D.R. Horton, Anixter price, move up, downsized Ineos on tap; secondary stays strong

By Paul Deckelman and Paul A. Harris

New York, April 25 - The high-yield primary market saw a pair of $350 million deals price on Wednesday, as activity lessened a little from Tuesday's busy $2 billion session.

Homebuilder D.R. Horton, Inc., a familiar junk market name, turned the key on a quickly shopped, upsized offering of five-year notes.

Anixter International Inc., a distributor of various industrial products, came in with a quick-to-market seven-year transaction.

Both new issues were heard by traders to have firmed solidly when they hit the aftermarket.

The traders also saw stronger levels on the deals which had priced on Tuesday from Levi Strauss & Co., Laredo Petroleum Inc., Viasystems Group, Inc., and even Plains Exploration and Production Co.; the latter deal improved after having not moved much immediately after pricing.

Away from the issues that have actually priced, syndicate sources heard price talk on issues that are expected to price on Thursday - Ineos Finance plc, Radiation Therapy Services, Inc., Prospect Medical Holdings, Inc. and MBI Energy Services Inc. The sources meantime heard that the big Ineos dual-currency deal was downsized, with new talk out, while MBI Energy also had revised talk, as well as covenant revisions.

And they heard that Affinity Gaming LLC - the old "Terrible Herbst" Las Vegas locals gaming operator - will be bringing a $200 million deal to market, likely next week.

Traders said that the secondary market was firmer overall, as junk took its cues from a resurgent stock market. Statistical measures rose across the board. Among the notable individual gainers were Sprint Nextel Corp., following its quarterly earnings, and Select Medical Corp., on news of higher Medicare payments to long-term care facilities next year.

Anixter prices at tight end

Two issuers priced single-tranche deals, raising a total of $700 million on Wednesday.

Both executions printed yields at the tight end of talk.

In an offering that included an investor roadshow, Anixter Inc. priced a $350 million issue of non-callable seven-year senior notes (Ba3/BB) at par to yield 5 5/8%, at the tight end of the 5¾% area yield talk.

Wells Fargo was the left bookrunner. Bank of America Merrill Lynch, J.P. Morgan and RBS Securities Inc. were the joint bookrunners.

Proceeds will be used to repay the company's accounts receivable securitization facility, to repay revolver debt and for general corporate purposes.

D.R. Horton brings drive-by

In quick-to-market action, D.R. Horton priced an upsized $350 million issue of 4¾% non-callable five-year notes (Ba2/BB-/BB) at par to yield 4.749%, at the tight end of yield talk which was set at 4 7/8%.

The offering was increased from the planned $300 million.

Citigroup was the left bookrunner. J.P. Morgan and UBS were the joint bookrunners. Pricing was done off the investment-grade desk

The Fort Worth-based homebuilder plans to use the proceeds for general corporate purposes.

Ineos downsizes, trims talk

England's Ineos Finance plc downsized its dual-currency high-yield notes offer by a minimum of $500 million equivalent and revised price talk lower on Wednesday afternoon.

The eight-year senior notes (B1/B+) would thus be downsized to $1.7 billion equivalent from $2.2 billion equivalent.

In revised price talk, the notes in the dollar-denominated tranche are talked to yield 7½% to 7 5/8%, down from 7 5/8% to 7 7/8%.

The notes in the euro-denominated tranche are talked to yield 25 basis points more than the dollar-denominated notes. Earlier talk had the euro tranche coming 37.5 bps behind the dollar-denominated notes.

The final overall deal size and tranche sizes remain to be determined.

The books closed on Wednesday for accounts in the United States, and will close at 5 a.m. ET on Thursday for accounts in Europe.

Pricing is set to take place during the New York morning on Thursday.

Joint bookrunner J.P. Morgan will bill and deliver. Barclays is also a joint bookrunner.

With the downsizing of the bonds by $500 million equivalent, the company's bank loan will be upsized by a proportional amount.

Talking the deals

In addition to Ineos three other offerings are slated to price Thursday.

Radiation Therapy Services talked its $335 million offering of five-year senior secured second-lien notes (B1/B+) to yield 8¾% to 9%.

Wells Fargo is the left bookrunner. Morgan Stanley, SunTrust and Barclays are the joint bookrunners.

Prospect Medical Holdings, Inc. talked its $325 million offering of seven-year senior secured notes (B2/B-) to yield 8¼% to 8½%.

