CrownRock prices to cap nearly $6 billion week, new bonds firm; market seen easier

By Paul Deckelman and Paul A. Harris

New York, April 5 - CrownRock, LP and CrownRock Finance, Inc. were heard by high-yield syndicate sources to have come to market Friday with an upsized $400 million of eight-year notes. The new bonds firmed when they reached the aftermarket.

The energy exploration and production company's deal was the only pricing seen on the session in Junkbondland.

It raised the week's total amount of U.S. dollar-denominated, junk-rated paper from domestic or industrialized-country issuers to $5.9 billion in eight tranches, according to data compiled by Prospect News, up from the $5.29 billion in 10 tranches which had priced during the holiday shortened previous week ended March 28.

New junk issuance for the year so far came in at $94.9 billion in198 tranches, according to the data, running about 2% behind the pace seen at this time last year.

Among the issues which priced during the week, traders said that Thursday's offerings from American Builders & Contractors Supply Co. Inc. and Bonanza Creek Energy, Inc. were trading solidly higher.

Paper priced earlier in the week was seen mostly continuing to hold its own, although off its earlier highs in some cases. DISH DBS Corp.'s huge two-part deal continued to struggle in the aftermarket, as it has all week.

Statistical measures of secondary market performance were seen mixed to a little lower on the day, after having been higher across the board on Thursday. But the indicators rose from week-earlier levels for a sixth consecutive time.

CrownRock prices upsized deal

Against the backdrop of a rocky ride in the global capital markets, with macroeconomic headlines creating turbulence, the high-yield primary finished the first week in April with a slow Friday session.

A single deal cleared.

CrownRock, LP and CrownRock Finance, Inc. priced an upsized $400 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 7 1/8%.

The yield printed in the middle of the 7% to 7¼% yield talk.

The deal underwent changes. A proposed special call at 110%, which would have come into effect had a change of control taken place before July 1, 2014, was withdrawn. Also the general restricted payments basket was reduced.

Credit Suisse and Mitsubishi were the joint bookrunners for the deal which was upsized from $350 million.

The Midland, Texas-based energy company plans to use the proceeds to repay debt and for general corporate purposes.

Canadian Energy plans C$ deal

Canadian Energy Services & Technology Corp. expects to sell C$200 million of seven-year senior notes (/B/DBRS: B) during the week ahead.

The company started a roadshow in Vancouver on Friday.

Scotia and RBC are the senior managers for the debt refinancing deal from the Calgary, Alta.-based gas- and oil-field products and services company.

Meanwhile Friday's only new dollar-denominated offering came in the form of a press release from U.S. Well Services, LLC and USW Financing Corp.

The Houston-based oilfield services company announced that it will sell a $12 million tack-on to its 14½% senior secured notes due Feb. 15, 2017.

Syndicate names had not surfaced as of the Friday close, market sources said.

The capital expenditures deal is being marketed under Regulation D and Regulation S.

The week ahead

The April 8 week gets underway with a $2.4 billion active forward calendar.

Among the offerings expected to price during the upcoming week, Rentech Nitrogen's $320 million sale of eight-year senior secured notes (B1/B) is being discussed in a yield context of 6½% to 6¾%, a trader said on Friday.

Credit Suisse, BMO, Morgan Stanley and RBC are the joint bookrunners.

Hecla Mining Co. is in the market with a $400 million offering of eight-year senior notes (B2//) which is being discussed in a 7% area yield context, according to a buyside source.

The deal is being led by BofA Merrill Lynch and Scotia.

And Penn Virginia Corp.'s planned $400 million of seven-year senior notes (Caa1/B-) is being discussed with an 8½% to 8¾% yield.

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

Also in the week ahead, Scotland's KCA Deutag Finance plc is expected to price bonds.

The oil and gas services company roadshowed an $860 million offering of seven-year senior secured notes (B3/B) that has gone "radio silent," market sources say.

The word is, the deal has been postponed but not pulled, and could price next week in a smaller size, a London-based debt capital markets banker said, observing that the company is in a cyclical business and is notably leveraged.

New CrownRock paper pops

When the new CrownRock notes were freed to trade in the secondary market, a trader pegged those bonds at 101 1/8 bid, 101 3/8 offered.

That was up from the par level at which the Midland, Texas-based energy exploration and production company had priced its deal.

A second trader, however, said that he "didn't really see much secondary trading" in the issue.

Thursday deals do well

Among the names that priced on Thursday, a trader said that American Builders & Contractors Supply's 5 5/8% notes due 2021 came off Thursday's peak aftermarket levels when they opened on Friday at 101 ¼ bid, 102 offered.

That was well down from the levels seen in Thursday's dealings, when the Beloit, Wis.-based building supply company's downsized $500 million issue of the bonds had traded significantly higher after pricing at par.

