Six Flags leads $2.6 billion session as primary picks up; Crown Castle brings split-rated deal

By Paul Deckelman and Paul A. Harris

New York, Dec. 11- The high-yield year-end primary pricing parade continued on Tuesday, with seemingly no end to issuers stepping up to get financing deals done before the junk market begins its traditional December wind-down around the middle of the month.

Five borrowers brought some $2.6 billion of new purely junk-rated, dollar-denominated paper to market. Additionally, there was one split-rated two-part megadeal making its debut.

Theme park operator Six Flags Entertainment Corp. had the biggest junk-only deal, upsizing its eight-year offering to $800 million.

Petrochemical concern TPC Group Inc. did a $655 million eight-year secured deal.

Canadian real estate company Brookfield Residential Properties Inc. upsized its eight-year deal twice, before arriving at the $600 million level.

Boilermaker Cleaver-Brooks Inc. also upsized its seven-year secured deal, pricing $300 million of paper.

Michael Foods Holding Inc. served up a quick-to-market $275 million PIK note issue.

Traders saw all of the day's new issues going higher when they hit the aftermarket.

Crown Castle International Corp. brought a $1.5 billion two-part behemoth of a drive-by deal to market. However, sources saw the communications antenna tower operator's split-rated offering mostly appealing to high-grade investors reaching for yield rather than true junk bonders.

Price talk emerged on deals, such as Greek dairy producer FAGE International SA and inVentiv Health, Inc., with both expected to come to market on Wednesday.

Traders saw little secondary market activity away from trading in the new deals. Statistical performance indicators continued to gain on the day.

TPC at the tight end

Tight executions were the rule on Tuesday, as four of the five issuers priced at the tight end of talk.

Three of the five deals were upsized.

TPC Group priced a $655 million issue of eight-year senior notes (B3/B) at par to yield 8¾%, at the tight end of the 8¾% to 9% yield talk.

The par pricing bonds were 102 bid, according to a trader, noting that demand for new issue paper appears to be intensifying.

Bank of America Merrill Lynch, Jefferies and Morgan Stanley were the joint bookrunners for the acquisition deal.

Brookfield upsizes twice

Brookfield Residential Properties priced an upsized $600 million issue of eight-year senior notes (B2/BB-) at par to yield 6½%, at the tight end of the 6½% to 6¾% yield talk.

The deal was upsized from $500 million, after having been previously upsized from $400 million.

Credit Suisse, Citigroup and J.P. Morgan were the joint bookrunners for the debt refinancing deal.

Six Flags upsizes

Six Flags Entertainment priced an upsized $800 million issue of eight-year senior notes (B3/BB-) at par to yield 5¼%, at the tight end of the 5¼% to 5½% yield talk.

Wells Fargo was the left bookrunner for the deal, which was upsized from $600 million. Merrill Lynch and Barclays were the joint bookrunners.

The Grand Prairie, Texas-based regional theme park company plans to use the proceeds to repay $72.2 million of its term loan A and $177.8 million of its term loan B and plans to use the remainder for general corporate purposes, including to fund repurchases of common stock.

The additional proceeds resulting from the $200 million upsize will be used to repay an additional $100 million of the company's term loan B and increase the amount of cash to its balance sheet to be used for general corporate and working capital purposes.

Cleaver-Brooks at tight end

Cleaver-Brooks priced an upsized $300 million issue of 8¾% seven-year senior secured notes (B2/B) at 99.361 to yield 8 7/8%, at the tight end of price talk that was set in the 9% area.

The notes traded as much as 3 points higher in the secondary market, according to a trader who saw them at 102 bid in the middle of the afternoon.

RBC was the left bookrunner. UBS and SunTrust were the joint bookrunners.

Proceeds will be used to partially fund the acquisition of Cleaver-Brooks by Harbour Group and to refinance debt. The additional proceeds resulting from the upsizing will be used to reduce sponsor equity by $10 million and reduce borrowings under the company's ABL facility.

Michael Foods PIK toggles

Michael Foods Holding priced a $275 million issue of senior PIK toggle notes (Caa1/CCC+) at 99.5 to yield 8.611%

The notes pay a cash coupon of 8½% and a PIK coupon of 9¼%

The transaction came in line with price talk of 8½% to 8¾% at 99.5.

Goldman Sachs was the left bookrunner for the quick-to-market PIK holdco dividend deal deal.

Merrill Lynch was the joint bookrunner.

Talking the deals

With the approach of the Yuletide, it's surf's up in the high-yield primary and it is almost certain to remain that way through the rest of the week, sources say.

Dealers set the stage for Wednesday's session, setting price talk on a pair of offerings.

inVentiv Health upsized its offering of five-year senior secured notes (B2/B) to $600 million from $550 million and talked them to price with a yield in the 9% area.

Citigroup, Merrill Lynch, Credit Suisse, Deutsche Bank, Jefferies and Wells Fargo are the joint bookrunners.

And Greece's FAGE International and FAGE USA boosted price talk on a $250 million add-on to their 9 7/8% senior notes due Feb. 1, 2020 (confirmed B3/existing B) to 101.

The new talk is 50 cents richer than the rich end of earlier official talk of 100 to 100.5.

Again, Citigroup is the bookrunner for the Rule 144A and Regulation S offering.

