Pinnacle Entertainment, Dana drive-bys lead session; KeHE bonds jump; Arch off after numbers

By Paul Deckelman and Paul A. Harris

New York, July 30 - High-yield primary activity intensified on Tuesday. A half-dozen new dollar-denominated, fully junk-rated deals from domestic or industrialized country issuers came to market, and issuance approached the $3 billion level, up from about $2 billion on Monday.

A number of the day's deals were opportunistically timed and quickly marketed transactions, including the largest issue of the day, casino operator Pinnacle Entertainment Inc.'s upsized $850 million of eight-year notes.

Also driving by was vehicle components manufacturer Dana Holding Corp., with an upsized $750 million two-part issue consisting of eight- and 10-year notes, as well as movie theater chain operator National Amusements, Inc., which brought a $300 million tranche of five-year secured notes, and mortgage provider Stearns Lending, Inc., with an upsized $250 million of seven-year secured notes.

Several regularly scheduled forward calendar deals also came to market, including European airport services provider Swissport International Ltd., which did a $390 million add-on to its existing five-year secured notes, and specialty foods provider KeHE Distributors, LLC, serving up $200 million of eight-year second-lien notes.

The latter company's newly priced bonds were seen by secondary market traders as having firmed smartly when they were freed for aftermarket dealings. The Stearns deal was also seen several points higher when those bonds were freed to trade.

Those market participants also saw some activity - though nowhere near the same size of gains - in the new issues from Pinnacle Entertainment and National Amusements as well as in Monday's deals from Sirius XM Radio Inc. and Icahn Enterprises LP, with all of those companies' new notes trading right around their respective issue prices. However, the Tesoro Logistics LP bond offering that also priced on Monday was doing well in the aftermarket, several traders said.

They opined that the increased flow of new issues was overshadowing the non-new-deal secondary, although there was situational trading in some of those names, including Arch Coal Inc. after the company's release of weaker quarterly numbers versus a year ago.

Statistical indicators of secondary market performance finished mostly on the upside on Tuesday after having been mixed over the previous three consecutive sessions.

Pinnacle Entertainment upsizes

The Tuesday session in the dollar-denominated primary market saw six issuers bring a combined seven tranches of high-yield notes to raise an overall total of $2.8 billion.

Four of the seven tranches came as drive-bys.

Executions were crisp: four tranches came at the tight end of talk, and the other three came in the middle of talk.

Pinnacle Entertainment priced an upsized $850 million issue of eight-year senior notes (B2/B+) at par to yield 6 3/8%.

The issue was upsized from $800 million.

The yield printed in the middle of the 6¼% to 6½% yield talk.

J.P. Morgan Securities Inc., Goldman Sachs & Co., BofA Merrill Lynch, Deutsche Bank Securities Inc., Wells Fargo Securities LLC, Credit Agricole CIB, Barclays and UBS Investment Bank were the joint bookrunners.

Proceeds will be used to help finance the cash consideration for the acquisition of Ameristar Casinos, Inc., to redeem Pinnacle's existing 8 5/8% senior notes due 2017, to provide working capital and for general corporate purposes.

Dana two-part deal

Dana Holding upsized its two-part offering of senior notes (B2/BB) to $750 million from $600 million and priced both tranches on Tuesday.

A $450 million tranche of eight-year notes priced at par to yield 5 3/8%, at the tight end of yield talk that was set in the 5½% area.

The long-maturity tranche was comprised of $300 million of 10-year notes that priced at par to yield 6%, on top of yield talk.

Citigroup Global Markets Inc., BofA Merrill Lynch, Barclays, Deutsche Bank, JPMorgan, UBS and Wells Fargo were the joint bookrunners.

Proceeds will be used to repurchase the company's series A preferred stock from Centerbridge, to fund additional share repurchases and for general corporate purposes.

National Amusements drives by

National Amusements priced a $300 million issue of five-year senior secured notes (B1/BB) at par to yield 5%.

The yield printed at the tight end of the 5% to 5 1/8% yield talk.

Barclays and Wells Fargo were the joint bookrunners for the debt refinancing deal.

Stearns Lending upsizes

Stearns Lending priced an upsized $250 million issue of seven-year senior secured notes (B2/B+) at par to yield 9 3/8%.

The deal was upsized from $200 million.

The yield printed at the tight end of yield talk in the 9½% area.

