Noble deal upsizes; RCN Grande, Itron add-on, split-rated Toll also price; Tuesday deals trade actively

By Paul Deckelman and Paul A. Harris

New York, Jan. 17 – It was another busy session in the high-yield primary market on Wednesday as a trio of junk-rated issuers pushed out some $1.15 billion of new paper, although that was only around half of the $2.35 billion volume seen on Tuesday, owing to the lack of any megadeal-sized offerings.

However, global energy drilling firm Noble Corp. did price an upsized $750 million of eight-year guaranteed notes, which were heard to have gained more than 1 point in busy aftermarket dealings.

Also pricing were $300 million of five-year notes from cable, internet and telecom services provider RCN Grande and a $100 million addition by technology and services company Itron Inc. to the $300 million of 2026 notes that it sold in December.

The day also saw an upsized and split-rated 10-year offering from homebuilder Toll Brothers Inc., which saw some secondary trading.

There was meanwhile considerable aftermarket activity in Tuesday’s three new deals – from Hologic, Inc., Nabors Industries, Inc. and Olin Corp., dominating the day’s Most Actives list.

Statistical market performance measures turned lower across the board on Wednesday after having been mixed for two straight sessions before that. The indicators had first turned mixed on Friday and stayed that way on Tuesday following Monday’s holiday market close. The mixed sessions had followed a higher session last Thursday, which in turn had followed two straight lower sessions before that.

Noble upsizes

In Wednesday's primary market Noble Corp. priced an upsized $750 million issue of eight-year senior guaranteed notes (B2/B+) at par to yield 7 7/8%.

The issue size was increased from $500 million.

The yield printed in the middle of the 7¾% to 8% yield talk. Early whisper on the debt refinancing deal was in the 8% area.

Timing was accelerated, as the offer had been expected to remain in the market until Thursday.

Citigroup was the left global coordinator. DNB Markets and HSBC were the joint global coordinators.

Barclays, JP Morgan, SunTrust and Wells Fargo were the joint bookrunners.

RCN Grande prices tight

RCN Grande priced a $300 million issue of five-year senior notes (Caa1/CCC+) at par to yield 6 7/8%.

The yield printed at the tight end of the 6 7/8% to 7 1/8% yield talk.

Initial talk was 7% to 7¼%, according to a market source who added that the order book was two-times oversubscribed.

Credit Suisse was the lead bookrunner for the acquisition financing. UBS, Morgan Stanley, Nomura, Goldman Sachs and BofA Merrill Lynch were the joint bookrunners.

Itron taps 5% notes

Itron Inc. priced a $100 million add-on to its 5% senior notes due Jan. 15, 2026 (B2/BB-) at par to yield 5% in a quick-to-market Wednesday trade.

The reoffer price came on top of price talk.

Lead left active bookrunner Wells Fargo will bill and deliver for the debt refinancing deal.

Toll Brothers split-rated deal

In the crossover market Toll Brothers priced an upsized $400 million issue of split-rated non-callable 10-year notes (Ba1/BBB-) at par to yield 4.35%, in a trade that was conducted on the investment grade syndicate desk.

The issue size was increased from $300 million.

The yield printed inside of the 4½% to 4 5/8% early guidance.

Citigroup led the public offer.

Crown Holdings sets talk

Looking to the Thursday session, Crown Holdings Inc. set price talk for its three-part offering of senior notes.

The deal includes

• $750 million of Crown Americas LLC and Crown Americas Capital Corp. eight-year notes (Ba3/B+) with three years of call protection, talked to yield in the 4 7/8% area;

• €335 million of Crown European Holdings SA five-year bullet notes (Ba2/BB) talked to yield in the 2 3/8% area; and

• €600 million of Crown European Holdings SA eight-year bullet notes (Ba2/BB) talked to yield in the 3% area.

European books close at 9 a.m. ET Thursday. Books in the United States close at 10:30 a.m. ET Thursday. The acquisition financing deal is set to price thereafter.

Citigroup is the left bookrunner. Deutsche Bank, BofA Merrill Lynch, BNP Paribas, Santander, Wells Fargo, Mizuho, TD and Scotia are the joint bookrunners.

Elsewhere among deals on the active forward calendar, Meredith Corp.'s $1.4 billion offering of eight-year senior notes is playing to a big book, a trader said, adding that early guidance was 7¼% to 7½%, but the acquisition financing deal could come in the low 7% area.

Credit Suisse is the lead bookrunner.

And Arby's Restaurant Group, Inc., $485 million offering of eight-year senior notes is also going well, the trader said.

Early guidance was 7½% to 7¾%, but look for the deal to clear with a low 7%-handle yield, the source added.

