Taseko, split-rated Toll add-on price; recent issues busy; energy names slide as crude prices plunge

By Paul Deckelman and Paul A. Harris

New York, June 7 – For a second successive session, the high-yield primary market saw but a single U.S. dollar-denominated and fully junk-rated deal get done on Wednesday, as Canada-based Taseko Mines Ltd. priced $250 million of five-year secured notes in a regularly scheduled forward calendar offering.

There was one other dollar deal heard to have gotten done – a split-rated $150 million add-on to homebuilder Toll Brothers’ existing 2027 notes, seen by syndicate sources to have been mostly of interest to high-grade accounts looking for some crossover yield.

Tuesday had also seen just one new deal price, in contrast to Monday’s super-busy session, when more than $5 billion of new junk paper had come clattering down the chute, the second-most of any session so far this year; the key deal that priced that day, Tenet Healthcare Corp.’s nearly $4 billion four-part offering, remained among the most actively traded issues Wednesday. It was seen lower all around, along with recent megadeal-sized transactions from Hertz Corp. and PetSmart, Inc.

Away from the new issues, oil and natural gas names such as California Resources Corp., Chesapeake Energy Corp., Continental Resources Inc. and EP Energy Corp. all got hammered lower in active dealings, as world crude oil prices plunged by more than $2 per barrel after the U.S. government reported an unexpected increase in crude inventories.

Statistical market performance measures fell across the board for a second straight session on Wednesday; they had turned lower on Tuesday after having been mixed on Monday and stronger all around last Thursday and Friday.

Taseko prices atop talk

In Wednesday's dollar-denominated new issue market Taseko Mines Ltd. priced a $250 million issue of 8¾% five-year senior secured notes (B3/B-) at 99.00 to yield 9.003%.

The reoffer price came on top of price talk. The yield printed in line with yield talk in the 9% area.

Jefferies was the bookrunner for the debt refinancing deal.

Split-rated Toll Brothers tap

In the crossover market Toll Brothers priced a $150 million add-on to the Toll Brothers Finance Corp. split-rated 4 7/8% senior notes due March 15, 2027 (Ba1/BB+/BBB-) at 103.655 to yield 4.4%.

The yield printed at the tight end of the 4.4% to 4.45% yield talk.

The add-on came in a high grade execution that was priced on the investment grade syndicate desk.

SunTrust was the lead. Citigroup, Deutsche Bank, Mizuho, SunTrust and Wells Fargo were the joint bookrunners.

UPC 12-year deal

UPC Holding BV priced a restructured €635 million issue of 12-year senior notes (expected ratings B2/B/B) at par to yield 3 7/8%.

The yield came on top of yield talk in the 3 7/8% area.

The debt refinancing deal was announced to the market earlier on Wednesday as a €635 million two-tranche offer that also included a tranche of 10.5-year notes, talked in the 3 5/8% area, then subsequently withdrawn, with all proceeds shifted to the 12-year tranche.

Credit Suisse was the lead left bookrunner. ABN Amro, Credit Agricole, HSBC, Mediobanca, Morgan Stanley, Nomura, NatWest, SG C and UBS were the joint bookrunners.

Superior Industries upsize, talk

Looking ahead, Michigan-based Superior Industries International, Inc. talked an upsized €250 million offering of eight-year senior notes (S&P: B-) to yield 6% to 6¼%.

Official talk comes in line with initial guidance in the low 6% area.

The JP Morgan deal, which was upsized from €240 million, is expected to price before the end of the week.

Taseko, Toll notes slightly better

A trader said that Taseko Mines’ new 8¾% senior secured notes due 2022 were trading in a 99 1/8-to-99½ bid range, although he said he had seen just a handful of trades in the Vancouver, B.C.-based copper producer’s new deal.

That was up slightly from the 99 level at which those notes had priced.

At another desk, the Toll Brothers tap of its 4 7/8% notes due in March of 2027 was quoted between 103½ and 104 bid, versus the 103.655 level at which the Horsham, Pa.-based homebuilder’s quickly shopped add-on had priced.

