Legacy Reserves prices; talk on American Piping Products emerges; most recent deals seen firmer

By Paul Deckelman and Paul A. Harris

New York, Nov. 19 - The high-yield primary sphere swung into what is expected to be a relatively quiet, holiday-shortened week with one pricing on Monday. Energy operator Legacy Reserves LP brought a $300 million eight-year offering to market.

The issue priced too late in the session for any kind of an aftermarket.

But there was sufficient activity in the deals priced in the last week or so, almost all of it to the upside.

Sealed Air Corp.'s eight-year notes were seen showing particular strength, holding above the 103 bid mark.

AK Steel Corp.'s new six-year secured notes were climbing solidly during Monday's session.

Friday's offerings from Walter Energy Inc. and Thompson Creek Metals Co. Inc., both of which priced at a discount to par, were also solidly higher, above the 101 mark.

Away from the deals that have actually priced, talk was heard on American Piping Products Inc.'s upcoming five-year secured offering.

And syndicate sources said that Canadian oilfield services concern Tuscany International Drilling Inc. would soon be hitting the road to market a dollar-denominated bond deal.

Among the already established bonds, traders saw a generally firm tone to the market and some notable gainers, including Native American casino operator Single Springs Tribal Gaming Authority, whose bonds zoomed on better earnings.

Legacy prices mid-talk

A quiet Monday session saw just one deal clear the market.

Legacy Reserves LP and Legacy Reserves Finance Corp. priced a $300 million issue of 8% eight-year senior notes (Caa1/B-) at 97.848 to yield 8 3/8%, in the middle of the 8¼% to 8½% yield talk.

Merrill Lynch and RBC were the joint global coordinators for the acquisition financing. UBS and Wells Fargo were the joint bookrunners.

American Piping talks notes

Only one other news item bearing upon a U.S. issuer surfaced on Monday.

American Piping Products has set price talk for its $100 million offering of five-year senior secured notes (Caa1//).

The notes are talked with a 12 7/8% coupon to yield 13¼% to 13½%, implying a reoffer price of 97.778 to 98.659.

The deal, which is in the market via Imperial Capital, is expected to price on Tuesday.

Tuscany starts Thursday

There was a greater amount of news volume away from the United States on Monday.

Calgary, Alta.-based Tuscany International plans to start a roadshow on Thursday for a U.S. dollar-denominated offering of senior notes.

Although neither the issuer nor the dealers announced a size or maturity, Fitch Ratings assigned its B+ rating to a $200 million offering of seven-year notes. Standard & Poor's, in assigning its B rating to the notes, also pegged the deal size at $200 million.

Credit Suisse and Scotia Capital are the joint bookrunners.

The roadshow for the debt refinancing deal wraps up on Nov. 27.

Annington starts Tuesday

The European high-yield generated news as well on Monday.

Annington Finance No. 5 plc, a financing unit of London-based Annington Homes, plans to start a roadshow on Tuesday for its £500 million offering of senior PIK notes due in January 2023 (expected Caa1/CCC+).

Barclays is the bookrunner.

Proceeds will be used to fund the acquisition of Annington by Terra Firma Capital from Nomura.

Elsewhere, the market learned that Ford's FCE Bank plans to commence meetings with fixed-income investors in London on Nov. 27 ahead of a possible bond deal, market conditions permitting.

BNP Paribas, Credit Suisse, Deutsche Bank and HSBC are the arrangers.

The European high-yield should remain active right up until the market winds down for the year-end holiday week, London-based syndicate sources said on Monday.

One debt capital markets banker there saw about two deals per week during that interval. Similarly, another banker set deal volume to year-end at about eight in all.

The European high-yield market has been notably stable in recent days, compared with the market in the United States, one banker noted.

Also, fund flows, which turned decidedly negative during the most recent week in the United States, have remained persuasively positive in Europe, the source added.

Some European accounts that had put cash to work in U.S. high yield are shifting into European bonds, the source said, adding that in comparison to the U.S. market, the European market is perceived to be relatively inexpensive at present.

Legacy too late to trade

The day's sole new deal that priced, from Legacy Reserves came to market too late in the session for any kind of secondary dealings,

The Midland, Texas-based energy exploration and production company's $300 million eight-year offering had earlier priced at 97.848 to yield 8%.

Friday deals hold their own

A trader said that "the older stuff," by which he meant paper that's priced within the last two weeks, "is a little bit better, sort of grinding up with the marketplace," which overall had a positive bias.