Jefferies LLC was the bookrunner.

The Santa Ana, Calif.-based independent mortgage origination and servicing company plans to use the proceeds to refinance debt and for general corporate purposes including the acquisition of additional servicing rights from third parties.

KeHE comes at the tight end

KeHE Distributors and KeHE Finance Corp. priced a $200 million issue of eight-year senior secured second-lien notes (B3/B) at par to yield 7 5/8%.

The yield printed at the tight end of yield talk that was set in the 7¾% area.

BMO was the left bookrunner. JPMorgan was the joint bookrunner.

The Romeoville, Ill.-based specialty, natural and organic, and fresh food distribution company plans to use the proceeds to refinance debt, to redeem some preferred stock and for general corporate purposes.

Swissport taps 7 7/8% notes

Activity may be winding down in the European market, but there was news on Tuesday.

Aguila 3 SA, a subsidiary of Luxembourg-based airport services provider Swissport International, priced a $390 million add-on to its dollar-denominated 7 7/8% senior secured notes due Jan. 31, 2018 (B2/B) at 102.75 to yield 7.149%.

The price came in the middle of the 102.5 to 103 price talk.

Citigroup, BNP, SG, Morgan Stanley and UBS were the joint bookrunners for the acquisition financing.

S&B Minerals comes atop talk

S&B Industrial Minerals SA and S&B Minerals Finance SCA priced a €275 million issuer of seven-year senior secured notes (B3/B+) at par to yield 9¼%, on top of yield talk.

Credit Suisse, UBS, BNP and HSBC managed the sale.

Proceeds will be used to refinance existing debt and fund a dividend.

Talking the deals

The Wednesday session figures to be an active one.

Dealers released talk on a couple of deals that are on deck for the mid-week session.

US Xpress Enterprises Inc. talked its $250 million offering of seven-year senior secured second-lien notes due 2020 (Caa1/B-) to yield 9½% to 9¾%.

Wells Fargo is the left bookrunner. Morgan Stanley is the joint bookrunner.

And Flexi-Van Leasing, Inc. talked its $250 million offering of five-year senior notes (B3/BB-) to yield 7¾% to 8%.

BofA Merrill Lynch is the left bookrunner. Wells Fargo is the joint bookrunner.

Mohegan call Wednesday

Mohegan Tribal Gaming Authority has scheduled an investor conference call at 10:30 a.m. ET on Wednesday to discuss its $425 million offering of eight-year senior notes.

The deal is set to price on Thursday.

Credit Suisse Securities (USA) LLC, RBS Securities Inc., Goldman Sachs , Credit Agricole, SunTrust Robinson Humphrey Inc., Jefferies, BofA Merrill Lynch and Nomura are the joint bookrunners.

The gaming company plans to use the proceeds to refinance its third-lien notes.

Playa plans $300 million

Playa Resorts Holding, BV plans to price a $300 million offering of seven-year senior notes (Caa1/B) early next week.

BofA Merrill Lynch is the left bookrunner for the acquisition financing. Deutsche Bank is the joint bookrunner.

Pricing parade revs up

A secondary market trader characterized Tuesday in Junkbondland as having been dominated by "a whole lot of new issuance."

He said that "for the last week, the market has been really focused on this FOMC [Federal Open Market Committee]-GDP-employment sort of morass. It's kind of held the broader market in check."

But he said that "the new issues have come fast and furious," adding that "I would anticipate more and more of these deals will be coming."

He said that "you see this type of deals - most of them are kind of small, one-off transactions.

"You're not seeing a $1 billion Clear Channel [Communications, Inc.] deal or the big industrial or big oil and gas-type deals coming right now. I think it's whatever guys can scrape together in a mid-summer-type trading."

KeHE, Stearns lead the way

Among the day's specific new deals, he saw KeHE Distributors' 7 5/8% second-lien senior secured notes due 2021 trading around 101½ bid, 102 offered.

A second trader saw those new bonds at 101 5/8 bid, 102 1/8 offered, while a third pegged them at 101 bid, 102 offered.

The Romeoville, Ill.-based distributor of specialty, natural and organic foods, along with its KeHE Finance subsidiary, priced $200 million of those notes at par after marketing the issue to prospective investors via a roadshow.

The first trader did not see any trace of the Stearns Lending 9 3/8% senior secured notes due 2020, describing that $250 million issue as "a small, one-off deal."

