Consolidated brings floaters, new fixed notes firm; Atwood jumps on Ensco buyout; oil bonds off with crude

By Paul Deckelman and Paul A. Harris

New York, May 30 – It was back to work on Tuesday in Junkbondland, as the high-yield market re-opened after the long Memorial Day holiday weekend, which had included an abbreviated session on Friday and a full market close on Monday.

Primaryside players said that one new deal came to market, from Consolidated Energy Ltd., which priced a $300 million issue of five-year floating-rate notes – the second half of a two-part offering whose other half had gotten done on Friday.

Secondary market traders saw that part of the alternative waste management services and energy production company’s new deal – $500 million of eight-year fixed-rate notes – trade up solidly from the slight discount at which that paper had priced, although they said that volume in the new deal was fairly light.

Elsewhere in the new-issue market, prospective deals from Taseko Mines Ltd. and Nokia Corp. popped up on the radar screens.

Amid a mostly quiet post-holiday session, traders saw some activity in recent offerings from PetSmart Inc., Chesapeake Energy Corp. and NOVA Chemicals Corp.

But the real focus in the secondary realm was on Atwood Oceanics Inc., whose bonds jumped by more than a dozen points in heavy trading on the news that Ensco plc will acquire the offshore oilfield services company.

Statistical market performance measures were mixed for a third straight session on Tuesday; they had turned mixed on Thursday and stayed that way on Friday, after having been higher for the four consecutive sessions before that.

Upon resuming new issue market activity following the extended Memorial Day holiday weekend in the United States, a single dollar-denominated offering priced on Tuesday.

Consolidated Energy Finance SA priced a $300 million issue of Libor plus 375 basis points five-year floating-rate notes (B2/BB-), with a 0% Libor floor, at 99.75.

The spread, reoffer price and Libor floor all came on top of talk, as well as initial guidance.

Morgan Stanley & Co. was the sole bookrunner.

In an unusual execution, the floating-rate notes were priced one market session after the company priced a $500 million issue of 6 7/8% eight-year fixed-rate senior notes (B2/BB-) at 99.5 to yield 6.957%, a deal which came last Friday.

Taseko Mines roadshow

Taseko Mines Ltd. plans to start a roadshow on Wednesday for a $250 million offering of five-year senior secured notes.

An investor call is also set to take place on Thursday.

Jefferies is the sole bookrunner for the debt refinancing.

Elsewhere Nokia Corp. is expected to place new dollar-denominated fixed-rate notes before the end of the week.

With the deal size remaining to be announced, the offer is set to be marketed by means of an investor conference call that could take place as early as Wednesday, a market source added.

JP Morgan will lead the debt refinancing deal in a syndicate of banks to include Barclays, Citigroup and Goldman Sachs (see related stories in this issue).

Casino prices tight

In the European primary market France-based Casino Guichard-Perrachon (Groupe Casino) launched and priced an upsized €550 million issue of 1.865% five-year fixed-rate notes (expected ratings BB+/BB+) at a 170 basis points spread to mid-swaps.

The issue size was increased from €500 million.

The spread came tight to the mid-swaps plus 180 bps spread talk, and through the 200 bps initial guidance.

The deal played to $2.5 billion of orders, a source said.

Joint global coordinator and joint bookrunner Credit Agricole will bill and deliver for the debt refinancing deal that was priced on the investment grade desk. BNP Paribas and Citigroup were also joint global coordinators and joint bookrunners.

BofA Merrill Lynch, Deutsche Bank, MUFG, NatWest Markets and UBS were also joint bookrunners.

Center Parcs roadshow

Center Parcs Corp. plans to start a roadshow on Wednesday for an offering of up to £730 million of high-yield rated class B secured notes in two tranches.

The deal includes class B3 notes due August 2022. The target size for the tranche is £450 million.

The high-yield portion of the deal will also include up to £280 million of class B4 secured notes. The minimum size of the B4 notes tranche will be £225 million.

Both tranches have final maturities in 2047.

Joint global coordinator Barclays will bill and deliver. NatWest Markets is also a joint global coordinator. HSBC and JP Morgan are joint bookrunners.

The issuing entity will be CPUK Finance Ltd., which is also selling £100 million of its investment graded rated 3.588% class A4 fixed-rate secured notes, which have a final maturity in 2042.

The New Ollerton, Newark, Nottinghamshire, U.K.-based vacation park operator plans to use the proceeds repay its existing class B notes, as well as to fund its Longford Forest development in the Republic of Ireland, and to fund a distribution to shareholders.

And London-based TiZir Ltd. mandated ABG Sundal Collier ASA and Pareto Securities AS to organize meetings with fixed income investors ahead of a possible dollar-denominated offering of senior secured bonds.

Proceeds would be used to refinance $275 million of outstanding senior secured bonds due September 2017.

Consolidated fixed-rate notes up

In the secondary realm, traders did not immediately report any initial aftermarket dealings in the new Consolidated Energy five-year floating rate notes.

