TMS Int’l, David Weekley, Clear Channel Outdoor price; Hertz heads higher, Valeant gives up gains

By Paul Deckelman and Paul A. Harris

New York, Aug. 9 – For a third straight session, the high-yield new-deal market saw a trio of issuers get deals done on Wednesday, although the day’s volume total of $650 million of new U.S.-dollar-denominated and fully junk-rated paper was well down from Monday’s $2.15 billion and Tuesday’s $1.95 billion, according to data compiled by Prospect News.

There was a pair of regularly scheduled $250 million eight-year forward calendar offerings, from builder David Weekley Homes, LLC and TMS International Corp., which provides mill services for steelmakers.

Billboard operator Clear Channel Outdoor Holdings, Inc. did a quickly shopped and upsized $150 million add-on to its existing notes due in December of 2020.

Traders did not immediately report any initial aftermarket dealings in the day’s new notes, although one noted that the Clear Channel Outdoor paper’s issue price was well below where the existing bonds had been prior to the add-on news.

They said that Tuesday’s megadeal from Canadian fast-food chain operator Restaurant Brands International Inc. was the most actively traded junk issue Wednesday, up slightly on the session in heavy trading.

Other recently priced credits seen trading actively included Charter Communications, Inc., Dynegy, Inc. and United States Steel Corp.

Away from the new deals, Hertz Corp.’s bonds and its shares were on the rebound, after having retreated on Tuesday following quarterly earnings numbers.

On the other hand, Valeant Pharmaceuticals International, Inc.’s bonds – which had done well on Tuesday in the wake of numbers from the Canadian drug manufacturer – were falling back on Wednesday.

Statistical market performance measures were lower across the board for a second consecutive session on Wednesday, their fourth lower session in the last five trading days; they had retreated on Tuesday after having been mixed on Monday.

TMS atop talk

New flow remained robust in the high-yield primary market Wednesday.

Three issuers priced single tranche deals to raise a combined total of $650 million.

One of the three came as a drive-by.

One was upsized.

Credit Suisse was on the left for all three trades.

TMS International Corp. priced a $250 million issue of eight-year senior notes (Caa1/B) at par to yield 7¼%.

The yield printed on top of yield talk in the 7¼% area.

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

Weekley Homes comes wide

David Weekley Homes, LLC and Weekley Finance Corp. priced a $250 million issue of 6 5/8% eight-senior senior notes (B3/B+) at 97.731 to yield 7%.

The yield printed 12.5 basis points beyond the wide end of yield talk in the 6¾%.

Credit Suisse, BofA Merrill Lynch and Wells Fargo were the joint bookrunners for the debt refinancing deal.

Clear Channel Outdoor prices rich

In the session's sole drive-by, Clear Channel Outdoor Holdings, Inc. priced an upsized $150 million tack-on to the Clear Channel International BV 8¾% senior notes due Dec. 15, 2020 (B3/B) at 104 to yield 6.86%.

The issue size was increased from $125 million.

The reoffer price came at the rich end of the 103.5 to 104 price talk, which was unchanged from initial guidance.

Credit Suisse was the sole bookrunner.

The San Antonio-based outdoor advertising company intends to use the proceeds, including those additional proceeds resulting from the $25 million upsizing of the deal, for general corporate purposes.

Parexel talk 6½% area

Looking ahead, Parexel International Corp. talked its $720 million offering of eight-year senior notes (Caa1/CCC+) to yield in the 6½% area.

Talk comes at the tight end of the 6½% to 6¾% earlier guidance.

The deal, being led by BofA Merrill Lynch, is expected to price Thursday.

Staples roadshow

Staples Inc. plans to start a roadshow on Friday for a $1.3 billion offering of eight-year senior notes (expected ratings B3/B-).

The deal is expected to price in the early part of the Aug. 14 week.

BofA Merrill Lynch is helming the offer.

Proceeds will be used to help fund the acquisition of Staples by Sycamore Partners.

Mixed Tuesday flows

The daily cash flows were mixed and muted on Tuesday, the trader said.

High-yield ETFs sustained $77 million of outflows on the day.

Actively managed funds saw $5 million of inflows on Tuesday.

Dedicated bank loan funds were flat-to-negative on Tuesday, sustaining $15 million of outflows on the day.

Day’s deals unseen

In the secondary sphere, traders did not immediately report any initial aftermarket dealings in the regularly scheduled new 7¼% notes due 2025 from TMS International, a Glassport, Pa.-based provider of mill services for steelmakers, or the 6 5/8% regularly scheduled notes due 2025 from Houston-based privately held homebuilder David Weekley.

Nor was there much in the way of readings on the quickly marketed 8¾% 2020 add-on from Clear Channel Outdoor Holdings.

A market source did estimate that the Clear Channel notes, which he saw going out a touch below their 104 issue price, were down around 1¾ points from where the existing bonds had been trading before news of the new issue hit the screens.

Restaurant Brands trades actively

One of the traders said that Tuesday’s big new deal from Restaurant Brands International “was kind of holding in there” at 100¼ bid, in active dealings.