However, at another desk, a trader said that he had seen the bonds shoot up to 103 bid, 104 offered after the company, along with its Stearns Holding Inc. financing subsidiary, had upsized the quick-to-market issue and had priced it at par.

Other, larger Tuesday pricings were more restrained in the secondary arena.

A Trader saw Pinnacle Entertainment's 6 3/8% notes due 2021 trading between 100 3/8 bid and 100¾ offered, although a second trader saw the Las Vegas-based gaming company's quickly shopped issue get as good as 101 bid after having priced at par via its PNK Finance Corp. subsidiary.

And National Amusements' 5% senior secured notes due 2018 were in a 100¼ to 100¾ bid context, a trader said, although a second located the bonds around 101 bid.

The Norwood, Mass.-based movie theater chain operator had priced that drive-by deal at par via its NAI Entertainment Holdings and NAI Entertainment Holdings Finance Corp. subsidiaries.

Traders saw no immediate aftermarket activity in either tranche of Maumee, Ohio-based vehicular components manufacturer Dana Holding's quick-to-market two-part deal or Swissport International's 2018 add-on notes.

Earlier issues trade around

Among the issues that priced on Monday, a trader said the bonds were "mostly doing OK."

For instance, he saw Tesoro Logistics' 6 1/8% notes due 2021 trading "straight up," moving up to 101½ bid.

A second trader saw those bonds in a 100 5/8 to 101 1/8 bid context.

The company - a limited partnership controlled by San Antonio-based energy refiner and marketer Tesoro Corp. - and its Tesoro Logistics Finance Corp. subsidiary had priced the $550 million issue at par on Monday after having upsized that quick-to-market deal from an originally announced $300 million.

A trader said that Sirius XM's 5¾% notes due 2021 "did fine," quoting the bonds around par, although he said that he "didn't see a lot of flow in it."

A second trader located the bonds at 99 7.8 bid, 100½ offered.

The New York-based satellite radio broadcaster priced its $600 million quickly shopped issue at par late Monday.

The first trader also saw Icahn Enterprises LP/Icahn Enterprises Finance Corp.'s 6% notes due 2020 at 99¾ bid, 100¼ offered.

The New York-based diversified holding company priced that $500 million drive-by at par on Monday after having upsized it from $350 million originally.

Arch Coal off

Away from the new deals, a wider second-quarter loss at St. Louis-based coal producer Arch Coal did little to help the company's debt on Tuesday.

One trader called the 7% notes due 2019 down over a point at 82 3/8. Another trader placed the issue at 821/2, "down about a point."

At another desk, a market source pegged its 7¼% notes due 2020 down a deuce at 81 3/8 bid.

Another trader said the 6% notes due 2019 were "about unchanged" around 86.

For the quarter, Arch Coal reported an adjusted net loss of $60.5 million, or 29 cents per share. That compared to a loss of $22.1 million, or 10 cents per share, a year ago.

The company blamed a decline in price for metallurgical coal for the wider loss.

Revenues dropped 21% to $766.3 million. (See related story elsewhere in this issue.)

Despite the Arch loss, the rest of the coal sector was seen holding its ground for the most part.

A market source called Alpha Natural Resources Inc.'s 6¼% notes due 2019 off by half a point at 841/2.

Market signs mostly better

Statistical junk market performance indicators turned mostly better on Tuesday after having been mixed for the previous three sessions.

The Markit Series 20 CDX North American High Yield index edged up by 1/16 point to close at 105 7/16 bid, 105 9/16 offered. On Monday, it had lost 3/8 point, snapping a two-session winning streak at the tail end of last week.

The KDP High Yield Daily index saw its first gain on Tuesday - a 3-basis-point rise to 73.83 - after having posted losses over the previous five consecutive sessions, including Monday's 14-bps setback.

But its yield continued to move up for a fifth straight session, rising by 2 bps to 6.01%, after having widened out by 5 bps on Monday.

The widely followed Merrill Lynch High Yield Master II index posted its second straight advance on Tuesday, gaining 0.028%, on top of Monday's 0.34% improvement, which had broken a three-session skid.

Tuesday's gain lifted the index's year-to-date return to 3.53% from Monday's close at 3.501%.

The return was down from its peak level for the year so far of 5.835%, recorded on May 9, though up solidly from its 2013 low point of 0.384%, set on June 25.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.