Chemours megadeal, Viking Cruises price; new Chemours busy; Seventy Seven Energy jumps

By Paul A. Harris and Paul Deckelman

New York, May 5 – The high-yield market saw a pair of new issues price on Tuesday, in contrast to the complete shutout seen on Monday.

Chemical manufacturer Chemours Co. had the big deal of the day, a three-part, regularly scheduled $2.5 billion equivalent deal consisting of an upsized $1.35 billion of dollar-denominated eight-year notes, a downsized $750 million of 10-year notes and a €360 million tranche of eight-year notes.

Both dollar-denominated tranches firmed in initial aftermarket deals, although they were off from their early peak levels. The considerably larger eight-year piece was actively traded, much more so than the 10-year notes.

Viking River Cruises Ltd. brought a quickly shopped $250 million offering of 10-year notes to market, which moved up solidly when they hit the aftermarket.

Price talk emerged on the prospective new offerings being shopped around by Quintiles Transnational Holdings Inc. and Petra Diamonds Ltd., with both expected to price on Wednesday.

Another transaction seen likely to price on Wednesday was Brookfield Residential Properties Inc.’s concurrent $350 million and C$250 million of 10-year and eight-year notes, respectively.

Among the already-established bonds, Quicken Loans Inc.’s big deal from Friday remained the most actively traded junk issue.

Away from the new or recently priced deals, traders saw Seventy Seven Energy Inc.’s bonds jump in busy dealings after the oilfield services operator reported better-than-expected first-quarter financial results and then announced plans to augment its liquidity.

Statistical measures of market performance were lower on Tuesday after having turned mixed on Monday from Friday’s higher-across-the-board showing.

Chemours three-part deal

The primary market came back to life on Tuesday, with two issuers pricing a combined three tranches of dollar-denominated notes and raising an overall total of $2.35 billion.

One of the two issuers came quick-to-market.

One of the three tranches was upsized. Another one was downsized.

Executions were solid, with two tranches pricing at the tight end of talk and the third pricing on top of talk.

Tuesday's big deal came from Chemours, which priced $2.5 billion equivalent of senior notes (B1/BB-) in three tranches.

The deal saw $250 million equivalent of proceeds shifted to the two eight-year tranches from the 10-year tranche.

An upsized $1.35 billion tranche of eight-year notes priced at par to yield 6 5/8%. The tranche was upsized from $1,125,000,000. The yield printed at the tight end of yield talk in the 6¾% area.

An upsized €360 million tranche of eight-year notes priced at par to yield 6 1/8%. The tranche was upsized from €350 million. The yield printed at the tight end of yield talk in the 6¼% area.

A downsized $750 million tranche of 10-year notes priced at par to yield 7%. The tranche was downsized from $1 billion. The yield printed on top of yield talk.

Credit Suisse, J.P. Morgan, BofA Merrill Lynch, Barclays, Citigroup and Goldman Sachs were the joint bookrunners.

Proceeds from the notes will be used to partially fund a dividend to DuPont and for general corporate purposes.

Viking River Cruises drive-by

In the drive-by market, Viking River Cruises priced a $250 million issue of 10-year senior notes (B3/B+) at par to yield 6¼%.

The yield printed at the tight end of the 6¼% to 6½% yield talk.

Wells Fargo was the left bookrunner. BofA Merrill Lynch and Credit Suisse were the joint bookrunners.

The Woodland Hills, Calif.-based river cruising company plans to use the proceeds for general corporate purposes including working capital, capital expenditures, debt repayment and the acquisition of river vessels or ocean cruise ships.

Talking the deals

New-issue pace appears poised to pick up on Wednesday, as dealers posted price talk on a couple of roadshow deals.

Quintiles Transnational Holdings talked its $800 million offering of eight-year senior notes (Ba3/BB) to yield in the 5% area.

Joint bookrunner Barclays will bill and deliver. JPMorgan, Morgan Stanley, Citigroup, Goldman Sachs and Wells Fargo are also joint bookrunners.

And Petra Diamonds set initial price talk for its $300 million offering of five-year senior secured second-lien notes (B2/B+) in the 8½% area.

The talk comes on top of early guidance, according to market sources.

Joint global coordinator and active bookrunner RBC will bill and deliver. Barclays is also a joint global coordinator and active bookrunner. Rand Merchant Bank is a passive bookrunner.

Brookfield dual-currency deal

Brookfield Residential Properties kicked off concurrent $350 million and C$250 million offerings of senior notes (expected ratings B2/B-) on Tuesday.

Investor calls and meetings were scheduled to take place in the United States and Canada on Tuesday. The offerings are set to price on Wednesday.

The dollar-denominated tranche features 10-year notes and is in the market via joint bookrunners JPMorgan, Citigroup, Credit Suisse, Deutsche Bank and Wells Fargo.

The Canadian dollar-denominated tranche features eight-year notes and is being led by joint bookrunners Scotia, CIBC and TD.

No official price talk had circulated by Tuesday's close, according to a market source.

However the dollar-denominated notes are shaping up in the low-to-mid 6s, and the Canadian dollar-denominated notes are expected to come 50 basis points inside of the dollar-denominated notes.

