Nuance, Acco, Mattamy, GTT price offerings, GTT up in aftermarket; funds add $2 billion

By Paul Deckelman and Paul A. Harris

New York, Dec. 8 – The high-yield new deal machine continued to churn out offerings on Thursday, with syndicate sources seeing a total of $1.52 billion of new U.S. dollar-denominated and fully junk-rated paper coming to market from a quartet of domestic or industrialized-country issuers, a bit more than the $1.46 billion which had gotten done in three deals on Wednesday.

Software provider Nuance Communications Inc. had the big deal of the day – a quickly shopped $500 million of 10-year notes.

Office products manufacturer Acco Brands Corp. also did an unscheduled offering of $400 million of eight-year notes.

Canada-based homebuilder Mattamy Homes brought an upsized $325 million of seven-year notes as a regularly scheduled forward calendar transaction, while cloud networking services provider GTT Communications, Inc. also did a scheduled deal, offering $300 million of eight-year notes.

In the aftermarket, traders saw the latter paper firm smartly from its issue price.

They also saw continued strength in such names from earlier in the week as Tervita Corp., Ritchie Bros. Auctioneers Inc. and Chesapeake Energy Corp. although Antero Resources Corp.’s new issue was seen treading water in the aftermarket.

Statistical market performance measures turned mixed on Thursday after four straight sessions on the upside.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – posted a third consecutive week of net inflows this week, after having broken a string of six straight net outflows.

Sources familiar with the fund-flow statistics said that $2.034 billion more came into those weekly reporting-only domestic funds than left them via investor redemptions during the week ended on Wednesday, on top of inflows of $342 million seen last week and $598 million the week before that.

Nuance at a discount

Four issuers priced single-tranche dollar-denominated deals during the Thursday session, raising a combined total of $1.52 billion.

Two of the four came quick to market.

One was upsized.

Executions were tight, with three of the four pricing at the tight ends of talk, while the fourth priced on top of talk.

Nuance Communications priced a $500 million issue of 5 5/8% 10-year senior notes (Ba3/BB-) at 99.062 to yield 5¾%.

The yield printed on top of yield talk.

Barclays was the sole bookrunner for the debt refinancing deal.

Acco at the tight end

In another debt refinancing deal, Acco Brands priced a $400 million issue of eight-year senior notes (B1/BB-/BB) at par to yield 5¼%.

The yield printed at the tight end of the 5¼% to 5½% yield talk.

Barclays was the lead left bookrunner for the drive-by deal. BMO, BofA Merrill Lynch and Wells Fargo were the joint bookrunners.

Mattamy upsizes, prices tight

At the completion of a roadshow, Mattamy Homes priced an upsized $325 million issue of seven-year senior notes (B1/BB) at par to yield 6 7/8%.

The issue size was increased from $300 million.

The yield printed at the tight end of yield talk in the 7% area.

The order book was well above the size of the deal, according to a trader, who added that Mattamy appeared to go well.

Credit Suisse, RBC and Wells Fargo were the joint bookrunners for the debt refinancing deal.

GTT plays to $1 billion book

GTT Communications priced a $300 million issue of eight-year senior notes (Caa1/B-) at par to yield 7 7/8%.

The yield printed at the tight end of official price talk and initial guidance, both of which were in the 8% area.

The deal was playing to a $1 billion order book, a trader said.

Credit Suisse, KeyBanc and SunTrust were the joint bookrunners for the acquisition financing.

Talking the deals

The Friday session is expected to generate some issuance, sources say.

Carlson Wagonlit BV set price talk for its $1,025,000,000 equivalent offering of notes.

The deal, which is being led by JPMorgan, includes $750 million of senior secured notes due 2023, in tranches of dollar-denominated fixed-rate notes and euro-denominated floating-rate notes.

The secured fixed-rate notes are talked to yield 6¾% to 7%, at the wide end of the 6½% to 7% initial guidance.

There was no update on the floating-rate notes which were in the market with early guidance of Euribor plus 500 basis points to 525 bps, with no Euribor floor, at a price of 99.5, the source said.

In addition, there is a $275 million tranche of senior unsecured notes due 2024 which is talked in the 9% area, at the wide end of the 8½% to 9% early guidance.

The deal is expected to price on Friday.

Elsewhere Starwood Property Trust, Inc. talked its $500 million of offering of non-callable five-year senior notes (expected ratings B1/BB-) to yield 5% to 5¼%, tight to early guidance of 5½%.