At another desk, a market source said the bonds had firmed slightly, perhaps around 3/16 point, to finish at 100 5/16.

Volume of more than $75 million was easily the biggest seen in any Junkbondland issue on Wednesday.

The Oakville, Ont.-based franchise operator of Burger King, Tim Hortons and Popeyes quick-service restaurant’s $1.3 billion of 5% senior secured notes due 2025 had priced at par on Tuesday after that unscheduled offering had been upsized from an originally announced $1 billion.

Looking at Tuesday’s other new deals, a trader said that Triumph Group, Inc.’s 7¾% notes due 2025 “didn’t really trade too much today.”

He saw those notes hanging in around the same 101 bid level they had reached in Tuesday’s initial aftermarket activity, after the Berwyn, Pa.-based designer and manufacturer of aircraft structures and components had priced its $500 million regularly scheduled forward calendar offering at par.

Earlier Wednesday, another trader quoted the notes in a 100¾-to-101¼ bid context.

Tulsa, Okla.-based natural gas and oil exploration and production company WPX Energy, Inc.’s 5¼% notes due September 2024 at 98¾ bid, 99½ offered.

That was a little below the 99¼-to-99¾ bid context those bonds had finished at on Tuesday.

But it was still above the 98.5 price at which that quickly shopped $150 million add-on to the company’s existing $500 million of the notes had priced on Tuesday to yield 5.509%.

Recent deals retreat

Amid a generally softer session in the high yield market, other recently priced deals were seen ending the day lower.

A trader said that Charter Communications’ 5% notes due February 2028 “were off a little bit,” at 99½ bid.

At another desk, a market source who also saw those Charter notes finish at 99½ saw a bigger loss, estimated they were off by 1 1/8 point, with around $16 million having changed hands.

The Stamford, Conn.-based cable, broadband and phone service provider had priced $1.5 billion of those 10.5-year notes at par in a quick-to-market issue last Thursday, after the deal was upsized from an originally announced $1 billion.

Dynegy’s new 8 1/8% notes due in January 2026 were seen by a market source off ¾ point on the day, at 98 5/8 bid.

Volume was around $10 million.

The Houston-based power generating company had priced that quickly shopped $850 million 8.5-year issue at 99.259 on Monday, yielding 8¼%, after the deal was upsized from $600 million originally.

And a trader said that U.S. Steel’s 6 7/8% notes due 2025 eased by ½ point, finishing at 99¾ bid, with around $10 million traded.

The Pittsburgh-based steelmaking giant had priced $750 million of those notes at par in a regularly scheduled forward calendar transaction on Aug. 1.

Hertz on the rebound

Away from the new deals, a trader called Hertz Corp.’s bonds “fairly busy,” seeing its 7 5/8% notes due 2022 up 1 ¾ points on the day to end at 100¼ bid, on “pretty heavy volume” of more than $42 million.

Hertz’s 6¾% notes due 2019 gained 3/8 point to end at 99 1/8 bid, on over $28 million of volume.

Both of those issues had retreated on Tuesday, he said, after sector peer Avis Budget Car Rental had reported disappointing earnings, followed by Estero, Fla.-based Hertz itself, which also had numbers that were “not good.”

However, he theorized “they had already traded off on the Avis numbers, and investors maybe thought the Hertz numbers were not as bad as they could have been, so they rallied off their lows.”

Hertz’ shares zoomed by more than 23% on Wednesday, on three times normal volume.

Valeant in retreat

Valeant Pharmaceuticals’ 6 1/8% notes due 2025, which had performed well on Tuesday after the Canadian drug maker reported favorable numbers and progress on deleveraging, gave back those gains on Wednesday.

A trader saw them down 1¼ point, at 84¼ bid, with over $23 million traded.

Indicators stay lower

Statistical market performance measures were lower across the board for a second consecutive session on Wednesday, their fourth lower session in the last five trading days; they had retreated on Tuesday after having been mixed on Monday.

The KDP High Yield Daily Index saw its second big loss in a row and fifth straight downturn overall on Wednesday, nosediving by 14 basis points to end at 72.28, after having swooned by 11 bps on Tuesday.

Its yield rose by 5 bps, to 5.15%, its third successive widening; it had also risen by 3 bps on Tuesday and by 1 bp on Monday, after having been unchanged on Friday. The yield had also ballooned out by 9 bps on Thursday.

The Markit CDX Series 28 High Yield Index ended down over ¼ point at 107 bid, 107 1/16 offered, its fifth loss in as many sessions. It had also fallen by around ¼ point on Tuesday.

And the Merrill Lynch North American High Yield Index retreated for a second straight session on Wednesday, losing 0.361%, on top of Tuesday’s 0.067% downturn, which had followed Monday’s 0.019% advance.

The latest loss cut the index’s year-to-date return to 5.718%, its first time under 6% since July 24, when it had ended at 5.923%.

Wednesday’s finish was down from 6.101% on Tuesday and down as well from last Wednesday’s close at 6.233%, its 2017 year-to-date peak.

© 2015 Prospect News.
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