Upsized Post Holdings, Stone Energy drive-bys lead $1.26 billion day; new Toll bonds busy

By Paul Deckelman and Paul A. Harris

New York, Nov. 13 - The high-yield primary sphere continued to grind out new deals on Wednesday, albeit at a reduced pace versus Tuesday's frenetic post-holiday pace.

All told, syndicate sources saw $1.26 billion of new junk-rated, dollar-denominated paper come to market during the session in three tranches, versus Tuesday's $2.37 billion from six issuers in seven tranches - the heaviest issuance seen in Junkbondland in more than a month.

And while all of Tuesday's issuance came in the form of opportunistically timed and quickly shopped drive-by offerings, just two out of Wednesday's three deals fit that description.

Breakfast cereal manufacturer Post Holdings, Inc. served up an upsized $525 million of eight-year notes, while oil and natural gas exploration and production company Stone Energy Corp. did an upsized $475 million add-on to its existing 2022 notes.

Besides those unscheduled deals, paper manufacturer Appvion, Inc. priced a $250 million 6.5-year secured deal off the forward calendar.

Unusual for a domestic issuer, vehicle-rental giant Hertz Global Holdings, Inc. did a euro-denominated 5.25-year deal via a Europe-based subsidiary.

Only the Post deal was seen having reached the aftermarket, where traders saw the new bonds having firmed by more than a point from their issue price.

There was a mixed bag of trading in deals that priced Tuesday, with the two-part offering from homebuilder Toll Brothers Inc. probably the most active among them.

In the secondary market, Post Holdings' existing 2022 bonds were among the most actively traded paper, presumably on the news of the pending new deal.

Statistical market performance measures turned mixed after having been lower across the board on Tuesday. Wednesday's results marked the fifth mixed session over the past six trading days, and the ninth such session over the past 11 trading days.

Post Holdings upsizes

The deal pace slowed down during Wednesday's high-yield primary market session.

Three issuers brought single-tranche deals, two of them upsized drive-bys, to raise a total of $1.26 billion, a relatively inconspicuous volume compared to Tuesday's $2.37 billion in seven tranches from six issuers.

Post Holdings, Inc. priced an upsized $525 million issue of eight-year senior notes (B1/B) at par to yield 6¾%.

The deal was upsized from $450 million.

The yield printed on top of yield talk.

Goldman Sachs, Barclays, Credit Suisse, Wells Fargo, JP Morgan, Nomura, Rabo and SunTrust were the joint bookrunners.

The St. Louis-based ready-to-eat cereal manufacturer plans to use the proceeds to fund the acquisition of Dakota Growers Pasta Co. and for general corporate purposes.

Stone Energy upsizes add-on

Stone Energy Corp. priced an upsized $475 million add-on to its 7½% senior notes due Nov. 15, 2022 (B3//) at 103.

The yield to worst is 6.949%, and the yield to maturity is 7.042%.

The deal was upsized from $400 million.

The reoffer price came cheap to the 103½ price talk.

BofA Merrill Lynch, Barclays and Wells Fargo were the joint bookrunners for the debt refinancing.

Appvion at a discount

In Tuesday's only roadshow deal, Appvion, Inc. priced a $250 million issue of 9% second-lien senior secured notes due June 1, 2020 (second-lien ratings B2/CCC+) at 98.501 to yield 9.31%.

The yield printed 68.5 basis points beyond the wide end of yield talk in the 8½% area.

Barclays was the lead left bookrunner. Jefferies was the joint bookrunner.

The Appleton, Wis.-based producer of paper products plans to use the proceeds to refinance debt.

Hertz prints at 4 3/8%

In Europe, Hertz Holdings Netherlands BV priced a €425 million issue of non-callable senior notes due Jan. 15, 2019 (expected ratings B2/B) at par to yield 4 3/8%.

The yield printed in the middle of the 4¼% to 4½% yield talk.

Joint bookrunner Barclays will bill and deliver. Credit Agricole, Deutsche Bank, JPMorgan, Natixis and Wells Fargo were also joint bookrunners.

Proceeds will be used to refinance the outstanding 8½% euro-denominated notes due 2015 at 1041/4.

Post pops up

In the secondary market, when the Post Holdings 6¾% notes due 2021 were freed for aftermarket activity, a trader saw the new bonds at 101 1/8 bid, 101 5/8 offered on the break, up from their par issue price.