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

Meanwhile MBI Energy Services, Inc. made an upward revision to price talk on its $250 million offering of eight-year senior notes (confirmed Caa1/expected B), hiking talk to the 10% area from the 9½% area, a syndicate source said on Wednesday.

The notes have also undergone covenant changes.

The books close at 10 a.m. ET on Thursday, and the deal is set to price after that. Previously the notes had been expected to price on Wednesday.

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

The primary market is likely to remain busy and the drive-by business should stay active provided the secondary market remains supportive, a syndicate banker said shortly after Wednesday's close.

Affinity Gaming to roadshow

The market heard one roadshow announcement.

Affinity Gaming LLC plans to start a roadshow on Thursday for a $200 million offering of eight-year senior notes.

The deal is set to price in the middle or late part of the week ahead.

Deutsche Bank, J.P. Morgan, Jefferies and Macquarie are the joint bookrunners.

Proceeds, along with proceeds from a $235 million credit facility, will be used to refinance debt resulting from the company's Chapter 11 proceedings.

Junk gets a lift

A trader in the secondary market called Wednesday's session "one of those crazy days."

He added that "you could have bought almost anything at higher levels after Apple announced" - a reference to the unexpectedly strong earnings posted by high-tech bellwether Apple Inc. That sparked a surge in stocks - the Dow Jones Industrial Average, for instance, rose by 89.06 points Wednesday, or 0.69%, to end at 13,090.22, while broader indexes were also up, including the tech-heavy Nasdaq, which jumped 2.30% on the day.

Back in Junkbondland, the trader suggested, "everything got better today."

Statistical measures of junk market performance rose across the board for a second straight session on Wednesday.

A trader saw the Markit Group CDX North American Series 18 High Yield Index up by 5/8 point on Wednesday to end at 95 5/8 bid, 95 7/8 offered, after having gained 9/16 point Tuesday.

The KDP High Yield Daily Index rose by 8 basis points on Wednesday to close at 73.67, on top of Tuesday's gain of 9 bps. Its yield declined by 4 bps, to 6.63%, after having come in by 5 bps Tuesday.

And the widely followed Merrill Lynch High Yield Master II Index posted its second straight gain, rising 0.25% on Wednesday. That followed Tuesday's 0.159% advance.

Wednesday's gain lifted the index's year-to-date return to 5.734% - a new peak level for 2012, eclipsing the previous high-water mark of 5.471%, set on Tuesday.

The new year-to-date figure is the index's highest since it hit 5.987% back on Aug. 2, 2011.

Day's new deals move up

Both of Wednesday's newly priced deals were seen solidly higher when they were freed for aftermarket trading.

"Both traded well and ended up about in the same place" was how one trader put it.

He saw D.R. Horton's new five-year notes at 101½ bid, 101 7/8 offered - well up from the par level at which the Fort Worth, Texas-based homebuilder had priced its upsized $350 million deal.

A second trader pegged the bonds at 101 3/8 bid, 101 5/8 offered, and he exclaimed "I can't believe that 4¾% coupon" - stingy by even the standards of some of the recent junk new deals that have had very un-junklike coupons in the 5½% area or below.

He further marveled at the fact that while some of those recent junk deals with low coupons did not really go anywhere when freed for trading due to investor disinterest in such relatively low-yielding paper, the D.R. Horton issue had no trouble moving up.

One of the traders meantime saw Anixter International's seven-year notes at 100¼ on the break, just after the company's $350 million deal had priced at par. However, shortly afterward, he saw those bonds having firmed further, to 101½ bid, 102 offered.

A second trader saw the Glenville, Ill.-based diversified industrial products distributor's bonds at 101 3/8 bid, 101¾ offered.

Tuesday deals trade better

Along with Wednesday's new offerings, the quartet of new deals that priced in the junk market Tuesday was seen having pushed up from their immediate aftermarket levels.

A trader noted that the big deal coming out of Tuesday's session - Houston-based energy operator Plains Exploration and Production Co.'s 6 1/8% notes due 2019 "started slow [Tuesday], but then it was gaining traction today," pushed upward by the overall market strength.

He saw that $750 million issue at 100 5/8 bid, 101 offered, up from the par bid, 100¼ offered level the bonds held late Tuesday.

The quickly-shopped issue had priced at par on Tuesday, after having been upsized from an originally announced $500 million.

In contrast, Tuesday's other three deals had all done pretty well when they were freed for secondary market dealings, and on Wednesday, traders saw them adding to those gains.

A trader said that Levi Strauss & Co.'s 6 7/8% notes due 2022 had firmed to 102 bid, 102¼ offered, noting that the venerable San Francisco-based blue jeans maker "always does very well" in trading.