The Calgary, Alta.-based land developer and homebuilder plans to use the proceeds to refinance debt and for general corporate purposes.

ETFs were sellers Tuesday

High-yield exchange-traded funds were better sellers, by far, on Tuesday, according to a market source who tracks them carefully.

This market source projects a Tuesday outflow from the ETFs greater than the $444 million daily outflow that they sustained last Friday.

Chemours bonds busy

In the secondary market, traders saw considerable activity in the new Chemours 6 5/8% notes due 2023.

A trader said that both dollar-denominated tranches of the Wilmington, Del.-based chemical manufacturer’s forward calendar offering “seemed to be pretty active,” but he acknowledged that weighing in at $1.35 billion, the eight-year notes were nearly double in size versus the $750 million 10-year tranche and so, understandably, saw more activity.

He pegged the eight-year notes at 100¼ bid, while locating the 10-years at 100 7/8 bid.

A second trader saw two-sided markets in the eight-year, at par to 100 3/8 bid, and in the 10-year, at 100¾ to 101.

A third trader said that the bonds had come off their initial peak levels.

For instance, he said that the eight-year notes had gotten as good as a 100 5/8-to-100¾ context – only to fall back to end between 100 1/8 and 100 3/8, after “somebody sold $25 million at 100¼.” All told, more than $54 million of the eight-years were seen to have traded.

He saw the 10-years, meanwhile, ending at 100 7/8 bid, down from their peak level at 101 1/8.

Viking cruises higher

The day’s other offering – Viking Cruises’ $250 million drive-by offering of 6¼% notes due 2025 – firmed smartly when the notes were freed to trade, although volume levels were considerably less than those of the Chemours bonds.

A trader saw the notes at 101½ bid, up from their par pricing level.

A second saw the paper in the 100¾-to-101½ bid range.

Quicken again tops actives

For a third consecutive session, Quicken Loans’$1.25 billion split-rated (Ba2/BBB-) offering of 10-year senior notes generated the most volume of any issue in Junkbondland.

A trader said that the Detroit-based online lender’s 5¾% notes due 2025 “were pretty active,” but he saw the issue having nosedived by more than 1 point, ending at 100¼ bid.

A second trader said the bonds were down by some 1 3/8 points, ending at 100 1/8, with over $88 million having changed hands, on top of the $93 million of notes that traded on Monday and Friday’s turnover of $122 million, after the regularly scheduled forward calendar offering had priced at par.

A market source explained that with trading coming from both traditional junk bond accounts as well as high-grade investors looking to pick up a little yield by reaching down and dabbling in a split-rated issue, Quicken was easily the biggest-volume credit three sessions running.

Energy names get a boost

Away from the new deals, with oil prices shooting up – U.S. benchmark-grade West Texas Intermediate crude for June delivery jumped $1.81, or 3.07%, to $60.74 per barrel on the New York Mercantile Exchange – “that put a bid under the energy names” such as California Resources Corp.’s 6% notes due 2024, a trader said.

He saw the Los Angeles-based oil and natural gas exploration and production company’s paper firm to a 95-to-95½ bid range, up from 94½, on “pretty good volume.”

Another big gainer was Houston-based E&P operator Linn Energy LLC; its 6¼% notes due 2019 finished up 2½ points on the session at just under 89 bid, with over $19 million having come to blows.

Seventy Seven surges

Also in the energy patch, Oklahoma City-based oilfield services provider Seventy Seven Energy’s bonds firmed smartly after the company reported better-than-expected 2015 first-quarter results.

Its 6½% notes due 2022 jumped more than 5 points to end at 63 7/8 bid, while its 6 5/8% notes due 2019 also rose about 5 points on the day, closing at 86 7/16 bid.

Volume for both tranches was a brisk $13 million-plus.

Besides positing a smaller-than-expected loss and generating larger-than-expected revenues, the company announced plans to augment its liquidity by exercising the $100 million accordion feature on its existing term loan (see related story elsewhere in this issue).

Indicators head south

Statistical measures of market performance were lower on Tuesday after having turned mixed on Monday from Friday’s higher-across-the-board showing.

The KDP High Yield Daily index was unchanged on Tuesday at 71.68, after having edged up by 1 bp on Friday and again on Monday, gains that had followed three straight losses last week.

Its yield was also unchanged at 5.21%, after having atypically moved up by 3 bps on Monday, even though the index reading was also up that session (the yield normally moves inversely to the index and typically falls when the index reading rises). Tuesday’s unchanged reading was the second such steady finish in the past three sessions.

The Markit Series 24 CDX North American High Yield index – which had been unchanged on Monday – was down ¼ point on Tuesday, ending at 107 bid, 107 1/32 offered. On Friday, it had been up by 5/32 point, its first gain after four straight losses before that.

The Merrill Lynch North American Master II high yield index eased by 0.013%, versus Monday’s 0.099% rise, which had been its third straight improvement.

The retreat lowered its year-to-date return to 3.88% from 3.893% on Monday, though it still was above Friday’s 3.791% close. It remained below its peak level for the year, 3.952%, set last Monday.

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