Upsized Weatherford two-part deal closes out $14.2 billion week, year’s busiest so far

By Paul Deckelman and Paul A. Harris

New York, June 10 – The high-yield primary market saw one deal price on Friday – bringing to a close what is, so far, the heaviest week for new issuance seen in Junkbondland this year.

Oilfield services operator Weatherford International Ltd. came to market with a twice-upsized $1.5 billion two-part offering of five- and seven-year notes.

That regularly scheduled forward calendar offering raised the week’s total of new dollar-denominated and fully junk-rated new paper from domestic or industrialized-country borrowers to $14.21 billion in 17 tranches, according to data compiled by Prospect News.

That not only was nearly five times the $3.08 billion that got done in four tranches last week – a week which saw one less trading session than usual due to the Memorial Day market close – it also surpassed the $11.2 billion in 20 tranches which had priced during the week ended May 27, the previous largest volume week this year.

This week’s issuance was the most seen in Junkbondland since the $15.95 billion that priced in 19 tranches during the week ended March 13, 2015, last year’s single heaviest primaryside week, according to the data.

The week’s issuance raised this year’s new-deal total so far to $109.91 billion in 150 tranches, although that still lagged last-year’s intense pace by 36.47%. Some $173.01 billion of new junk paper had priced in 274 tranches by this point on the calendar last year.

Traders said that the new Weatherford notes were mostly seen trading around the two tranches’ par issue price.

Among other recently priced deals, traders saw considerable volume for yet another day in the billion-dollar-plus deals that had priced earlier in the week from Dell, Inc., DISH Network Corp. and Cheniere Energy Partners LP. All were off on the day, in line with the day’s generally easier junk bond market, but remained above their respective issue prices.

Traders also saw notable volume in Thursday’s new deals from J.C. Penney Corp., Inc. and Centene Corp., which likewise came off the highs they had hit in initial aftermarket dealings.

Statistical market performance measures turned lower on Friday after having been mixed on Thursday.

But they were higher across the board versus where they had ended last week, their second higher week in the last three.

Weatherford upsizes bullets

A relatively quiet Friday finished off a big week in the dollar-denominated primary market.

Weatherford International priced the session’s sole transaction, an upsized $1.5 billion of senior notes (B2/BB-) in two bullet tranches.

The deal included $750 million of five-year notes which priced at par to yield 7¾% and $750 million of seven-year notes which priced at par to yield 8¼%.

The notes in both tranches priced on top of yield talk.

The deal, which was said to be playing to $4 billion of orders across both tranches, was twice upsized, first to $1.25 billion from $1 billion, and subsequently to its final $1.5 billion size.

Deutsche Bank and Wells Fargo were the joint global coordinators and joint bookrunners.

Elsewhere on Friday, Direct ChassisLink, Inc.’s $325 million offering of seven-year senior secured second-lien notes (B3/BB-) had been expected to clear the market before the weekend, however it will remain in the market over the weekend, a market source said shortly after the Friday close.

The deal was talked to yield in the 9% area on Thursday, talk that came at the wide end of earlier guidance in the high 8% to 9% range.

The week ahead

The June 13 week will get underway with no dollar-denominated deals on the active forward calendar.

There was little conviction among sellside sources pressed for tips on Friday, some saying it could be a relatively big week, pending market conditions.

There is still cash to put to work, sources say.

However the most recent daily cash flows for dedicated high-yield bond funds were negative.

High-yield ETFs saw $160 million of outflows on Thursday, the most recent session for which data was available at press time.

Actively managed high-yield funds saw $15 million of outflows on the day.

The news follows Thursday afternoon’s news that the dedicated high yield funds saw $748 million of inflows for the week to Wednesday’s close.

ContourGlobal prices tight

In the European primary market ContourGlobal Power Holdings SA priced a €550 million issue of five-year senior secured notes (/BB/BB-) at par to yield 5 1/8%.

The yield printed at the tight end of yield talk that had been set in the 5¼% area.

Goldman Sachs ran the books.

The Luxembourg-based developer and operator of wholesale electric power generation businesses plans to use the proceeds to refinance debt, including its senior secured notes due 2019, and for general corporate purposes.

Titan Cement upsizes

Titan Cement Co. SA priced an upsized €300 million issue of non-callable five-year senior notes (BB) at par to yield 3½% on Friday.

The issue amount was increased from €250 million.

The yield printed on top of yield talk.

Joint bookrunner HSBC will bill and deliver. BofA Merrill Lynch and SG were also joint bookrunners.