A second trader pegged the new deal at 101½ bid, 102¼ offered.

Post was the only one of the day's three new dollar-priced issues seen trading around, with no signs of an aftermarket seen in either paper maker Appvion's secured 2020 notes or in Lafayette, La.-based oil and gas operator Stone Energy's add-on to its existing 2022 notes.

Existing Post notes ease

A trader did see Post Holdings' existing 7 3/8% notes due 2022 retreat in an apparent reaction to the news that the cereal company would be bringing a sizable new deal to market.

He quoted those bonds down ½ point at 105¼ bid. Volume of over $10 million put the issue well up on the most active list.

A second trader had the bonds going home at 105½ bid, calling them down 5/8 point with over $10 million having changed hands.

Toll trades actively

Among the deals that had priced on Tuesday, a trader said that the Toll Brothers two-part issue via its Toll Brothers Finance Corp. subsidiary was "pretty much the big-volume guys of the day."

He saw the new 4% notes due 2018 at 100 1/8 bid, 100 3/8 offered, while its new 5 5/8% notes due 2024 were around 99¾ bid.

Toll Brothers, a Horsham, Pa.-based builder of luxury homes, priced $350 million of the 4% notes at 99.95 to yield 4%, and priced $250 million of the 5 5/8% notes at 99.985 to yield 5 5/8%.

The quick-to-market deal was upsized to $600 million from $500 million originally.

Reynolds bonds firm

Among the other Tuesday deals, a trader said that Reynolds Group Holdings Ltd.'s 5 5/8% notes due 2016 gained ½ point on the session to end at 101½ bid, 102 offered.

A second trader, though, said that he had seen "no activity at all" in the new issue.

The Auckland, N.Z.-based manufacturer of packaging products for food and beverages, including its iconic Reynolds Wrap aluminum foil, priced its $650 million drive-by deal via a pair of subsidiaries - Beverage Packaging Holdings (Luxembourg) II SA and Beverage Packaging Holdings II Issuer Inc.

After pricing at par, the bonds moved up to a 101 to 101¼ bid context in initial aftermarket dealings.

Existing Reynolds bonds busy

As was the case on Tuesday, traders saw some of Reynolds Group's existing bonds actively traded.

The company's 9% notes due 2019, which on Tuesday had gained ¼ point on volume of over $6 million, were among the busiest bonds in the junk precincts on Wednesday.

A trader said that more than $9 million of those bonds had traded, and said they were up by 1/8 point, to 106¼ bid.

However, a market source at another desk said there was not much trading seen in its 5¾% notes due 2020, which had been one of the busiest credits on Tuesday, with over $15 million having changed hands.

Level 3 loses ground

A trader saw Level 3 Communications Inc.'s new floating-rate notes due 2018 at 100 1/8 bid, 100½ offered, calling that a 3/8 point loss on the day versus the notes' late Tuesday levels.

A second trader also saw them a little easier, at 100¼ bid, 100½ offered.

The Broomfield, Colo.-based wholesale telecommunications and internet backbone service provider had priced $300 million of the notes at par on Tuesday via its Level 3 Financing, Inc. subsidiary.

The quick-to-market deal was a rare floater - the vast majority of junk market deals are done with a fixed coupon - and was priced to yield 350 bps over Libor.

Market signs turn mixed

Overall, statistical junk-market performance indicators turned mixed on Wednesday after having been lower across the board on Tuesday.

It was the fifth mixed session in the last six trading days, and the ninth in the last 11 trading days.

The Markit Series 21 CDX North American High Yield index rose by 3/16 point to close at 106½ bid, 106 5/8 offered, after having dipped for the two sessions before that including Tuesday, when it was off by 9/32 point.

The KDP High Yield Daily index suffered its ninth straight loss Wednesday, sliding by 20 bps to finish at 74.05. On Tuesday, it had plunged 16 bps.

Its yield rose for a third consecutive session Wednesday, finishing at 5.79%, 2 bps wider on the day.

On Tuesday, it had risen by 6 bps for a second consecutive session.

The widely followed Merrill Lynch High Yield Master II index meantime lost 0.09% on Wednesday, its second straight setback. On Tuesday, it was down by 0.104%.

The latest loss lowered its year-to-date return to 5.869%, down from Tuesday's close at 5.964%, and down as well from last Thursday's reading of 6.367%, its peak level for 2013 so far.

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