market with an upsized $2.5 billion of bonds, split into three tranches. The GM Financial unit appeared too late in the session for any aftermarket trading, participants said.

That was also the case with commercial real estate lender and REIT iStar Financial, Inc.'s quickly shopped $265 million offering of three-year notes.

Earlier in the day, scaffolding provider Safway Group Holding LLC priced an upsized $560 million issue of five-year secured notes, which firmed smartly when they were freed for trading.

There was also a pair of upsized $400 million transactions, both out of the energy space, with midstream natural gas company Atlas Pipeline Partners, LP doing an eight-year deal and Canadian oil and gas operator Seven Generations Energy Ltd. bringing a seven-year deal to market. But there, the similarities ended; while the Atlas transaction stayed not too far from its par issue price, traders saw the Seven Generations deal move sharply higher when it was freed to trade.

The syndicate sources heard price talk emerge on several deals that are expected to price during Wednesday's session - from global chemical storage company LBC Tank Terminals Netherlands BV, steel and metal products producer Commercial Metals Co. and energy industry geophysical technology provider Ion Geophysical Corp.

Primaryside developments, also including new-deal announcements and prospective deals popping up on the radar screen, took center stage, traders said, overshadowing the non-new-deal secondary market.

Statistical indicators of market performance were higher across the board for a fourth consecutive session.

GM blows through talk

The torrid high-yield primary market saw five issuers bring a combined seven tranches. Each issuer upsized the overall amount of notes it priced.

Of the tranches, five priced inside of price talk, while the other two priced at the tight end.

General Motors Financial priced a massively upsized $2.5 billion three-part senior notes transaction (Ba3/BB-/BB).

The deal was announced at $2 billion on Monday.

All three tranches blew through yield talk.

The deal included a $1 billion tranche of three-year notes, which priced at par to yield 2¾%. The yield printed 12.5 basis points inside of yield talk set in the 3% area.

There was also a $750 million tranche of five-year notes, which priced at par to yield 3¼%, 25 bps below the tight end of the 3½% to 3¾% yield talk.

The long tranche featured $750 million of 10-year notes, which priced at par to yield 4¼%, 25 bps below the tight end of the 4½% to 4¾% yield talk.

Barclays, Deutsche Bank, Goldman Sachs, RBC and RBS were the joint bookrunners. Deutsche Bank will bill and deliver.

Proceeds will be used to fund a portion of the acquisition of the international auto finance and financial services businesses of Ally Financial Inc., to repay certain debt to General Motors Co. under its inter-company loan and for general working capital purposes.

Safway inside of talk

Safway Group priced an upsized $560 million issue of five-year senior secured second-lien notes (B3/B) at par to yield 7%.

The deal was upsized from $540 million.

The yield printed 12.5 basis points inside of yield talk set in the 7¼% area.

After the deal broke for trading, it was 102 bid, 103 offered, according to a trader.

Goldman Sachs, Wells Fargo, Morgan Stanley, Barclays and Lazard managed the sale.

Proceeds will be used to repay the company's second-lien senior secured term loan in full and a portion of the ABL credit facility, as well as to make a distribution to the parent to enable the parent to pay a dividend to its equity holders.

Proceeds will also be used for general corporate purposes.

Atlas drives through

Atlas Pipeline Partners and Atlas Pipeline Finance Corp. priced an upsized $400 million issue of eight-year senior notes (B2/B+) at par to yield 4¾%.

The deal was upsized from $325 million.

The yield printed at the tight end of the 4¾% to 5% yield talk.

Citigroup was the left bookrunner for the quick-to-market deal.

Wells Fargo, BofA Merrill Lynch, Deutsche Bank, J.P. Morgan and SunTrust were the joint bookrunners.

Proceeds will be used to repay outstanding amounts under a credit facility, which will be used to partially fund the $1 billion purchase price of the TEAK Midstream LLC acquisition, and for general corporate purposes.

The additional proceeds resulting from the $75 million upsizing of the deal will be used to pay down the company's revolver by $50 million, with the remainder to go as cash on its balance sheet.

