Nationstar plus upsized TitleMax and Chassix lead $1.2 billion session, trade up

By Paul Deckelman and Paul A. Harris

New York, July 17 - High-yield primary sphere activity was heard to have picked up on Wednesday, as four new issues totaling $1.18 billion of new dollar-denominated, fully junk-rated paper from domestic or industrialized-country issuers priced, versus Tuesday's one deal worth $500 million.

Syndicate sources said that lender TitleMax, Inc. had the biggest deal of the day, an upsized $525 million of five-year secured notes that priced via two financing subsidiaries.

Another financial name - Nationstar Mortgage Holdings, Inc. - also came to market via two subsidiaries with $250 million of quickly shopped five-year paper.

Among the industrials, Chassix, Inc., which manufactures parts for vehicle chassis assemblies, did an upsized $350 million of five-year secured notes.

Traders said that all three of those deals firmed solidly when they moved into the aftermarket.

The session also saw Canadian pulp manufacturing company Mercer International Inc. bring a "smallish," quick-to-market add-on to its existing bonds.

The traders also said that Tuesday's lone deal, from Canada's Nova Chemicals Corp., continued to do well in the aftermarket.

Away from the new deals, United Rentals Inc.'s paper moved up after the equipment rental company reported favorable second-quarter results.

Statistical market performance measures turned higher across the board on Wednesday after having been mixed during the previous session.

Signs of the market heating up

Four issuers each priced single tranches in Wednesday's primary market session, raising a combined total of $1.18 billion.

Executions had the earmarks of a market that, according to sources, is heating up.

Two of the four deals were upsized.

Two of the four came as a.m.-to-p.m. drive-bys.

And three of the four came at the tight end of talk.

TitleMax upsizes

TitleMax priced an upsized $525 million issue of five-year senior secured notes (B3/B+) at par to yield 8½%.

The deal was upsized from $500 million.

The yield printed at the tight end of the 8½% to 8¾% talk.

Jefferies and Morgan Stanley were the joint bookrunners for the debt refinancing.

Chassix at the tight end

Chassix, Inc. priced an upsized $350 million issue of five-year senior secured notes (B3/B) at par to yield 9¼%.

The yield printed at the tight end of the 9¼% to 9½% yield talk.

BofA Merrill Lynch was the left bookrunner for the deal, which was upsized from $325 million. Bank of Montreal was the joint bookrunner.

Proceeds will be used to repay and terminate the company's term loan B, including paying prepayment premiums and accrued interest, and to repay the ABL facility in full, excluding about $3 million of outstanding letters of credit. Proceeds will also be used for general corporate purposes.

Nationstar Mortgage drives by

Nationstar Mortgage LLC and Nationstar Capital Corp. priced a $250 million issue of five-year senior notes at par to yield 6½%, on top of yield talk.

The deal appeared to go well and was in the secondary above new issue price at 101 1/8 bid, 101 5/8% offered, a trader said.

Credit Suisse and BofA Merrill Lynch were the joint physical bookrunners. Barclays, Wells Fargo and J.P. Morgan were the joint bookrunners.

The Lewisville, Texas-based non-bank residential mortgage servicer plans to use the proceeds to provide working capital and for general corporate purposes.

Mercer taps 9½% notes

Mercer International Inc. priced a $50 million tack-on to its 9½% senior notes due Dec. 1, 2017 (existing ratings B3/B) at 1041/2.

The reoffer price, which came at the rich end of the 104¼ to 104½ price talk, rendered a 7.941% yield to worst.

Credit Suisse was the sole bookrunner for the general corporate purposes deal.

Schaeffler for Thursday

Schaeffler Holding Finance BV set price talk for its €1.5 billion equivalent offering of five-year senior secured PIK toggle notes (confirmed B2/expected B).

A dollar-denominated tranche is talked to yield 7% to 7¼%, and a euro-denominated tranche is talked to yield 7¼% to 7½%. Tranche sizes are expected to be split fifty-fifty.

Pricing is set for midday on Thursday.

JPMorgan will bill and deliver for the dollar tranche, while Deutsche Bank will bill and deliver for the euro tranche. They are joint bookrunners along with BNP, Citigroup, Commerzbank, HSBC and UniCredit.

Proceeds will be used to refinance existing HoldCo debt.

Smithfield plans two tranches

Also in the market as business expected to clear before the weekend is Smithfield Foods, Inc., with an $800 million dual-tranche offering of senior notes via sole bookrunner Morgan Stanley.

The bonds are coming with five- and eight-year maturities. Specific tranche sizes remain to be determined.

Price talk has yet to surface, but the five-year notes are being discussed in the context of a 5½% yield, according to a trader who added that the deal is going well.

The eight-year notes are whispered at 6% to 6¼%, the source added.

Gardner Denver starts roadshow

Gardner Denver Inc. began a roadshow on Wednesday for a $675 million offering of eight-year senior notes (expected ratings Caa1/B-).

Deutsche Bank, Citigroup, Barclays, UBS, Mizuho, RBC, Macquarie, HSBC and KKR are the joint bookrunners for the buyout deal.

Day's deals do well

In the secondary arena, traders saw each of Wednesday's new issues doing well when those bonds were freed for aftermarket activity.

For instance, while one of the traders said that he "hadn't seen squat" in TitleMax's 8½% senior secured notes due 2018, "even though it was a B3/B+ credit," a trader at another desk quoted the Savannah, Ga.-based auto title lending company's deal at 102½ bid, 103½ offered, up from its par issue price.

