Men’s Wearhouse, JBS, Tenet price; Men’s Wearhouse stylish in secondary; new DaVita, iStar busy

By Paul Deckelman and Paul A. Harris

New York, June 11 – New-deal activity in the high-yield market slowed down on Wednesday from the heavy volume seen on Tuesday, the busiest session in several weeks.

Three issuers combined for $1.85 billion of new fully junk-rated, dollar-denominated new paper – a little less than half of the more than $3.74 billion that got done in five tranches from four issuers on Tuesday.

Wednesday’s big deal was a suddenly revived $750 million 10-year issue from meat and poultry producer JBS USA, LLC – a deal that had actually been shopped around to would-be investors several weeks ago but which was temporarily shelved when it got caught up in the company’s failed effort to buy fellow food processor Hillshire Brands Co.

Clothing retailer Men’s Wearhouse, Inc. came to market with a $600 million offering of eight-year notes, and traders said that it was a good fit for investors, with the bonds sporting some handsome gains when they reached the aftermarket.

Hospital operator Tenet Healthcare Corp. brought a quickly shopped $500 million add-on to its existing 2019 notes to market.

Tuesday’s big deals from kidney dialysis services provider DaVita HealthCare Partners Inc. and real estate funding company iStar Financial Inc. were seen dominating Junkbondland’s most actives list, with all three of those tranches racking up volume in the tens of millions of dollars.

News reports that P.F. Chang’s China Bistro Inc. may have been the victim of a data breach by hackers that potentially compromised diners’ credit card information caused some investors to lose their appetite for the Asian-themed restaurant chain operator’s bonds, a trader said.

Overall statistical market performance indicators were mixed for a second consecutive session on Wednesday after three straight sessions on the upside before that.

JBS returns

Three dollar-denominated issuers priced single-tranche deals on Wednesday, raising a combined total of $1.85 billion.

Of the executions, one deal came at the tight end of talk, and two came in the middle of talk.

JBS USA, LLC returned to the primary market to price a $750 million issue of 10-year senior notes (Ba3/BB) at par to yield 5 7/8%.

The yield printed in the middle of the 5¾% to 6% yield talk.

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

JBS completed the deal on Wednesday after having temporarily postponed it in the wake of losing its unsolicited bid for Hillshire Brands Co. to a competing bid from Tyson Foods, Inc., during the week of May 26.

The syndicate was revamped following the news that JBS's previous lead bookrunner, Morgan Stanley & Co., had provided financing for Tyson's competing bid.

Men's Wearhouse oversubscribed

Men’s Wearhouse priced a $600 million issue of eight-year senior notes (B2/B-) at par to yield 7%.

The yield printed at the tight end of yield talk in the 7 1/8% area.

The acquisition financing deal was said to be playing to $6 billion of orders, according to a market source.

BofA Merrill Lynch was the left bookrunner. J.P. Morgan was the joint bookrunner.

Tenet taps 5% notes

Tenet Healthcare Corp. priced a $500 million fungible add-on to its 5% senior notes due March 1, 2019 (B3/CCC+) at 101.5 to yield 4.639%.

The reoffer price came on top of price talk.

Barclays was the lead left bookrunner for the debt refinancing deal. BofA Merrill Lynch, Citigroup, Wells Fargo, Goldman Sachs, JPMorgan and SunTrust were the joint bookrunners.

The Dallas-based health-care services company plans to use the proceeds to redeem its 9¼% senior notes due 2015 and for general corporate purposes.

Talking the deals

The Thursday session figures to be an active one in the primary market.

On Wednesday dealers circulated price talk on a pair of deals expected to price during the session.

Gates Global LLC and Gates Global Co. set price talk in their $1,365,000,000 equivalent offering of eight-year senior notes (Caa2/B).

A $1.04 billion dollar-denominated tranche is talked to yield 6% to 6¼%. A $325 million equivalent euro-denominated tranche is talked to yield in the 6% area. The euro-denominated tranche is expected to generate roughly €235 million of proceeds.

Citigroup, Credit Suisse, Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS and Macquarie are the joint bookrunners.

And Hillman Group Inc. upsized its offering of eight-year senior notes (Caa2/CCC+) to $330 million from $270 million and talked the notes to price in the 6½% area.

Morgan Stanley and Barclays are the joint bookrunners.

With the upsizing of the bonds, Hillman downsized its concurrent term loan by the same amount, $60 million, decreasing its size to $550 million from $610 million.

Sanchez Energy starts roadshow

Sanchez Energy Corp. began a roadshow on Wednesday for a $700 million offer of senior notes due January 2023 (existing ratings B3/B-).

RBC is the left bookrunner. Credit Suisse is the joint bookrunner.

The Houston-based oil and gas exploration and development company plans to use the proceeds to fund the Catarina acquisition, repay revolver debt, including that incurred to fund the acquisition, and for general corporate purposes including working capital.

NUVOtv launches secured notes

NUVOtv launched a $230 million offering of five-year senior secured notes.

Jefferies is the lead.

Both Sanchez Energy and NUVOtv are set to price in the week ahead.

