Dollar General, Oasis, Navios drive by; new Dollar Generals dominate; health-care news awaited

By Paul Deckelman and Paul A. Harris

New York, June 27 - A trio of high-yield issuers priced nearly $1 billion of new paper on Wednesday, syndicate sources said.

As has been the case for most of the deals recently done in Junkbondland, Wednesday's three deals were all opportunistically timed same-day offerings that priced just hours after their respective new-deal announcements hit the tape.

Deep-discount retailer Dollar General Corp. priced an upsized $500 million offering of five-year notes. Those bonds were heard by traders to have firmed smartly when they were cleared for aftermarket activity.

Energy operator Oasis Petroleum Inc. came to market with an upsized $400 million offering of 10.5-year notes. In secondary dealings, the new bonds were "all over the lot," a trader said, bouncing around a little above their par issue price.

Dry bulk commodities shipping company Navios Maritime Holdings Inc. and its Navios Maritime Finance (US) Inc. subsidiary weighed anchor with an $88 million add-on to their existing 2017 notes. The new paper was not seen in the aftermarket.

The market also saw a two-part offering of secured airline equipment certificates from Delta Air Lines Inc., one tranche rated investment grade and the other considered to be junk.

Away from the issues that priced, talk was out on three other deals that are expected to come to market this week - Halcon Resources Corp. and Coeur D'Alene Mines Corp., which are set to price on Thursday afternoon, and Ceridian Corp., seen likely to price either Thursday or Friday.

Apart from the primaryside, the high-yield market was seen to have a firm tone, including major statistical performance indexes, which were up across the board.

Things were quiet as many junk players awaited the scheduled release Thursday of the Supreme Court's decision on the constitutionality of the Obamacare health-care reform law. However, there was no mad scramble seen either into or out of the kind of hospital, pharmaceutical, other health-care or insurance names that would seem most likely to be affected by whatever decision is handed down.

Dollar General upsizes

A busy Wednesday primary market saw a trio of straight, single-tranche junk deals price. They generated a combined total of $988 million of proceeds.

Dollar General priced an upsized $500 million issue of five-year senior notes (Ba2/BB+) at par to yield 4 1/8% on Wednesday, according to a syndicate source.

The yield printed at the tight end of yield talk that was set in the 4¼% area.

The deal was yielding 3.8% bid in the secondary market late Wednesday, according to a trader from crossover land who added that it traded well but in relatively low volume.

"It's a funny kind of deal," the trader remarked, noting that the five-year maturity leaves little room for significant price appreciation.

The trader said that a deal such as Dollar General could make sense for insurance companies looking to fill certain kinds of debt baskets.

Citigroup Global Markets Inc., Goldman Sachs & Co. and KKR Capital Markets LLC were the joint bookrunners for the quick-to-market debt refinancing, which was upsized from $450 million.

Oasis Petroleum drives by

Oasis Petroleum also brought an upsized deal, a $400 million issue of 10.5-year senior notes (B3/B) priced at par to yield 6 7/8%.

The yield printed at the tight end of the 6 7/8% to 7% yield talk.

J.P. Morgan Securities LLC, Citigroup, Wells Fargo Securities LLC, RBC Capital Markets LLC, UBS Securities LLC, RBS Securities Inc. and Tudor Pickering Holt & Co. Securities Inc. were the joint bookrunners.

The Houston-based independent oil and gas exploration and production company plans to use the proceeds to fund its exploration, development and acquisition program and for general corporate purposes.

Navios taps 8 7/8% notes

Navios Maritime Holdings and Navios Maritime Finance (US) priced an $88 million add-on to their 8 7/8% first-priority ship mortgage notes due Nov. 1, 2017 (Ba3/BB-) at par to yield 8 7/8%.

The reoffer price came at the rich end of the 99.5 to par price talk.

The deal attracted a significant amount of interest from holders of Navios' existing bonds, an informed source said.

Morgan Stanley & Co. LLC and JPMorgan were the bookrunners for the quick-to-market debt refinancing deal.

The original $400 million priced at 98.603 to yield 9 1/8% in October 2009.

QVC crossover deal

In the crossover space, QVC Inc. priced a $500 million issue of 10-year senior secured notes (Ba2/BBB-/BBB-) at par to yield 5 1/8%.

The yield printed on top of price talk, according to market sources.

The order books were said to be as much as six-times oversubscribed, according to a skeptical trader from the crossover space who noted that order-padding is widespread in the bond markets.