Barclays is the left bookrunner.

PureGym comes inside talk

In the sterling-denominated junk market PureGym priced a £360 million issue of seven-year senior secured notes (B3/B/B+) at par to yield 6 3/8%.

The yield came through the 6½% to 6¾% yield talk; early guidance had the deal coming in the high 6% area.

Accelerated timing saw the LBO deal clear on Wednesday, whereas it was originally scheduled to price on Thursday.

Joint global coordinator Barclays will bill and deliver. Jefferies was also a joint global coordinator. RBC, Credit Suisse and ING were joint bookrunners.

Matalan sets talk

Matalan Retail Ltd. set price talk in its £480 million two-part offering of secured notes.

The deal includes £330 million of five-year first-lien notes (B2/B-) with two years of call protection, talked to yield in the 7% area, and £150 million of six-year second-lien notes (Caa2/CCC) with three years of call protection, talked to yield in the 9 7/8% area.

Pricing is set for Thursday.

Barclays, Lloyds and Morgan Stanley are managing the sale.

Tuesday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Tuesday, the most recent session for which data was available at press time, a trader said.

High-yield ETFs sustained $421 million of outflows on the day.

Actively managed funds sustained $255 million of outflows on Tuesday.

The combined funds have seen $3.3 billion of week-to-date outflows, the source added.

New Noble notes gain

In the secondary arena, traders saw solid gains in Noble Corp.’s new Noble Holding International Ltd. 7 7/8% senior guaranteed notes due 2026, following their par pricing.

One trader pegged the new bonds in a broad par-to-102 bid range, while a second saw them going home at 101 1/8 bid, on volume of more than $94 million, making it among the day’s busiest credits.

A trader meantime said that Noble’s existing 7¾% notes due 2024 were trading up 2 points on the day at 95¾ bid, exclaiming “Wow!” at the move.

He said that more than $56 million of that paper changed hands.

The Cayman Islands-based offshore energy drilling company’s 7.70% notes due 2025 were finishing at 93¼ bid, up 1¼ point from their most recent prior round-lot levels last week, with over $15 million traded.

Other drillers drop

The good reception for Noble’s new and existing notes, however, did not translate into sector strength from other drilling names.

For instance, a trader called the new Nabors Industries 5¾% notes due 2025 “off a little bit” at 99 7/8 bid.

A second trader who saw the bonds at that level called them down ½ point on the day.

More than $186 million of those notes changed hands, easily topping the junk market’s Most Actives list for Wednesday.

Nabors, a Hamilton, Bermuda-based onshore oil, natural gas and geothermal drilling contractor, priced $800 million of those notes at par on Tuesday in a quick-to-market transaction upsized from $600 million originally.

The notes had pushed as high as 100 3/8 bid on initial volume of over $10 million.

Nabors’ existing 5½% notes due 2023 meantime eased by ¼ point on Wednesday, finishing at 101¼ bid, with over $10 million having traded.

Sector peer Ensco plc’s new 7¾% notes due 2026 were seen down ¼ point at 101 bid, on “pretty good volume,” a trader said.

Another market source said the London-based driller’s new paper was down ¼ point at 101 bid, with over $24 million of volume.

Ensco priced $1 billion of those notes at par on Thursday after that regularly scheduled forward calendar offering was upsized from an originally announced $500 million.

Toll trades around

A trader said that he saw “a few prints at par,” in the new Toll Brothers 4.35% notes due 2028 but suggested that “that was the underwriter.”

He said “generically,” the notes were in a 99½-to-par bid range.

At another desk, the Horsham, Pa.-based homebuilder’s new split-rated notes were quoted at 99¾ bid, down from their par issue price, with more than $13 million of turnover.

Hologic heads higher

A trader saw both parts of the Tuesday’s $1 billion offering from Hologic, Inc. at 100¼ bid, slightly above their respective issue prices.

Another trader said that both Hologic tranches “were pretty active,” seeing the 4 5/8% notes due 2028 at 100¼ bid, while the 4 3/8% notes due in October 2025 were at 100 3/8 bid.

A market source said that more than $77 million of the 4 5/8% notes traded on Wednesday, going out at 100¼ bid, while more than $62 million of the 4 3/8% notes moved around at 100 3/8 bid.

Hologic, a Marlborough, Mass.-based medical technology company, priced $400 million of the 4 5/8% 10-year notes at par in a quickly shopped transaction on Tuesday, along with a $600 million add-on to its existing $350 million of the 4 3/8% notes originally sold last October. The add-on also priced at par.