Recent issues easier

Among recently priced issues, Dallas-based hospital operator Tenet Healthcare Corp.’s four tranches of new bonds were among the day’s Most Active issues – but a trader said that “volume was not as high today as [Tuesday], when it was astronomical.”

The new 5 1/8% second-lien notes due 2025 were seen off by 1/8 point at exactly par, with over $31 million traded – a far cry from the more than $240 million of that same bond that had changed hands on Tuesday.

Its 7% unsecured notes due 2025 nosedived by more than 1½ points on Wednesday to end at 99 3/8 bid, with around $16 million traded, versus Tuesday’s nearly 1-point gain, with over $60 million traded.

Its two tranches of 4 5/8% notes due 2024 – one issued by parent Tenet Healthcare and the other by subsidiary THC Escrow Corp. – were both seen down ½ point, at par bid, with around $14 million of each traded – versus $77 million of the former and over $100 million of the latter on Tuesday.

Other recent deals “seen under pressure,” a trader remarked, included Estero, Fla.-based car-rental giant Hertz Corp.’s 7 5/8% notes due 2022, which ended down ¾ point, at 98¼ bid, as over $26 million traded. On Tuesday, those notes had lost 1 full point on the session.

Things were almost as bad on Wednesday for San Diego-based pet food and supplies retailer PetSmart’s two-part offering as they had been on Tuesday; its 5 7/8% senior secured first-lien notes due 2025 were down ½ point to just over 98 bid, with over $18 million traded, while its 8 7/8% unsecured notes due 2025 were ¼ point lower at 95½ bid, with over $12 million of volume; both issues had plunged by more than 1 full point on Tuesday, in active dealings.

Crude plunge punishes energy credits

Away from those new deals, traders said the big news of the day was the sharp slide in oil and gas names.

“With crude down more than $2 [per barrel],” a trader said, California Resources’ benchmark 8% notes due 2022, “always a volatile mover along with oil prices,” plunged just under 5 full points on the session, going home at 67½ bid, on market-leading volume of over $34 million.

Other sector names were also on the slide, including Chesapeake Energy’s recently priced 8% notes due 2027, ending down 1 3/8 point on the day at 96¾ bid, while its older 8% notes due 2025 lost 5/8 points, ending at 98 5/8 bid.

Continental Resources’ 4½% notes due 2023 were 1 point lower on the day at 96½ bid, while EP Energy’s 8% notes due 2025 slid nearly 3 points, to 81½ bid, with all of those energy names seen trading actively.

The news that crude stocks in the United States unexpectedly grew by 3.3 million barrels in the latest reporting period, to 513 million barrels, according to the federal government’s Energy Information Administration, sent crude prices down around 5% on the day, with West Texas Intermediate crude for July delivery plunging by $2.47 per barrel on the New York Mercantile Exchange, settling in at $45.72.

Indicators stay lower

Statistical market performance measures fell across the board for a second straight session on Wednesday; they had turned lower on Tuesday after having been mixed on Monday and stronger all around last Thursday and Friday.

The KDP High Yield Daily index plunged by 15 basis points on Wednesday to end at 72.53, its second consecutive loss after four straight upside finishes; it had eased by 1 bp on Tuesday after having risen by 1 bp on Monday.

Its yield was rose by 3 bps to 4.90%, after having been unchanged on Tuesday and having come in by 1 bps on Monday.

The Markit CDX Series 28 High Yield index posted its third straight loss, ending down 3/16 point at 107 7/16 bid, 107 1.2 offered. On Tuesday, the index had retreated by nearly 3/32 point.

The Merrill Lynch North American High Yield index was off for a second day in a row, closing off by 0.096%, on top of Tuesday’s 0.009% loss – its first such downturn after six consecutive upturns, including Monday’s advance of 0.046%.

The latest loss cut the index’s year-to-date return to 5.054% from 5.064% on Tuesday, and down as well from Monday’s 5.074%, which had been its sixth straight new 2017 peak cumulative return.

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