Several of the traders saw Nationstar Mortgage's 6½% notes due 2018 move up when they moved into the secondary.

One initially saw the bonds trading in a 99 to par context - actually below their par issue price.

But a little later in the session, a second trader saw that quick-to-market transaction as having moved up to 100¾ bid, 101½ offered, while a third saw them even better than that. He pegged the deal going home at 101 bid, 101½ offered.

One of the traders saw Chassix, Inc.'s 9¼% senior secured notes due 2018 having moved up from their par issue price.

He located the Southfield, Mich.-based automotive components manufacturer's offering trading in a 102½ to 103½ context.

Even Mercer International's 9½% notes due 2017 were quoted better after the Vancouver, B.C.-based pulp manufacturing company's $50 million add-on to the existing paper priced at 1041/2. One trader said the bonds had firmed to 105½ bid, 106½ offered, while a second had the drive-by offering even better than that, at 107 bid, 108 offered.

New Nova bonds firmer

One of the traders saw Nova Chemicals' 5¼% notes due 2023 building on the initial aftermarket gains that had been notched on Tuesday, after its quickly shopped $500 million offering had priced at par and then gained around 1 point in the aftermarket.

He saw the bonds on Wednesday at 101 5/8 bid, 102 1/8 offered, while commenting that the Calgary, Alta.-based chemical manufacturer - a long-time Junkbondland borrower - is "an oldie but goody. I love that name."

A second trader said the bonds had gained ¼ point from Tuesday's levels, finishing 102½ bid, 102 7/8 offered.

Monday's deals hold their own

Going back a little further, one of the traders said that that he had seen RKI Exploration & Production, LLC's 8½% notes due 2021 at 102 bid, 102½ offered.

It was the first sighting of the Oklahoma City- based energy operator's new debt, $350 million of which had priced at par on Monday afternoon but which had not been seen in the aftermarket on either Monday or Tuesday.

The trader said that MagnaChip Semiconductor Corp.'s 6 5/8% notes due 2021were wrapped around par on Wednesday, at 99 7/8 bid, 100 1/8 offered.

That was about where the South Korean-based computer-chip manufacturer's quickly shopped $225 million issue had traded on Tuesday. The deal had actually priced late Monday at 99½ to yield 6.707%, but had come to market too late that day for any immediate dealings.

And going back further still, a trader at another desk saw Best Buy Co., Inc.'s 5% notes due 2018 3/8 point better, at 99¾ bid, 100¼ offered.

The Richfield, Minn.-based electronics retailer had priced its quick-to-market $500 million split-rated (Baa2/BB/BB-) issue on Thursday at 99.997 to yield 5% after the deal was upsized from an originally announced $350 million, and it attracted some attention from both the junk and the investment-grade crossover sides of the bond market.

However, Best Buy's notes were seen by traders to have struggled in the aftermarket both on Thursday and again on Friday, trading below their issue price most of the time. One of the traders said the notes had gotten all the way down to 98½ bid at one point before coming off their lows.

United Rentals rises

Away from the new-deal arena, a trader said that Wednesday's session was "very quiet - I'm not going to lie - but we have a lot of earnings coming out, and that's where our market is."

One familiar junk issuer that was out with earnings on Wednesday was United Rentals, the Greenwich, Conn.-based construction and industrial equipment leasing company. It reported 2013 second-quarter results that included adjusted EBITDA of $549 million, up $76 million from the year-ago quarter, and an adjusted EBITDA margin of 45.5%, a gain of 370 basis points versus a year ago. The company also reaffirmed its outlook for full-year adjusted EBITDA in a range of $2.25 billion to $2.35 billion and free cash flow of between $400 million and $500 million. It faces no significant maturities in the short term, company executives said on United Rentals' Wednesday conference call (see related story in this issue).

United Rentals' busiest bonds - its 8 3/8% notes due 2020 - were seen by a market source having risen by 7/8 point on the day to 112 1/8 bid, on round-lot volume of more than $7 million.

Its 5¾% notes due 2018 gained ¾ point to go out at 108 bid, although volume was just over $2 million.

Market indicators improve

Statistical junk market performance indicators were better across the board on Wednesday for the sixth session out of the last seven, after having turned mixed on Tuesday.

The Markit Series 20 CDX North American High Yield index was up by ½ point to finish Wednesday's session at 105 7/8 bid, 105 15/16 offered, in contrast to Tuesday's 5/32-point downturn, which had snapped a streak of six sessions without a loss.

The KDP High Yield Daily index gained 15 bps points on Wednesday, its seventh consecutive rise. It had risen by 14 bps on Tuesday.

Its yield meantime came in by 7 bps, to 5.93%, also its seventh straight narrowing. On Tuesday, it had closed 4 bps lower.

And the widely followed Merrill Lynch High Yield Master II index also saw its seventh straight gain on Wednesday, as it rose by 0.266%. That followed Tuesday's 0.252% advance.

The latest gain raised the index's year-to-date return to 3.537% from Tuesday's 3.262%. Wednesday's finish was the highest in over a month, since June 4, when it stood at 3.728%.

Wednesday's yield to worst was 5.992%, down from Tuesday's 6.079%. It was the first time that yields were back below the 6% level and the lowest one-day yield since June 4, when the yield stood at 5.895%.

Its spread to worst over Treasuries was 476 bps, down from 480 bps on Tuesday and the tightest level seen since the 469 bps spread recorded back on May 31.

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