Talk on inVentiv and FAGE left the balance of the calendar with no official talk, heading into Wednesday.

However, there is whisper, sources say.

Official price talk should surface on Wednesday for Tempur-Pedic International Inc.'s $350 million offering of eight-year senior notes (B3/B+), according to a trader, who added that the whisper is in the 7½% area.

The $400 million tranche of the Rain CII Carbon LLC and Rain CII Carbon Corp. $675 million-equivalent offering of eight-year senior secured second-lien notes (B1/BB-) is whispered in the 9% area, the trader said. Rain is also offering a €210 million euro-denominated tranche.

Initial guidance is 8¼% on Dematic's $250 million offering of eight-year senior notes (expected ratings Caa1/CCC+), which is expected to price toward the end of the week.

Also expected to price toward the end of the week is Harbinger Group Inc.'s $650 million offering of seven-year senior secured notes (B3/B), which is guided at 8¼% to 8½%, according to a trader.

Sorenson starts roadshow

One roadshow start was announced on Tuesday.

Sorenson Communications, Inc. began a roadshow for its $400 million offering of seven-year first-lien senior secured notes (expected ratings B3/B), which is expected to price either on Friday or on Monday.

J.P. Morgan, Goldman Sachs and Deutsche Bank are the joint bookrunners for the debt refinancing deal.

Day's deals do well

A secondary market trader declared, "Everything does and everything has" [done well] when the day's new issues moved into the aftermarket after pricing.

For instance, he said that Six Flags' new eight-year notes had moved to 100¾ bid, 101 0ffered, up from the theme park operator's par issue price earlier. A second trader saw the bonds at 101 bid, 101¼ offered.

The first trader also saw the new Sungrass Merger Sub/TPC Group eight-year secured notes get as good as 102-to-102½ bid before going out at 101¾ bid, 102¼ offered.

At another desk, a trader saw them at 101 7/8 bid, 102 3/8 offered. Yet another trader saw a more restrained finish at 101½ bid, 102 offered.

When Michael Foods' new PIK toggle notes were freed for secondary market dealings, a trader pegged the bonds at 103¼ bid, although he had not yet seen any offerings.

He opined, "That would be a hell of a move, a nice little 4-point rise" from the credit's 99.5 issue price.

"Four points on the break - for a PIK toggle dividend deal, too," he mused in wonderment.

Another trader later on quoted the bonds at 103 bid, 103½ offered.

The first trader saw the company's existing notes, such as its 9¾ issue due 2018, mostly trading sideways at the 1101/2-to-111 bid level.

Other new deals showing strength included Brookfield Residential Properties' much-upsized eight-year bonds, which closed at102¼ bid, 102 3/8 offered.

"I hadn't seen action in those the last two hours," a trader said around mid-afternoon ET.

He also saw the day's other pricing, Cleaver-Brooks' senior secured 2019 bonds, "definitely bid in the 102ish area."

A trader at another shop saw the bonds at 102 bid, 103 offered.

One of the traders said: "It's been really crazy [over the past several sessions] watching the stuff go [continually upward]. There really haven't been any pigs yet."

Monday deals hang in there

The strength extended backwards to the deals that have come to market over the last several sessions as well.

For instance, Monday's $600 million of AMC Networks, Inc. 4¾% notes due 2022 was seen by a trader at 101½ bid, 102 offered - around the level's seen after the New York-based cable network operator's deal had priced at par.

A second trader saw the bonds up 3/8 point on the day, at 101 5/8 bid, 101 7/8 offered.

A trader said that Eldorado Gold Corp.'s 6 1/8% were seen at 101¾ bid, 102 offered, up a little from the 101 3/8 bid, 101 7/8 level seen on Monday after the Vancouver-based precious metals miner's $600 million deal had upsized from $500 million and priced at par.

Another trader pegged them up 3/8 of a point on the day at 101¾ bid, 102¼ offered.

New deals dominate

A trader said that the junk secondary market was "once again all new deals today" and, away from such deals, was "very quiet."

A second trader agreed that "overall volume was pretty light; the past two days have been lighter than I would have expected."

He did see some residual activity on Trace in Plains Exploration & Production Co., whose bonds had firmed smartly last week in relatively heavy trading on the news that Freeport McMoRan Gold & Copper would be acquiring the Houston-based oil and gas operator.

Indicators keep climbing

Away from the new-deal arena, statistical junk market performance indicators were up across the board for a sixth straight session on Monday.

The Markit Series 19 CDX North American High Yield index rose by half-point on Tuesday to end at 1011¼ bid, 101 3/8 offered, after having risen quarter-point on Monday.

The KDP High Yield Daily Index notched its 16th consecutive gain on Tuesday, advancing by 12 basis points to 75.18, after rising by3 bps on Monday. Its yield came in by 5 bps on Tuesday, to 5.73%, its 16th straight narrowing. The yield had declined by 2 bps on Monday.

And the widely followed Merrill Lynch High Yield Master II index rose by 0.178% on Tuesday, its 17th straight gain, on top of the 0.11% rise reported on Monday.

That lifted its year-to-date cumulative return to 15.146%, marking its eighth consecutive new peak level for 2012 and eclipsing the old mark of 14.942%, which had been recorded on Monday.

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