The Athens-based building materials company plans to use the proceeds to refinance debt.

PVH roadshow

New York-based PVH Corp. plans to start a roadshow on Monday in London for a €350 million offering of non-callable eight-year senior notes (expected ratings Ba2/BB+).

The roadshow continues on Tuesday in Paris.

Active bookrunner Barclays will bill and deliver.

Meanwhile Barclays sent out a Monday morning save the date memo for an expected high-yield deal from a consumer/retail name.

New Weatherfords little changed

In the secondary market, a trader said that the new Weatherford notes “were not doing very much” after having priced at par for both tranches – the 7¾% notes due 2021 and the 8¼% notes due 2023.

He said that he saw “a ton of bonds” trading, with the 7¾s between 99 7/8 and par and the 8¼s between par and 100 1/8.

“There was a lot of activity hitting par bids,” he said, “but not really moving at all.”

A second trader had a more blunt assessment, declaring that “Weatherford is a pig – it didn’t do well.”

Penney comes off highs

Among the issues which had come to market on Thursday, a trader said that the new J.C. Penney 5 7/8% senior secured notes due 2023 “did well for most of the day,” finishing in a 100¾ to 101 bid context.

“They’re off their highs – but still above their issue price,” headed.

A second trader said that activity in the Plano, Texas-based major department store chain operator’s new issue was brisk, at more than $40 million traded.

He saw the bonds trading at bid levels between 100 5/8 and 101½ during the day, but saw them last going away in a more narrowly focused 100 5/8 to 100 7/8 bid context.

Centene hangs in

Among the other notes that priced on Thursday, a trader said that Centene’s 4¾% notes due 2022 “traded between 102¾ and 102 7/8 in the morning and stayed there all day long.”

A second trader said that more than $22 million of the notes changed hands, seeing them between 102 3/8 and 103 bid before finishing in the 102¾ area.

That was down about ¼ point from the highs hit in initial trading on Thursday, when the St. Louis-based managed-care and specialty health care provider had priced its $500 million add-on to its existing $300 million of the notes.

The quickly shopped add-on deal priced at 101.75 to yield 4.35%.

West Corp. below issue price

A trader said that West Corp.’s new 4¾% senior secured notes due 2021 “traded into a par bid and weren’t trading that well.”

A second trader had the bonds going out 3/8 point lower on the day at 99 5/8 bid, on volume of over $14 million.

The Omaha-based communications services company had priced its $400 million drive-by issue at par on Thursday.

Wednesday’s issues stay busy

Traders saw continued strong volume in the new deals which had come to market on Wednesday, but all at somewhat lower levels.

One saw Dell’s 5 7/8% notes due 2021 down ½ point at 100¼ bid, with over $44 million traded, while its 7 1/8% notes due 2024 had dropped 1¼ points to 100 7/8bid on, with over $32 million of volume.

DISH Network’s new 7¾% notes due 2026 were seen little changed at 100¼ bid on $36 million of turnover.

Cheniere Energy Partners’ 5 7/8% notes due 2026 eased by around 1/8 point on the day to end at 100 5/16 bid, with over $30 million traded.

Indicators turn lower

Statistical market performance measures turned lower on Friday after having been mixed on Thursday.

But they were higher across the board versus where they had ended last week, their second higher week in the last three.

The KDP High Yield Daily Index lost 8 basis points on the session, ending at 68.11, versus Thursday’s 7 bps gain.

Its yield widened by 4 bps to 5.98%, after having come in by 3 bps on Thursday.

However, its levels compared favorably with a 67.46 index reading and 6.15% yield seen last Friday.

The Markit Series 26 CDX North American High Yield Index lost 7/16 point on Friday to close at 102¾ bid, 102 13/16 offered, after dropping 13/32 point on Thursday.

However, on the week, it firmed from last Friday’s 102 21/32 bid, 102 11/16 offered finish.

The Merrill Lynch North American High Yield Master II Index was down by 0.263% on Friday, after having eased by 0.01% on Thursday.

That dropped its year-to-date return to 9.134% from Thursday’s 9.422%, which in turn was down from Wednesday’s 9.433%, which had been a fourth straight new peak level for the year so far.

Wednesday had marked the first time this year that the year-to-date return had closed above 9.00%.

And it was also the index’s highest year-to-date closing level since Dec. 31, 2012, when it had finished out that year with a 15.583% return.

For the week, the index gained 0.873%, its fifth consecutive weekly advance. It had risen by 0.166% last week.

© 2015 Prospect News.
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