Virgin Media, Martin Midstream deals cap $6 billion week; new United Rentals bonds stay busy

By Paul Deckelman and Paul A. Harris

New York, March 14 - Virgin Media was heard by syndicate sources to have priced $425 million of new 10.75-year notes on Friday via a financing subsidiary, as part of a larger, dual-currency offering from the company, a provider of cable, internet and phone service in the United Kingdom.

Martin Midstream Partners LP, a Kilgore, Texas-based provider of product transportation, storage and processing services to the energy industry, came to market with a quickly shopped $150 million add-on to its already existing 2021 bonds.

Neither deal was immediately seen trading in the aftermarket.

Those two issues topped off a week which saw $6 billion of new U.S. dollar-denominated, fully junk-rated paper from domestic or industrialized-country issuers price in 16 tranches - well down from the previous week, ended March 7, during which $11.75 billion of such paper had come to market in 21 tranches, making it the busiest week so far in the high yield space and the busiest week since last September, according to data compiled by Prospect News.

Friday's two deals also raised the year-to-date issuance total to $55.24 billion in 113 tranches - although that continued to lag about 15% behind the primary pace of a year ago, when $65.06 billion had priced in 149 tranches by this point on the calendar, according to the data.

Apart from the day's new deals, market sources reported continued active trading in United Rentals (North America), Inc.'s big two-part offering that priced on Wednesday, although it was well off the volume totals racked up on Thursday, when over $150 million of the two issues changed hands. Both tranches of the bonds were seen having eased a little, in line with a generally softer overall market.

But Thursday's two-part offering from CEVA Group plc was being quoted well up from the two tranches' par issue level.

Statistical market-performance measures turned lower across the board, after having been mixed on Thursday. They were also down from their week-ago levels.

Virgin Media three-part deal

Two issuers each priced a single dollar-denominated tranche on Friday, raising a combined total of $580 million.

One of those tranches came from Virgin Media Secured Finance plc, which priced the equivalent of £915 million in three tranches of senior secured notes (Ba3/BB-).

The deal included $425 million and £430 million tranches of notes due Jan. 15, 2025 that were both priced at par to yield 5½%. Both came at the wide end of the 5¼% to 5½% yield talk.

In a tranche that was added subsequent to the deal announcement, the company also priced £225 million of notes due March 29, 2029 at par to yield 6¼%. The 15-year notes also printed at the wide end of yield talk, which had been set at 6% to 6¼%.

All three tranches were well oversubscribed, a market source said.

Joint bookrunner Deutsche Bank will bill and deliver for the debt refinancing deal. Barclays, Credit Suisse, Goldman Sachs and UBS were also joint bookrunners.

Martin Midstream taps 71/4s

Martin Midstream Partners LP and Martin Midstream Finance Corp. priced a $150 million add-on to their 7¼% senior notes due 2021 (B3/B-) at 103 to yield 6.519%.

The reoffer price came at the cheap end of the 103 to 103.5 price talk.

Wells Fargo was the left bookrunner for the debt refinancing deal. RBC, ABN, BofA Merrill Lynch, Deutsche Bank, RBS, Regions and SunTrust were the joint bookrunners.

Multiplan roadshows $1 billion

MPH Merger Sub LLC began a roadshow on Friday for a $1 billion offering of eight-year senior notes (Caa1/CCC+) backing the buyout of Multiplan, Inc.

The notes are expected to price on Tuesday.

J.P. Morgan and Barclays are the joint bookrunners.

Ocean Rig to start marketing

Ocean Rig UDW Inc. plans to start a roadshow on Monday for a $500 million offering of five-year senior notes.

The deal is set to price late in the week ahead.

Credit Suisse and Deutsche Bank are the joint bookrunners for the debt refinancing deal.

iGate deal to roadshow

A roadshow starts Monday for iGate Corp.'s proposed $325 million offering of five-year senior notes (existing ratings B2/B+).

The deal is set to price during the middle part of the week ahead.

RBC is the left bookrunner. Deutsche Bank and UBS are the joint bookrunners.

The Fremont, Calif.-based technology company plans to use the proceeds to fund the redemption of its 9% senior notes due 2019.

Aurico Gold pricing Monday

Books closed Friday for Aurico Gold Inc.'s restructured $300 million offering of six-year senior secured second-lien notes.

The deal is set to price on Monday.

As previously reported, the maturity of the notes was reduced to six years from eight years and the ranking in the capital structure was improved to senior secured second-lien status from senior unsecured.

The notes are talked to price with 3 to 4 points of original issue discount and to yield 8½% to 8¾%.

The deal was held over the weekend due to finalization of the second lien documentation.

Joint global coordinator and joint bookrunner RBC will bill and deliver. Credit Suisse is also a joint global coordinator and joint bookrunner. Scotia is a joint bookrunner.

Also ahead, Bombardier could show up soon with a deal sized at between $1.75 billion and $2 billion, market sources say.

The company is seeking to pre-fund its euro-denominated 7¼% notes maturing in 2016, refinance its 6.3% notes due in 2014 and raise additional $500 million to $750 million of liquidity.