Seven Generations prices

Seven Generations Energy priced an upsized $400 million issue of seven-year senior notes (B3/CCC) at par to yield 8¼%.

The deal was upsized from $250 million.

The yield printed 12.5 basis points inside of price talk that was set in the 8½% area.

The notes screamed to 104½ bid, 105 offered, according to sources.

Just after the close a trader had them at 103¼ bid.

Credit Suisse ran the books.

The Calgary, Alta.-based energy company plans to use the proceeds to fund planned capital expenditures and for general corporate purposes. Proceeds resulting from the $150 million upsizing will be applied as cash on the balance sheet and used for general corporate purposes.

iStar upsizes drive-by

iStar Financial priced an upsized $265 million issue of senior notes due July 1, 2016 (existing ratings B3/B+) at par to yield 3 7/8%.

The deal was upsized from $250 million.

The yield printed at the tight end of yield talk set in the 4% area.

BofA Merrill Lynch, Barclays and J.P. Morgan were the joint bookrunners.

Proceeds will be used to redeem the remaining $96.8 million of 8 5/8% senior notes due 2013 and $144.6 million of 5.95% senior notes due 2013.

Talking the deals

The dust from Tuesday's $4 billion of issuance will have scant time to settle, as dealers prep another busy session for Wednesday.

Of the transactions on deck for the mid-week session, LBC Tank Terminals talked its $350 million offering of 10-year senior notes (B3/B) to yield 7% to 7¼%.

RBC is the left bookrunner. BNP, Credit Agricole, DNB and ING are the joint bookrunners.

Commercial Metals Co. talked its $300 million offering of non-callable 10-year senior notes (Ba2/BB+) with a yield in the 5% area.

Citigroup, Deutsche Bank, BofA Merrill Lynch, RBS and Wells Fargo are the joint bookrunners.

And ION Geophysical talked its $175 million offering of five-year senior secured second-lien notes to yield 8% to 8¼%.

Citigroup is the left bookrunner. Wells Fargo is the joint bookrunner.

BWAY's $250 million

BOE Intermediate Holding Corp., the indirect parent of BWAY Intermediate Co., Inc., has scheduled a roadshow ahead of a planned $250 million issue of senior PIK toggle notes due Nov. 1, 2017 (expected ratings Caa2/CCC+).

Pricing is expected during the middle part of the May 6 week.

BofA Merrill Lynch, Goldman Sachs & Co., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are the joint bookrunners for the Rule 144A for life deal.

Proceeds will be used to fund a special dividend to stockholders, including platinum equity.

Gastar via Imperial

Gastar Exploration USA, Inc., a subsidiary of Gastar Exploration Ltd., began a roadshow on Tuesday for its $200 million offering of five-year senior secured notes.

Imperial Capital is the bookrunner.

Proceeds will be used to finance the pending acquisition of mid-continent assets from Chesapeake Energy Corp., to repurchase 6,781,768 shares of the parent's common stock held by Chesapeake and settle all current litigation with Chesapeake.

Proceeds will also be used to repay Gastar's revolver in full and for general corporate purposes.

Pacific Drilling, Murray

Pacific Drilling SA is expected to undertake the placement of $750 million high-yield notes, according to a market source, who added that the deal is expected to kick off during the week ahead.

Goldman Sachs, Citigroup, Deutsche Bank and Barclays will be the leads.

The Luxembourg-based ultra-deepwater drilling contractor plans to use the proceeds to refinance existing commercial bank debt.

And Murray Energy Corp. is expected to kick off a roadshow for a $400 million offering of high-yield notes via Goldman Sachs during the week ahead.

The St. Clairsville, Ohio-based coal company plans to use the proceeds to refinance debt.

Portucel brings €250 million

Portucel, SA plans to participate in a Wednesday conference call with fixed-income investors in order to discuss its €250 million offering of seven-year senior notes (expected ratings Ba3/BB).

Credit Suisse is the bookrunner.

The Portugal-based paper company plans to use the proceeds for general corporate purposes.

Seven Generations soars

In the secondary sphere, traders said that the new 8¼% notes due 2020 from Seven Generations Energy were clearly the standout performer among the new deals that were seen in the aftermarket.