Nevertheless, the deal was up 25 basis points in the gray market and was actively traded, the source said, adding that a lot of people were interested in taking big pieces of the deal.

"There were real buyers involved," the trader said and added that it was a healthy investor mix.

Barclays Capital Inc., Bank of America Merrill Lynch and RBS were the bookrunners for the quick-to-market debt refinancing and general corporate purposes deal.

Talking the deals

Dealers set the stage Wednesday for a healthy amount of late-week volume in the primary market.

Halcon Resources talked its $500 million offering of eight-year senior notes (B3/CCC+) with a yield in the 9% area.

Barclays, Goldman Sachs, JPMorgan, Wells Fargo, BMO and RBC are the joint bookrunners.

Coeur d'Alene Mines talked its $350 million offering of eight-year senior notes (B3/BB-) with a yield in the 8½% area.

Barclays is the lead left bookrunner. Wells Fargo is the joint bookrunner.

Books for both the Halcon and Coeur d'Alene Mines deals are set to close Thursday afternoon.

Elsewhere, Ceridian talked its $720 million offering of seven-year senior secured notes (B1/B-) with a yield in the 9% area.

The deal is set to price late this week.

Deutsche Bank, Credit Suisse and Bank of America Merrill Lynch are the leads.

And Xtreme Drilling and Coil Services Corp. is marketing a $170 million offering of five-year first-lien notes with guidance of 8¾% to 9¼%.

The debt refinancing deal is being privately placed with institutional investors by Pareto Securities and could price before the end of the week.

Dollar General does well

When Dollar General's new bonds were freed for secondary dealings, traders saw strong interest in the Goodlettsville, Tenn.-based deep-discount retailer's five-year issue despite its very un-junk-like 4 1/8% coupon.

A trader saw the new deal trading up at 101 5/8 bid, versus the par level at which that $500 million deal - upsized from an originally announced $450 million - priced.

Another trader saw two-sided markets in the new credit around 101½ bid, 101¾ offered. He saw the new bonds as one of the most active issues of the day, with 47 trades recorded on the Trace system by late afternoon - 43 of them being round-lot transactions of at least $1 million or more.

Yet another trader saw the bonds going out at 101¼ bid, 101¾ offered.

Oasis 'all over'

The day's other sizable pricing, which came from Houston-based energy exploration and production operator Oasis Petroleum, was "all over the place," according to two junk traders working in different shops.

One quoted the 6 7/8% notes due 2023 offered at 100¾ bid and then characterized them as straddling "either side of 1001/2" at bid levels between 100¼ and 1003/4.

A second trader agreed with the assessment that they were "all over the place," seeing them gyrating between par and 100 7/8 bid, with the levels later tightening to a 100 1/8-to-100 3/8 context.

That $400 million issue priced at par after having been upsized from an originally announced $300 million.

The trader said that there were more than 70 trades in the new paper on Trace, with round-lot dealings alone totaling at least $47 million, putting it second only to one of Brazilian energy credit OGX Petroleo e Gas Participacoes SA's issues near the top of the Most Actives list.

Navios a no-show

Traders saw no trace of Navios Maritime Holdings' $88 million of 8 7/8% first-priority ship mortgage notes due 2017.

They noted that the deal was a relatively smallish add-on to an existing $400 million of those notes that were sold in the fall of 2009 and that Piraeus, Greece-based Navios, which operates dry-bulk commodity carriers that ferry such cargoes as coal and grain around the world, is less well-known than many domestic credits.

Delta two-tranche deal trades

One other transaction on the new-deal scene, a trader said, was Delta Air Lines' two-part $479 million offering of aircraft passthrough certificates, both tranches of which priced at par off the investment-grade desks of the respective banks that brought the Atlanta-based air carrier's deal to market.

He saw the larger piece of the deal, the $353 million of 4¾% class A certificates due 2020, at 101¼ bid, 101½ offered.

The smaller class B piece, $126 million of 6 7/8% notes due 2019, was trading at 100½ bid.

He thought it a little "bizarre" that the class B certificates would trade considerably cheaper than the class A paper until he looked at the respective ratings, which are based on the kind of collateral backing the two tranches of certificates. The class A 2020 piece is rated Baa2/A-, and the class B paper is rated Ba3/BB.

SM, Sonic hold gains

Traders also saw the new deals that priced earlier in the week pretty much holding on to the gains they notched in initial aftermarket dealings. Those gains were modest for SM Energy Co. and more pronounced for Sonic Automotive Inc.