Pricing is expected Friday.

Baffinland Iron Mines roadshow

One deal took a place on the active forward calendar for the week ahead.

Baffinland Iron Mines Corp. plans to start a roadshow on Friday in Toronto for a $350 million offering of five-year senior secured notes.

Goldman Sachs is the left bookrunner. Morgan Stanley is the joint bookrunner.

The company plans to use the proceeds to pay off its senior secured credit facility, as well as for working capital and other general corporate purposes.

The Dec. 12 week could see the final action of the 2016 new issue market because liquidity will thin significantly in the Dec. 19 to Dec. 23 week as holiday plans will almost certainly reduce the ranks of market participants, sources say.

GTT gains in secondary

In the secondary market, traders saw the new GTT Communications 7 7/8% notes trading solidly higher from the par level at which the McLean, Va.-based cloud networking services provider had priced its offering via its GTT Escrow Corp. subsidiary earlier.

One trader saw the new deal in a 101 to 102 bid context on the break but he subsequently had the bonds improving to a 102 to 103 bid range going home.

A second trader also pegged the new notes somewhere between 102 and 103 bid.

Mettamy, Acco see small gains

A trader said that Mettamy Group’s 6 7/8% notes were trading from 100½ to 101½ bid.

That was up from the par level at which the Burlington, Ont.-based homebuilder’s upsized offering had come to market.

He meantime initially saw Acco Brands’ 5¼% notes trading in a wide 100½ to 101½ bid neighborhood, after the Lake Zurich, Ill.-based office products provider had priced its quick-to-market offering at par.

But later on, he said, it tightened to a 100¼ to 101 bid context.

A second trader located the issue at 100 5/8 bid

The traders did not immediately report any initial aftermarket dealings in Burlington, Mass.-based voice and language software provider Nuance Communications’ new 5 5/8% notes, which priced at par.

New issues hold spotlight

Away from Thursday’s new deals, a trader said that much of the secondary market’s attention remained “squarely focused” on new and recently priced issues, “just as it has all week.”

One such name, he said, was Tervita’s 7 5/8% notes due 2021, which he saw at 102½ bid.

That was about unchanged from where the bonds had finished on Wednesday after the Calgary, Alta.-based earth, water, waste and resources solutions company’s regularly scheduled $360 million offering had priced at par.

Ritchie Bros.’ 5 3/8% notes due January 2025 were trading on Thursday at 101½ bid, a trader said.

The Vancouver, B.C.-based industrial auctioneer and equipment distributor’s $500 million scheduled forward calendar deal had priced at par on Wednesday.

A trader saw Chesapeake Energy’s new 8% notes due January 2025 pushing up to 101 bid, 101½ offered.

A second also saw the Oklahoma City-based oil and gas company’s $1 billion deal at that level, versus Wednesday’s levels around 99 5/8.

That drive-by megadeal had priced at par on Tuesday after being upsized from an originally announced $750 million.

But Chesapeake sector peer Antero Resources’ new 5% notes due March 2025 were not doing nearly as well.

“They’re struggling,” a trader said, quoting the issue trading between 99½ and 99¾ bid.

The Denver-based exploration and production company had priced its $600 million offering at par on Wednesday after that quick-to-market deal was upsized from an originally announced $550 million.

Indicators turn mixed

Statistical market performance measures turned mixed on Thursday after four straight sessions on the upside.

The KDP High Yield Index rose by 14 basis points on Thursday to end at 71.27 after jumping by 21 bps on Wednesday. Thursday marked its seventh consecutive gain.

Its yield came in by 6 bps to close at 5.50% after declining by 8 bps on Wednesday. It was the yield’s 10th straight narrowing.

But the Markit Series 27 CDX Index lost more than 3/32 point on Thursday, going out at 105 13/16 bid, 105 27/32 offered, its first loss after four advances, including Wednesday’s firming of more than ½ point.

However, the Merrill Lynch High Yield Index rose for a seventh straight day, advancing by 0.149% on the heels of Wednesday’s 0.413% upturn.

That lifted its year-to-date return to 16.592% from Wednesday’s finish at 16.419%, which had been the first time the cumulative return had topped the 16% mark since Oct. 28, when it closed at 16.024%.

Those levels still remain below the index’s peak level for this year of 16.768%, established on Oct. 25.

© 2015 Prospect News.
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