Day's deals unseen

In the secondary market, traders said that they saw no immediate trading in Virgin Media's 5½% notes due 2025, which came to market at par as part of a three-tranche dollar- and sterling-denominated deal.

The transaction was seen having priced too late in the session for any real aftermarket.

There was also no trading seen in the Martin Midstream add-on deal that priced considerably earlier in the day, due to its relatively smallish size, at $150 million, a market source said.

United Rentals remains busy

For a second consecutive session, there was fairly brisk trading in United Rentals' new two-part issue, which had priced late in the day on Wednesday and which began trading around on very heavy volume on Thursday.

A trader said that Greenwich, Conn.-based construction and industrial equipment rental and leasing company's 5¾% notes due 2024 were trading "right around par," quoting the bonds in a par to 100 1/8 bid context, on volume of around $20 million, making it one of the most actively traded credits on the day in Junkbondland.

However that was well under the estimated $117 million of bonds which changed hands on Thursday, when they were freed for trading. That total included $106 million of round-lot transactions.

The bonds had risen a little on Thursday after the $850 million tranche had priced at par, but on Friday, they were lower, with one trader quoting them at par, calling that down ¼ point on the day, while a second saw them at 99¾ bid, par offered, which he also saw down ¼ point.

The other half of that quickly shopped deal - its $525 million add-on to its existing 6 1/8% notes due 2023 - was also heavily traded on Thursday but remained fairly active of Friday.

Those bonds had priced at 105.25 to yield 5.188%, and then got as good as a 105 5/8 to 106 1/8 context, on over $50 million of volume. On Friday, with volume moderating to around $11 million, the notes were seen down 1/8 to ¼ point from Thursday's finish, quoted around 105½ bid.

"There was a huge re-trade [in the new issues] yesterday," a trader said Friday, elaborating that he thought it was "kind of surprising."

While he said that the deal "was an okay-sized deal, I think they pushed the price a little," with both tranches pricing right on top of pre-deal market price talk, "so some people decided to head for the door right away."

However, senior analyst Vicki Bryan of the Gimme Credit independent investment advisory service said in research note that "hot demand" for the notes allowed the transaction to be announced and priced within a matter of hours, and at the expected yield levels.

The debt issuance will be used to fund United Rentals' recently announced $780 million acquisition of National Pump & Compressor, Ltd. and to take out its $500 million of 9¼% notes due 2019 at a price of 110.4.

Bryan noted that while the company's leverage ratio of debt as a multiple of EBITDA is projected to rise to 3.4 times from 3.1 times at the end of the fourth quarter, "By year-end we have projected leverage will decline to 3x on strong EBITDA which we estimate to increase 16% for the year on revenue up 14%. We maintain 'buy' on United's new notes and 'outperform' on its legacy issues."

CEVA bonds better

Thursday's new issue of bonds from Netherlands-based logistics company CEVA Group was seen having firmed smartly when it was freed for aftermarket dealings on Friday.

The company's 7% first-lien notes due 2021 had moved up to 101 1/8 bid, 101 5/8 offered from the par level at which the $300 million issue had priced following its downsizing from $400 million originally.

Its 9% 1.5-lien notes due in September of 2021 were meantime seen having gotten as good as a 101¼ to 101¾ context. That $325 million of notes had also priced at par on Thursday, after having been downsized from $425 million originally.

Leap bonds jump

Away from the new deals, the 7¾% notes due 2020 issued by Cricket Communications Inc. topped the Most Actives list on Friday, with over $34 million of the bonds having changed hands. They ended up 5/8 point at 114½ bid.

That coincided with the news, announced Thursday, that the Federal Communications Commission had given its okay to the proposed acquisition of Cricket's corporate parent, San Diego-based Leap Wireless International Inc., by telecom giant AT&T Inc., which hopes to beef up its position in the pre-paid segment of the wireless industry, Cricket's specialty.

Market indicators head south

Reflecting the softer market tone seen in the overall market, statistical junk performance indicators turned lower across the board on Friday after having been mixed on Thursday - which in turn had followed a mixed session on Wednesday.

The indicators were also lower all around versus their levels at the end of the preceding week on Friday, March 7, their second consecutive losing week in a row.

The Markit Series 21 CDX North American High Yield Index lost 3/32 point on Friday to close at 106 15/16 bid, 107 offered, its seventh loss in a row. On Thursday, it dropped ½ point.

The KDP High Yield Daily Index also posted its seventh consecutive loss, sliding by 16 basis points to end at 74.73, after having dropped by 4 basis points on Thursday.

Its yield, meanwhile, rose by 5 bps to 5.29%, its second straight rise. It had been up by 1 bps on Thursday.

Those levels compared unfavorably with the 75.12 index reading and 5.19% yield seen the previous Friday.

And the widely-followed Merrill Lynch High Yield Master II Index also ended on the downside, by 0.134%, after having risen by 0.036% on Thursday.

That dropped its year-to-date return to 2.407% on Friday from 2.544% on Thursday and from the 2.812% reading seen on March 5, its 2014 peak level.

The index was down by 0.159% on the week, its second consecutive weekly loss. It had retreated by 0.184% the previous week, when the year-to-date return had closed at 2.57%.

© 2015 Prospect News.
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