As to the Miami-based alternative waste management services and energy production company’s 6 7/8% notes due 2025, a trader saw the new bonds at 100 5/8 bid, 101 1/8 offered, up from the 99.5 level at which that $500 million regularly scheduled forward calendar offering had priced on Friday to yield 6.957%.

A second trader pegged those bonds in a 100¾ to 101 1/8 bid context.

However, he said that he had only seen “a couple of trades in them today – literally just two trades.”

That, he said, came against a backdrop of “not a lot of anything really today,” with many market participants just slowly straggling back to work after the extended weekend holiday break.

Recent issues see modest activity

Among other recently priced issues, a trader said that PetSmart’s 5 7/8% senior secured notes due 2025 were at 100 1/8 bid.

He saw the other half of the San Diego-based pet food and supplies retailer’s $2 billion Thursday offering – its 8 7/8% senior unsecured notes due 2025 – “still struggling, quoting the bonds being offered at 99¼ bid, below their par issue price.

At another desk, a market source located the $1.35 billion first-lien secured notes at 100 5/8 bid, which he called down 1/8 point on the day, on volume of around $17 million.

He saw the same amount of the unsecured bonds trading, and quoted that $650 million issue down ¼ point at 99 bid.

One of the traders said that the new Chesapeake Energy 8% notes due 2027 dropped by more than 5/8 point on the session, falling to 98 5/8 bid, on volume of $17 million.

The Oklahoma City-based natural gas and oil exploration and production company had priced $750 million of those notes at par last Monday in a quick-to-market transaction.

Calgary, Alta.-based NOVA Chemicals’ 4 7/8% notes due 2024 gained ¼ point on the day to end at 100½ bid, with over $15 million traded.

Its 5¼% notes due 2027 were up by around 3/32 point on the day, ending at 100¼ bid, with over $10 million traded.

At another desk, the seven years were seen trading between 100½ and 100 5/8 bid, while its 10-years ended at 100 3/8 bid.

The company priced $2.1 billion of new paper on Thursday in equally sized $1.05 billion tranches coming off the forward calendar.

Atwood bonds soar on buyout

The big news of the day in the junk market, though, involved the existing bonds of Houston-based offshore energy drilling contractor Atwood Oceanics, which soared in heavy trading on the news that London-based sector peer Ensco plc will acquire Atwood in a deal valued at $10.72 per share, or $863 million in stock.

That shot Atwood’s 6½% notes due 2020 up to the par level from prior levels in the high 80s last Friday – a gain of over 13 points on the day.

More than $112 million of the Atwood bonds changed hands in round-lot trading – with numerous additional smaller odd-lot transactions as well.

Ensco’s 4½% notes due 2024 meantime were seen up nearly ½ point on the day at 84 bid, on volume of around $13 million.

Oil credits slide

While the Atwood news cheered the oil drilling sector – Transocean Ltd.’s 8 1/8% notes due 2021 gained ¼ point to end at 104¾ bid – bonds of energy companies themselves were seen lower, in line with a renewed downturn in crude oil prices.

Besides the aforementioned Chesapeake Energy new issue trading off, market participants said that Los Angeles-based energy sector bellwether issue California Resources Corp.’s 8% notes due 2022 dropped by 1¾ points to 76¾ bid.

Canada’s MEG Energy Corp.’s 7% notes due 2024 were down a deuce on the day at 88¼ bid, while Plano, Texas-based producer Denbury Resources’ 6 3/8% notes due 2021 lost ½ point to close at 77¼ bid.

The benchmark U.S. crude grade, West Texas Intermediate for July delivery lost 14 cents per barrel in New York Mercantile Exchange trading Tuesday, settling at $49.66 per barrel.

North Sea Brent crude for July delivery dropped by 45 cents per barrel to $51.84 on the London ICE Futures exchange.

Indicators stay mixed

Statistical market performance measures were mixed for a third straight session on Tuesday; they had turned mixed on Thursday and stayed that way on Friday, after having been higher for the four consecutive sessions before that. The junk market was officially closed on Monday for Memorial Day.

The KDP High Yield Daily index was unchanged for a second straight session on Tuesday at 72.61, after having lost 2 bps on Thursday, its first such loss after four straight gains, including Wednesday’s 5 bps rise. The index did not publish on Monday because of the holiday.

Its yield came in by 1 basis point on Tuesday to 4.92%, after having been unchanged two sessions before that. It had ended last Wednesday at 4.93% after having come in by 2 bps, its fourth straight narrowing.

The Markit CDX Series 28 index eased by about 1/16 point Tuesday to 107½ bid, 107 9/16 offered.

It had ended marginally lower on Monday, when the index published despite the holiday and had edged up by 1/32 point on Friday.

The Merrill Lynch North American High Yield index ended up 0.054% on Tuesday, after gaining 0.052% on Monday, when it was published despite the holiday. On Friday, it had ended down 0.017% on Friday, its first setback after five straight sessions on the upside.

Tuesday’s gain raised the index’s year-to-date return to 4.795%, its second consecutive new year-to-date peak level.

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