Parex prices tight

In the European primary market, France's Parex Group priced a restructured €550 million issue of seven-year senior secured floating-rate notes (expected B2/confirmed B) at par to yield three-month Euribor plus 425 basis points.

The spread printed on top of revised spread talk, which had tightened from earlier talk of Euribor plus 450 to 475 bps.

A proposed €150 million tranche of seven-year fixed-rate notes was withdrawn, with the proceeds shifted to the floating-rate notes tranche, increasing its size to €550 million from €400 million.

Global coordinator Credit Suisse will bill and deliver for the LBO deal. BNP Paribas was also a global coordinator. Deutsche Bank, UBS, Commerzbank and SG CIB were the joint bookrunners.

Mens Wearhouse lookin’ good

One of the major factors behind the growth of Men’s Wearhouse from a single small clothing store in Houston forty years ago to the giant apparel retailer it is today, with over 1,100 stores operating under various names, was its ubiquitous television commercials featuring company founder George Zimmer telling men that if they bought their clothes from him, “you’re gonna like the way you look – I guarantee it.”

Investors certainly liked the way the company’s new 7% notes due 2022 looked on Wednesday, with a trader quoting that paper at 103½ bid, 104 offered, well up from their par issue price.

“Everybody jumped on that one,” he said, later seeing the notes going out as high as 103¾ bid, 104½ offered.

He added the thought that in an America where the one-time novelty known as “casual Friday” has pretty much become the workplace “norm” at many companies and in many industries, “I wonder how many of the people bidding on these bonds and buying them actually wear suits to work?”

JBS, Tenet not seen

The trader also said that much of the day in the junk market was spent sitting around waiting on JBS USA’s resurrected 10-year note offering to come to market; when the Greeley, Colo.-based beef, pork and chicken producer’s $750 million issue of 5 7/8% notes finally priced, it was fairly late in the session, with no immediate aftermarket seen.

There likewise seemed to be no immediate dealings in Tenet Healthcare’s fungible add-on to its existing $600 million of 5% notes due 2019, even though that deal had priced earlier in the session.

DaVita domination continues

For a second consecutive session, DaVita HealthCare Partners’ new 5 1/8% notes due 2024 were by far and away the most active junk-rated issue, with over $113 million of those bonds seen having changed hands by the close.

That juggernaut of junk trading came on the heels of the more than $74 million of the bonds that traded on Tuesday after the Denver-based provider of kidney dialysis services priced its quick-to-market $1.75 billion issue of those bonds at par.

The new DaVita notes had quickly moved up to around a 100 3/8 to 100 5/8 bid context in initial aftermarket dealings on Tuesday; on Wednesday, they built on those gains, with the source quoting the bonds as having improved further to around 100 7/8 bid.

The company’s existing 5¾% notes due 2022, in contrast, had managed to eke out a little more than $5 million of trades by mid-afternoon, quoted at 106 7/8 bid.

iStar trades intensely

Joining DaVita at the top of the Most Actives list was Tuesday’s other megadeal – New York-based real estate funding provider iStar Financial’s two-part offering of 3.5- and 5-year notes. That $1.32 billion transaction had come to market late in the session on Tuesday, with no immediate aftermarket activity seen.

Its $550 million of 4% notes coming due in November of 2017 were trading at 101 bid on Wednesday, up 1 point from their par issue price, on volume of over $40 million.

And the company’s $770 million of 5% notes due 2019 had gained 7/8 point on the day from their par issue price, to 100 7/8 bid, on volume of over $45 million.

A trader said that those three issues accounted for much, if not most of, the volume recorded on Trace ion Wednesday, adding that “if you’re not trading in new issues, you were wallpaper.”

iStar’s existing 9% notes due 2017 were seen up 7/8 points on the day, at 116 bid, though on considerably less volume than the company’s new bonds.

P.F. Chang churns

A market source noted that restaurant operator P.F. Chang’s 10¼% notes due 2020 “fell below par,” quoting those bonds – nominally issued by Wok Acquisition Co. – at 98½ bid, 99½ offered. That was down from their recent levels around 102 bid, although the notes had not traded for a week or so.

He cited news that the Scottsdale, Ariz.-based company is investigating a report of a possible data breach involving credit and debit card data that may have been stolen from its restaurant locations nationwide.

Market indicators stay mixed

Statistical junk performance indicators were seen by market sources mixed for a second straight session on Wednesday after having been higher across the board for three days before that.

The Markit Series 22 index fell by 7/32 point to end at 108¼ bid, 108 13/16 offered, its second straight downturn. On Tuesday, it eased by 1/32 point.

The KDP High Yield Daily index was also lower at 74.97, down a deuce, its first loss after three straight gains. On Tuesday, it had risen by 3 bps.

Its yield at Wednesday’s close was 5.1 – a 6 bps widening out. Before that, it had come in by 2 bps for three consecutive days.

However, the widely followed Merrill Lynch High Yield Master II index meantime saw its sixth consecutive gain Wednesday, edging up by 0.003%, on top of Tuesday’s small 0.06% advance.

The latest gain lifted the index’s year-to-date return to 5.229%, its fifth straight new 2014 peak level, surpassing the previous high point of 5.226%, which had been seen on Tuesday.

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