"They certainly did jump," said one trader, who quoted the Calgary, Alta.- based oil and gas exploration and production company's paper at 104¼ bid, 104½ offered, well up from the par level where the upsized $400 million offering had priced.

A second trader pegged the bonds a little lower than that, but not by much, at 103¾ bid, 104¼ offered.

Safway strong

Among the day's other issues, a trader said that Safway's 7% senior secured second-lien notes due 2018 were trading at 102¼ bid, 102¾ offered, up from the upsized $560 million deal's par pricing level.

A second trader saw the Waukesha, Wis.-based construction scaffolding provider's deal finishing out the day at 102 bid, 102¾ offered.

On the other hand, Atlas Pipeline Partners, LP's 4¾% notes due 2021 didn't move too far off their par issue price.

A trader saw the Moon Township, Pa.-based natural gas midstream services provider's upsized $400 million offering in a 100½ to 101 bid context, while a second located the quickly shopped notes late in the day at 100¼ bid, 100¾ offered.

Traders said that New York-based commercial real estate lender iStar Financial's 3 7/8% notes due 2016 and the three-tranche issue from General Motors priced too late in the session to have any market impact.

GM Financial popular

One of the traders said that he heard that the new General Motors Financial "had people from high yield, crossover and [investment grade] in the book."

"There supposedly were over 800 accounts and over $20 billion of orders" for what ultimately became a $2.5 billion transaction, he said.

Referring to the recent record-huge bond offering that electrified the high-grade market, he said that GM Financial "became very Apple-esqe."

Not much of Monday deals

Looking at the deals that priced on Monday, a trader said that he heard the new Sonic Automotive Inc. 5% senior subordinated notes due 2023 offered at 1021/4, but didn't see any real markets in it.

The Charlotte, N.C.-based vehicle retailer's drive-by $300 million deal priced at par and had been seen trading around later on Monday at 102 bid, 102½ offered.

He said that NXP Semiconductors NV's 3¾% notes due 2018 traded at 100½ bid, 101 offered early in the morning, "but after that, there was just radio silence."

The Dutch computer-chip maker's quick-to-market $750 million issue had priced at par on Monday after having been upsized from an initially announced $500 million, but came too late in the session for any kind of secondary dealings.

A trader at another shop said that PVR Partners LP's 6½% notes due 2021gained 3/8 point on Tuesday, moving up to 102 1/8 bid, 102 5/8 offered.

The Radnor, Pa.-based natural gas midstream services company's quickly shopped $400 million deal had priced at par after having been upsized twice, first from the original $300 million to $350 million and then to $400 million. It was quoted in a 101½ to 102 bid context in Monday's dealings.

The first trader said that activity in recently priced issues, and in the secondary market in general, dried up on Tuesday "as the deals started to get announced and everyone headed to the sidelines to await the day's pricings."

Market indicators gaining

Overall, statistical junk performance indicators were firmer for a fourth consecutive session on Tuesday.

The Markit Series 20 CDX North American High Yield index was up by 3/16 of a point on Tuesday to end at 107 9/32 bid, 107 13/32 offered, its fourth consecutive advance. On Monday, it had risen by 15/32 of a point.

The KDP High Yield Daily index, meanwhile, rose for an 11th straight session on Tuesday, pushing upward by 4 basis points to close at 76.71. It had gained 2 bps on Monday.

The yield came in by 2 bps for a second consecutive session to finish at 4.91%. It was also its 11th straight improvement.

And the widely followed Merrill Lynch High Yield Master II index put up its 14th consecutive gain on Tuesday, rising by 0.218%. On Monday, it had risen by 0.109%.

The latest gain lifted its year-to-date return to 5.7%, marking its 12th straight new peak level for the year.

The index's yield to worst also dropped to a new all-time low at 5.004% on Tuesday, versus the prior low point of 5.063% notched on Monday. Tuesday's session was the fifth straight day in which a new low had been reached.

The spread to worst tightened on Tuesday to 429 bps over Treasuries, a new tight level for the year, versus the prior tight point of 434 bps, also recorded on Monday. Tuesday was the fifth straight session in which a new tight level for 2013 had been reached.

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