SM Energy, a Denver-based oil and natural gas exploration and production company, priced a quick-to-market $400 million of 6½% notes due 2023 at par on Tuesday. Those bonds, which were upsized from an originally announced $300 million, had been seen in Tuesday's aftermarket in a 100 5/8-to-100¾ context, although there were some quotes topping the 101 mark.

On Wednesday, a trader pegged the bonds at 100½ to 1003/4, although a second trader saw a wide par-to-101¼ spread.

"But there was just not a lot of activity," he said. "That was first thing this morning."

Sonic Automotive, a Charlotte, Va.-based vehicle retailer, priced a $200 million drive-by offering of 7% notes due 2022 on Monday at 99.11 to yield 7 1/8%. The new deal immediately moved as high as 101½ bid, with no offers, in initial secondary dealings after it priced and then added to those gains Tuesday, when it was quoted at 101-102.

On Wednesday, a trader located the notes higher, trading between 102 and 103 bid.

But a second trader said he had not seen any of Sonic's bonds trading "except on the first day."

A trader quoted Choice Hotels International Inc.'s 5¾% notes due 2022 at 104½ bid, although a second trader had them at 103¼ bid, 103¾ offered.

The Silver Spring, Md.-based lodging industry franchisor company's $400 million split-rated (Baa3/BB) issue priced at par on Friday, moved above 102 bid in initial aftermarket dealings after pricing and have continued to move up since then.

They had been seen on Tuesday at 104 bid, 104½ offered, up from Monday's levels around 103½ bid, 103¾ offered.

'Just hanging out'

Apart from the new deals, a trader said that "it seemed like people are just hanging out."

He said, for instance, that when his shop queried one of its larger accounts as to whether it was involved in the new Dollar General deal, the response they got was "no, I'm watching soccer." The televised Euro 2012 playoffs were providing a diversion from actually having to do anything of substance.

"Other people are hanging out, waiting to see what happens with the health-care ruling [Thursday]," when the U.S. Supreme Court is scheduled to announce its long-awaited decision on the constitutionality of the Obama administration's sweeping overhaul of the health-care system.

However, traders saw no great last-minute rush by accounts to position themselves, either going long or, alternatively, shorting pharmaceutical, health-care or insurance names ahead of the ruling. The theory was that anyone who wanted to place a bet on the likely outcome of Thursday's court announcement had already done so.

July 4th ahead

The trader further said that some market participants might not even show up on Thursday or Friday since the debt markets will be closed next Wednesday in celebration of Independence Day.

"Let's say you want to take a week off, five days. If [next] Wednesday is the holiday, why not just leave on Thursday afternoon and take Friday?"

End-of-quarter maneuverings

And the trader said that as the end of the quarter approaches, given the choice of either getting rid of underperforming credits in their portfolios or doing a little window-dressing, "I'd say it's more a matter of buying stuff that looks good."

He reported that he was seeing accounts buying "even odd pieces. If it's a name they like, they'll take them."

In contrast, he said that last year, if a block of, say, $980,000 bonds was offered, many accounts would pass on it, saying "we really want $1 million. Now, they'll say they'll take the $980 [thousand] in order to put their money to work."

He said that "in most of the stuff you see, it's not bids getting hit or offerings getting lifted, but instead kind of meeting in the middle and then getting lifted."

He said "definitely, people still have cash and they need to do something with it."

Market indicators move up

Statistical market performance measures were on the upside on Wednesday after having been mixed on Tuesday and having a clear downside bias on Monday.

A trader saw the Markit Group CDX North American Series 18 High Yield index up 3/8 point Wednesday to end at 95 1/8 bid, 95 3/8 offered after having been unchanged on Tuesday.

The KDP High Yield Daily index posted its first gain after two losses on Wednesday, finishing up 10 bps at 72.95. It had eased by 4 bps on Tuesday. Its yield narrowed by 4 bps on Wednesday, to 6.77%, after having risen by 1 bp Tuesday.

And the widely followed Merrill Lynch U.S. High Yield Master II index notched its second consecutive gain following two successive losses. It rose by 0.147% on Wednesday on top of Tuesday's rise of 0.054%.

Wednesday's gain lifted its year-to-date return to 6.561% from Tuesday's 6.405%. It was the highest level the index had seen since the 6.762% reading of May 11, though it's still off from the peak level for 2012 so far, 6.80%, set on May 7.

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