Olin issue holds gains

Tuesday’s other new deal – the 5% notes due 2030 from Clayton, Mo.-based specialty chemicals and firearms ammunition manufacturer Olin Corp. – were “hanging right in there” at 100 7/8 bid on Wednesday, a trader said.

Another trader saw the notes up ¼ point at 101 bid. He said that at some point, “they were up a little bit more than that” before ending at 101.

More than $67 million of the Olin notes traded Wednesday, about matching the volume seen in Tuesday’s initial aftermarket activity after the $550 million quick-to-market offering, upsized from an original $500 million, had priced at par.

Mattel off its highs

Going back a little further among recently priced issues, a trader said that Mattel Inc.’s 6¾% notes due 2025 “have been trading like a rock,” between 101 and 102 – but he added that they “started down yesterday [Tuesday] – they were down another ½ point today [Wednesday], to par.”

He said that there were about a dozen round-lot trades in the credit.

Another trader estimated volume at around $14 million, and said the notes finished at 98 7/8 bid, which he said was off by 5/8 point on the day.

Mattel, an El Segundo, Calif.-based toy manufacturer, priced $1 billion of those notes at par in a regularly scheduled forward calendar transaction on Dec. 15, one of the last junk bond deals of 2017.

Teva trades after downgrade

Away from new or recently priced issues a trader said that Teva Pharmaceutical Industries, Ltd. “was active again” on Wednesday, calling the Israel-based drug manufacturer’s capital structure off ¼ to ½ point on the day.

On Tuesday, he had also seen activity in Teva, as high-grade accounts began moving out of the company’s paper and some high yield-investor buying took place at lower levels, following a ratings downgrade to junk status.

On Friday, Moody’s Investors Service downgraded Teva’s senior unsecured rating to Ba2 from Baa3 previously, joining Fitch, which in November had dropped its long-term issuer default rating to BB from BBB- previously.

However, Standard & Poor’s still has its corporate credit rating at BBB-, albeit with a negative outlook.

Energy issues off despite crude gain

In the energy sphere, a trader said “the E&Ps were kind of active, with oil trading up a little bit” – but they failed to get any kind of a boost from that crude strength.

He saw Los Angeles-based oil and natural gas exploration and production operator California Resources Corp.’s 8% senior secured second-lien notes due 2022 down 3/8 point at 87 1/8 bid, with over $20 million having changed hands.

Houston-based E&P company EP Energy Corp.’s 9 3/8% notes due 2024 were unchanged at 86¾ bid, with just under $10 million traded.

Oklahoma City-based gas and oil producer Chesapeake Energy Corp.’s 8% notes due 2027 lost ½ point to end at par, on volume of over $14 million.

Crude oil prices rebounded a little on Wednesday after having fallen on Tuesday – their first drop after five straight sessions of upside before that.

Key domestic grade West Texas Intermediate for February delivery gained 24 cents per barrel in New York Mercantile Exchange dealings Wednesday, settling in at $63.97, while the main international grade, March-contract North Sea Brent crude, was up by 23 cents per barrel in London futures trading, ending at $69.38.

Indicators turn lower

Statistical market performance measures turned lower across the board on Wednesday after having been mixed for two straight sessions before that. The indicators had first turned mixed on Friday, and stayed that way on Tuesday following Monday’s holiday market close. The mixed sessions had followed a higher session last Thursday, which in turn had followed two straight lower sessions before that.

The KDP High Yield Daily index lost 3 basis points on Wednesday to finish at 72.12, after having risen by 4 bps on Tuesday, which in turn had followed Friday’s 6 bps drop. The index was not published on Monday with the market officially closed for the Martin Luther King Day federal holiday.

Its yield rose by 2 bps to 5.20%, after having come in by 2 bps on Tuesday. The yield had risen by 1 bp on Friday.

The Markit CDX Series 29 index was off by 1/32 point on Wednesday, to 108 15/32 bid, 108½ offered, its fourth loss in a row. It had also retreated by 3/32 point Tuesday, by almost 1/16 point on Monday – when the index was published despite the holiday-induced market close – and by 1/16 point on Friday, after having gained more than 3/16 point last Thursday.

And even the previously robust Merrill Lynch High Yield index ended on the downside on Wednesday after having notched four successive gains before that.

It fell back by 0.054%, in contrast to gains of 0.05% on Tuesday, 0.051% on Monday, when the index was published despite the market close. It had also advanced by 0.019% on Friday and 0.114% on Thursday.

Wednesday’s loss dropped the index’s year-to-date return to 0.783% from 0.838% on Tuesday, and down as well from last Monday, Jan. 8’s close at 0.862%, its peak cumulative level for the new year so far.

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