Levi had priced its $385 million drive-by offering at par late Tuesday, after having upsized it from the originally announced $350 million. When they were freed to trade, they firmed a point to a 101-102 context.

But on Wednesday, another trader quoted Levi at 102 1/8 bid, 102 5/8 offered.

Laredo Petroleum Inc.'s quick-to-market tranche of 7 3/8% notes due 2022 "did really well," a trader said Wednesday, quoting the Tulsa, Okla.-based energy exploration and production company's $500 million issue at 102 5/8 bid, 102 7/8 offered.

Another trader saw them even better on Wednesday at 102 5/8 bid, 103 1/8 offered.

Those bonds had priced Tuesday at par, after having been upsized from the originally announced $400 million. After initially trading on Tuesday at 101¼ bid, 102¼ offered, they had gone home Tuesday quoted as good as 102 bid, 102½ offered.

Viasystems Group, Inc.'s 7 7/8% notes due 2019 "did pretty well too," a trader said, quoting the $550 million paper at 101 3/8 bid, 101 5/8 offered.

A second trader saw the bonds at 101½ bid, 101¾ offered.

The St. Louis-based electronics manufacturer's $550 million had priced at par off the forward calendar on Tuesday and then had traded up to 101¼ bid, 102¼ offered.

Sprint runs up

Away from the new deals, a trader said that "high yield had a strong day," including a 1 to 2 point rise in Sprint Nextel Corp. paper, and that of its Sprint Capital Corp. financing subsidiary, following the company's earnings release.

A second trader saw about $15 million of the company's 6 7/8% notes due 2028 changing hands, rising over a point to 75 3/8. The 6% notes due 2016 gained 1¾ points, ending at 901/2.

Another market source pegged the 6% notes at 90½ bid as well, but deemed that up only ½ point.

At another shop, a trader said Sprint's 7 3/8% notes due 2015 were 1 point better at 97 bid, while the 6 7/8% notes were up 1 3/8 points at 751/2.

He saw the Sprint Capital 6.90% notes due 2019 - an actively traded issue, with over $12 million having traded by mid-afternoon - a point better at 87¼ bid.

The Overland Park, Kan.-based wireless telecommunications provider posted its first-quarter earnings Wednesday, which showed an increase in subscribers, due in large part to its addition of the iPhone. Sprint added about 263,000 contract-based subscribers during the quarter, with about 1.5 million new iPhones being activated.

Given the iPhone's success, wireless revenues gained 7.4%.

Still, once Sprint's Nextel network is added in, the contract-based gain turns to a loss of 192,000 customers. That network is scheduled to be shuttered next year.

Nextel's poor performance also caused a wider quarterly loss for the company. Net loss was $863 million, or 29 cents per share, compared to a net loss of $439 million, or 15 cents per share, the year before.

Revenues increased 5% to $8.73 billion.

However, the quarterly loss was less than the 40 to 42 cents per share that Wall Street had been expecting, and revenues beat analyst estimates of $8.7 billion.

On the company's conference call, Sprint executives meanwhile outlined the company's liquidity profile, which rose to $8.8 billion at the end of the quarter from $6.7 billion at the end of the previous quarter.

They also noted that Sprint's $2 billion bond issue in February represented a 200 basis point improvement over the junk deal Sprint did last November (see related story elsewhere in this issue).

New rates are good medicine

Traders saw a jump in many healthcare names, both on the overall better market and on the news that the government bureau that sets Medicaid and Medicare reimbursement rates announced that it would increase those payments in 2013.

A trader saw Select Medical Corp.'s 7 5/8% notes due 2015 as "one of the winners," saying that the Mechanicsburg, Pa.-based specialty hospital operator's issue had moved up to 101 bid, 101¼ offered from prior levels in a 98-99 context. Volume was more than $11 million - "and you rarely see that kind of volume on that bond."

Its floating-rate notes likewise rose to 92 bid, up several points.

That followed the announcement by the government's Centers for Medicare & Medicaid Services of a proposed rule that updates Medicare payment policies and rates for inpatient stays to general acute care hospitals paid under the Inpatient Prospective Payment System and long-term care hospitals paid under the LTCH Prospective Payment System.

CMS projects payment rates to general acute care hospitals will increase by 2.3% in fiscal year 2013, or about $175 million, while LTCH payments will increase by approximately $100 million, or 1.9%, in fiscal 2013 under the proposed rule.

- Stephanie N. Rotondo contributed to this report

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