The trader said that at times those bonds had gotten as high as 104 bid on Thursday, although other traders had put the peak levels between 102½ and 103.

After some morning trading on Friday, the first trader saw the paper having improved to a 102½ bid by mid-morning, but "nobody wanted to sell them."

Another trader located those bonds later in the session in a 101 7/8 to 102 3/8 context.

And yet another saw them going home in a 102½ to 103 bid context.

The first trader said that it was "the same thing with Bonanza Creek," quoting the Denver-based independent oil and gas company's 6¾% notes due 2021 as being bid without an offer.

A second trader saw the bonds going out at 102½ bid, 103 offered.

That was a nice pickup from the par level at which that $300 million issue had priced late in the session Thursday. There had been no aftermarket at that time, but the bonds were freed to trade on Friday morning.

A softer beginning

The first trader said that a key feature of Friday's market, at least in the early going, was "some huge bid lists in today."

Some of those bid-wanted lists, looking for investors interested in buying bonds from those companies' inventories, exceeded $400 million.

He explained that "rumor had it that an [exchange-traded fund] got a significant redemption last night, and so there were a couple of $100 million-plus bid lists."

However, he said that this was "not reflected in the volumes I see on Trace."

In fact, he opined, volume was really terrible. "If you take a look at what traded today and back out names like Ford and SLM," which are mostly of interest to the high-grade accounts looking to pick up a little bit of crossover yield, "there was hardly anything left."

He said that after treading water early on, in tandem with stocks which retreated after the Labor Department reported a considerably worse than expected March non-farm payrolls job-creation number of 88,000, "the market really came back. If you panicked and sold off in the morning, you lost."

CNH, Continental hold

Among the names that had priced earlier in the week, a trader said that Wednesday's offering from CNH Capital LLC was trading at 101 bid, 101½ offered.

A second saw the bonds trading between 100 7/8 and 101 3/8 bid.

The company - a unit of Burr Ridge, Ill.-based CNH Global NV, a manufacturer of heavy construction and agricultural equipment - had priced $600 million 3 5/8% notes due 2018 at par in a quick-to-market deal, after upsizing the issue from an originally announced $500 million. The new bonds had been quoted late Wednesday around a 101 to 101¼ bid context. And on Thursday around 101¼ to 101¾

A trader said that Continental Resources Inc.'s 4½% notes due 2023 on Friday at 102 5/8 bid, 103¼ offered.

The Oklahoma City-based oil producer's quickly shopped deal had priced at par on Tuesday after having substantially upsized to $1.5 billion from an originally announced $1 billion.

Those bonds had shot up solidly to around the 103 bid level when they began trading on Wednesday and had held most of those gains Thursday.

However, DISH DBS' $2.3 billion two-part issue continued to underperform, with a trader Friday seeing its $1.1 billion of 5 1/8% notes due 2020 at 99 1/8 bid, 99 5/8 offered, well under Tuesday's par issue price.

He did not see any markets in its $1.2 billion of 4¼% notes due 2018, although that issue too had traded below its par issue price on both Wednesday and Thursday.

The Englewood, Colo.-based satellite television broadcaster's drive-by deal had been radically upsized from an originally announced $1 billion.

A second trader said that "It got too aggressively priced" in explaining why the deal did so badly in the aftermarket while other deals did much better.

"If it had left something on the table [for investors], it would have been a home run," he opined.

Market indicators turn mixed

Overall, statistical junk performance indicators were mixed with a lower bias on Friday, after having been better across the board on Thursday. They were up all the way around versus week-earlier levels.

The Markit Series 20 CDX North American High Yield Index was up by 1/16 point on Friday to end at 103 9/13 bid, 103 11/16 offered. It was its second straight gain, having risen by 5/32 point on Thursday.

The index also topped the 102 31/32 bid, 103 3/32 offered level at which it had finished the previous Thursday, March 28, wrapping up a holiday-shortened week.

But the KDP High Yield Daily Index, meanwhile, lost 1 basis point Friday to end at 75.61, after having gained 1 bp on Thursday.

And its yield was unchanged at 5.49% after three straight sessions on the decline.

But those levels compared favorably with a week-earlier index reading of 75.59 and a yield of 5.51%.

The widely followed Merrill Lynch High Yield Master II index posted a loss on Friday, snapping a string of six straight sessions on the upside. It was down by 0.077%, after Thursday's 0.029% gain.

That left its year-to-date return at 3.014%, down from Thursday's 3.094%, which had been its sixth straight new peak level for 2013.

But the index was up by 0.158% on the week, its eight straight weekly gain.

Last week, it had a one-week gain of 0.10% and ended the week with a year-to-date return of 2.851%.

© 2015 Prospect News.
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