Laredo brings upsized deal; Stena slates; Telefonica news boosts NII; NRG's GenOn bonds slide

By Paul Deckelman and Paul A. Harris

New York, Jan. 13 - The high-yield market opened the new week on Monday with just one pricing, as energy operator Laredo Petroleum, Inc. did an upsized and quickly shopped $450 million offering of eight-year notes.

The new bonds came too late in the session for any kind of immediate aftermarket dealings.

Primaryside sources heard that Swedish shipping and offshore energy company Stena AB had hit the road to market a $400 million 10-year note issue.

In the non-U.S. dollar market, another energy and transportation company, Teekay Offshore Partners LP, announced plans for a Norwegian kroner-denominated five-year issue

French financial firm Wendel Investissement priced an upsized €400 million of seven-year notes.

Among recently priced issues, traders saw some sparse activity in NRG Energy Inc.'s 8.5-year megadeal, which had priced on Friday. Meanwhile, they saw a resumption of the slide in the bonds of NRG's wholly owned GenOn Energy unit.

Away from the new-issue world, NII Holdings, Inc.'s bonds jumped in busy trading on the news that the company - a provider of Nextel mobile-phone service in Latin America - reached an agreement with Spanish telecommunication company Telefonica SA allowing NII to use Telefonica's network in Mexico and Brazil to better reach its customers.

The news that Charter Communications Inc. had made yet another offer to acquire larger industry peer Time Warner Cable Inc., which quickly rejected the bid, came too late in the session to have any impact Monday, traders said.

Statistical market performance measures turned mixed after two sessions of having been higher across the board.

Laredo comes inside talk

Laredo Petroleum completed Monday's dollar-denominated high-yield deal.

The Tulsa-based energy company priced an upsized $450 million issue of eight-year senior notes (B2/B) at par to yield 5 5/8% in a quick-to-market transaction.

The deal was upsized from $350 million.

The yield came 12.5 basis points below the tight end of the 5¾% to 6% yield talk.

BofA Merrill Lynch was the left bookrunner for the general corporate purposes deal.

Citigroup, Credit Suisse, Wells Fargo and Goldman Sachs were the joint bookrunners.

Wendel upsizes

In the European high yield, France's Wendel Investissement launched and priced an upsized €400 million issue of seven-year senior notes (/BB+/) at par to yield 3¾% in a quick-to-market Monday transaction.

The deal was upsized from €300 million.

The yield printed on top of final yield talk. Earlier talk was 3 7/8% to 4%. Initial guidance came in the 4 1/8% area.

The deal generated €4 billion of orders from over 450 accounts, according to the source.

BofA Merrill Lynch, BNP Paribas, HSBC, SG CIB and Natixis were the joint bookrunners for the general corporate purposes deal.

Stena brings dollar bonds

Sweden-based Stena began a roadshow on Monday for a $400 million offer of non-callable 10-year senior notes (expected ratings B2/BB).

The deal is expected to price on Friday.

JP Morgan, Citigroup, BNP Paribas and HSBC are the joint bookrunners for the debt refinancing.

Teekay's NOK 700 million

Teekay Offshore announced on Monday that it intends to issue NOK 700 million, or roughly $115 million, of senior bonds due in January 2019.

DNB Markets, Nordea Markets and Swedbank Norway are the joint lead managers.

Proceeds will be used for general partnership purposes.

The prospective issuer is a marine transportation, oil production and storage services registered in Hamilton, Bermuda.

Laredo late, NRG lightly traded

In the secondary realm, Laredo Petroleum's new 5 5/8% notes due 2022 priced too late in the session for any kind of aftermarket dealings.

There was only light activity in the new NRG Energy 6¼% notes due in July of 2022, which had priced at par on Friday after the quick-to-market offering had been upsized to $1.1 billion from an originally announced $700 million.

One trader said that "the only thing" he saw in the Princeton, N.J.-based power generating company's new bonds was a trade at 100½ bid, 101 offered.

A second trader also saw the bonds quoted at 100½ bid, 101 offered, but added "that was earlier" in the day. He said the issue "hasn't really been quoted."

That was up slightly from the late-Friday levels around 100¼ bid, 100¾ offered.

NRG/GenOn paper off

As was the case on Friday, the various bonds of NRG's wholly owned GenOn Energy unit were seen trading well down from recent levels in apparent reaction to news of the big new deal, although activity levels were down from Friday.

The GenOn Escrow Corp. 9½% notes due 2018 were seen by a market source having dropped 3 points on the day to 107½ bid, although there was just one round-lot trade at that level, along with a number of smaller odd-lot pieces, some trading as high as 109½ bid.

The reduced activity pace in those bonds stood in contrast to dealings on Friday, when they fell by 1½ points to end at 1101/2, but on round-lot volume of over $13 million, putting the credit well up on the day's most actives list.

Among other GenOn bonds on Monday, GenOn Escrow's 9 7/8% notes due 2020 dropped to 107 bid from late Friday levels just above 110, although there were no round-lots traded.

Probably the most active bonds in the NRG complex were the 8½% notes due 2021, which had originally been issued by Mirant Americas Generation LLC. Those bonds had traded earlier last week at around the 105½ bid level, then slid to 101¼ bid on Friday. That plunge continued on Monday, as the bonds opened at 98½ bid and finally were seen by the market source going home at 95½ bid, on volume of over $8 million.

The 10.06% bonds due 2028 originally issued by Mirant Mid-Atlantic LLC traded at 98¼ bid, on over $2 million of volume. Those bonds had not previously traded since late October, when they were trading around 111 bid.