For instance, he saw two of the issues that had priced at discounts on Friday as having moved up solidly in Monday's dealings.

Walter Energy's new 9 7/8% notes due 2020 were trading in the a 1011/2-to-102 bid context - well up from the 99.302 level where the Birmingham, Ala.- based metallurgical coal producer 's $500 million issue had priced to yield 10%.

Along those same lines, Denver-based mining concern Thompson Creek Metals' $350 million of new 9¾% senior secured first-priority notes due 2017 had firmed to around 101 bid, 102 offered, versus the 99.076 price at which that deal had come to market, also yielding 10%.

A second trader said that he saw the new Walter Energy paper having gotten as good as 103 bid during the session.

He also saw Melco Crown Entertainment's 8½% notes due 2020 bid around a 1011/4-to-101½ context "and looking" for offerings. The Hong Kong-based operator and developer of casino projects in China's Macau gambling enclave had priced its $825 million issue at par on Friday via its Studio City Co. Ltd. subsidiary.

Another trader saw the gaming operator's new bonds at 101¼ bid, 102 offered.

Friday's fourth deal - for international energy drilling contractor Pacific Drilling V Ltd. - stayed closer to its issue price level, with a trader seeing the bonds in a 99 5/8-to-par trading range. The $500 million issue of 7¼% senior secured notes due 2017 had priced at 99.483 to yield 7 3/8%.

Older deals firm up

Going back a little further, a trader saw Sealed Air's 6½% notes due 2020 having moved up to 103 bid, 103½ offered.

That was well up from Thursday's levels in a 1011/2-to-102 context and Friday's 101¼ bid area.

The Elmwood Park, N.J.-based provider of food safety and security, facility hygiene and product protection services had priced its $425 million deal at par on Thursday, after having chopped its originally announced $850 million size in half to $425 million, dropping a planned 10-year notes tranche and just going with the eight-year bonds.

Another standout performer on Monday was AK Steel's new 8¾% senior secured notes due 2018. The West Chester, Ohio-based manufacturer of specialty steel alloys had priced its $350 million issue at par on Wednesday, and it had edged up to a 100 1/8 to 100 3/8 bid context by Thursday.

But on Monday, a trader said, the bonds had "moved up a lot today." He saw the bonds having improved to 1023/4-to103¼ bid by Monday afternoon.

"It's up a full point in the last hour alone."

He did not see any specific news out about the company that might explain that rise, but noted that "steel paper generally seems to be bid for today," stating, for example, that several issues of crossover credit ArcelorMittal SA were among the busiest high-yield bonds listed on Trace. The Luxembourg-based steelmaker's 6¼% notes due 2022 were seen at 98¾ bid on mid-afternoon volume of over $22 million, while its 4½% notes due 2017 were at 100¼ bid on turnover topping $17 million. Arcelor's 7% bonds due 2039 traded around the 93 level on volume of more than $13 million.

Additionally, he noted, the new AK Steel issue "is senior secured, and it kind of came up below the market." The paper had actually traded a little under its par issue price in initial aftermarket dealings last week, "so I think people were trying to add to it."

Overall, he said, "the stuff that came last week that was doing okay is up a lot. It's firm, and the rest of the stuff is sort of grinding up. I think right now, the way the market looks, we're seeing more buyers than sellers."

He said that "last week, we had a sense with the calendar that there wasn't a rush to just buy everything, with accounts looking it over and picking their spots. I don't know if that will change this week - but so far, it has a lot better tone to it."

Better secondary tone

Another trader also saw that better tone in the secondary market away from the new deals as well.

For instance, he said that Shingle Springs Tribal Gaming Authority's 9 3/8% notes due 2015 "[were] another big one today."

He saw the Shingle Springs, Calif.-based Native American gaming concern's bonds having moved up to the mid-90s from the mid-80s previously, after it reported favorable earnings data,

He also said that other stuff was "definitely better today," with Springleaf Financial's 6.9% notes due 2017up a point, at around the 86½ bid level, "so it was a good day."

Indicators improve

Among statistical market performance indicators, the Markit Series 19 CDX North American High Yield index rose by 1¼ point on Monday to end at 98½ bid, 98 5/8 offered, building on Friday's gain of 5/16 of a point.

The KDP High Yield Daily Index gained 18 basis points Monday to end at 73.51, after having lost 5 bps on Friday. Its yield declined by 4 bps, to 6.35%, after having risen by 2 bps Friday.

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