Atlanta-based power generator Mirant Corp. and Houston-based sector peer Reliant Energy merged in late 2010, with the resulting entity named GenOn Energy, which, in turn, was acquired by NRG in a deal that closed in December 2012.

While the GenOn bonds fell on Friday and again on Monday in apparent response to the bond deal, NRG's own existing bonds were seen little moved. The 7 7/8% notes due 2018 were actually up by about 1/8 of a point on the day at 114½ bid, with over $4 million of the notes having changed hands.

Lamar bonds lifted

Among other recently priced deals, a trader saw Lamar Media Corp.'s 5 3/8% notes due 2024 at 101¾ bid, 102 offered, up about ¼ of a point from their Friday levels.

At another desk, a trader pegged the bonds at 101½ bid,101¾ offered, calling them unchanged on the day.

The Baton Rouge, La.-based outdoor advertising company priced $510 of those bonds at par in a quick-to-market transaction last Tuesday. They moved up to 101 bid in the aftermarket and pretty much stayed there subsequently.

Nice move for NII

A trader said that the major excitement of the day was the jump in NII Holdings paper on the news that the Reston, Va.-based company, which provides wireless service to several Latin American markets under the Nextel brand name, had signed an agreement with rival telecommunications company Telefonica, under which NII will be able to offer its service to customers in its two biggest Latin markets, Mexico and Brazil using Telefonica's 3g network. This would spare NII the expense of having to build out its own network to provide service to more remote locations.

A trader said that the company's NII Capital Corp. bonds "were up - I know there was a lot of activity."

A second trader fleshed out that assessment with some numbers. He saw NII's 10% notes due 2016 having zoomed by 7 points on the session to end at 60 bid - their highest close since mid-November. Volume of over $65 million made the bonds clearly the most active Junkbondland name of the day.

He also saw NII's 7 5/8% notes due 2021 up 3 points, ending at 43½ bid. Volume was over 413 million, putting that issue high up on the actives list.

NII's Nasdaq-traded shares, meanwhile, jumped by 55 cents, or 24.38%, to end at $2.78. Volume of 17.3 million shares was more than three times the norm.

Charter a non-story - for now

A trader said that there was no immediate activity in the bonds of Charter Communications after news that Charter, which has made several merger overtures to larger rival Time Warner Cable, had come back with a third offer that its target promptly swatted away.

"That news hit right at the [market] close. I haven't seen a quote or a trade in either of them," he said.

A second trader agreed that "the Charter news came too late - people are assessing it right now."

He suggested that there might be some movement in Charter's bonds - mostly issued by its CCO Holdings unit - during Tuesday's session.

Stamford, Conn;-based Charter sent a letter to Time Warner Cable urging the latter company to enter into negotiations for a possible merger.

A response was not long in coming; New York-based Time Warner Cable's board unanimously rejected what it called Charter's "grossly inadequate" proposal.

Charter did not say exactly how much it would offer Time Warner Cable, only locating its offering price somewhere "in the low $130s" per share. Published reports estimated the offer at about $132.50, consisting of $83.00 in cash and $49.50 in Charter stock. Charter had previously offered cash and stock nominally valued at about $114 in June and roughly $127 in October.

The reports put the value of the bid at around $37 billion, with the total value of the deal, including assumed debt, somewhere north of $62 billion.

Rob Marcus, Time Warner Cable's chairman and chief executive officer, said that "Charter's latest proposal is a non-starter. First and foremost, it substantially undervalues TWC and would represent an EBITDA multiple of approximately 7 times - well below past transactions in the cable sector."

Time Warner Cable, whose market capitalization is about twice that of Charter, had previously indicated to Charter that it might consider a merger for a price of $160 per share, with at least $100 of that in cash.

Charter CEO Tom Rutledge - himself a former longtime Time Warner Cable executive - said Charter would take its offer directly to Time Warner Cable's shareholders.

'A crazy day'

Overall, a trader characterized Mondays session as "a crazy day, with the stock market feeling a little nervous." All of the major stock indexes ended the day lower.

However, he said that in the junk market, "our prices weren't pushed down too much."

He added that he saw accounts "selling some of their short stuff and going a little longer" in duration, apparently feeling comfortable enough to add some risk to their portfolios.

Market indicators mixed

Overall, statistical junk-market performance indicators turned mixed on Monday, after having been higher for two straight sessions before that.

The Markit Series 21 CDX North American High Yield index lost 15/32 of a point to end at 107¾ bid, 107 7/8 offered. It had been higher on Friday, when it gained 1/8 of a point.

The KDP High Yield Daily index was unchanged on Monday at 74./84, after having gained 9 basis points on Friday, its seventh advance in a row. Its yield, meanwhile, was also unchanged, going homer at 5.47%. On Friday, it had come in by 3 bps, marking its fourth straight decline.

However, the widely followed Merrill Lynch High Yield Master II index continued to roll, putting up its 16th consecutive advance - a winning streak dating to Dec. 19. It rose by 0.117%, on top of Friday's 0.112% advance.

The latest gain lifted its year-to-date return to 0.78%, its seventh straight new peak level for 2014, passing the previous mark of 0.662%, set on Friday.

The index's yield to worst came in to 5.486%, its second straight new 2014 low level. That eclipsed the previous low point of 5.52%, set on Friday.

Its spread to worst stayed at 413 bps over comparable Treasuries. The spread had widened from Wednesday's 406 bps over, the tight level for the year so far.

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