Guitar Center, NVA bring new deals; newer U.S. Steel, J.C. Penney dominate secondary; Valeant busy

By James McCandless and Paul A. Harris

San Antonio, March 14 – In the high-yield primary market on Wednesday, Guitar Center, Inc. priced $635 million of secured notes, NVA Holdings, Inc., the parent of National Veterinary Associates, priced $500 million of notes, Progroup AG priced €450 million of notes, and Stora Enso Oyj priced €300 million of notes.

The high-yield secondary market saw volume taken up by recent issues, traders said.

United States Steel Corp.’s latest issue saw much of the day’s activity as the company braces for impact as a result of newly placed tariffs.

Last week’s new pricing of J.C. Penney Co., Inc. continues to dominate in the retail space.

Valeant Pharmaceuticals International, Inc. saw another active day for its new eight-year senior unsecured notes.

The recent $1 billion pricing from Sprint Corp. continued trading.

Intelsat SA and Northern Oil and Gas, Inc. were in high volume again.

Guitar Center prices $635 million

In the Wednesday primary market session Guitar Center, Inc. priced a $635 million issue of 9½% 3.5-year senior secured notes (Caa1/CCC+) at 98.14 to yield 10 1/8%.

The coupon came on top of coupon talk. The yield printed in the middle of the 10% to 10¼% yield talk, and tight to the 10% to 10½% initial talk.

UBS was the lead bookrunner. Wells Fargo, BofA Merrill Lynch, J.P. Morgan and Citizens Capital were the joint bookrunners.

The Westlake Village, Calif., music retailer plans to use the proceeds to redeem its 6½% senior secured notes due 2019.

NVA tight to talk

NVA Holdings, Inc., the parent of National Veterinary Associates, priced a $500 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 6 7/8%.

The yield printed at the tight end of yield talk in the 7% area. Initial price talk was 6 7/8% area.

The deal was heard to be playing to an order book that was two-times oversubscribed on Tuesday afternoon, a trader said.

BofA Merrill Lynch, RBC, Jefferies and Nomura were the joint bookrunners.

The Agoura Hills, Calif.-based provider of veterinary medical services plans to use the proceeds to repay its $400 million second-lien term loan due 2022 and a $90 million draw on its revolving credit facility.

Progroup prices tight

Progroup AG priced a €450 million offering of eight-year senior secured notes (Ba3/BB-) at par to yield 3%.

The yield printed at the tight end of the 3% to 3¼% yield talk.

Deutsche Bank managed the sale.

The Germany-based containerboard company plans to use the proceeds to call its 5 1/8% senior secured fixed rate notes due 2022 at 102.563.

Stora Enso prints 2½% coupon

Finland's Stora Enso Oyj priced a €300 million issue of 2½% 10-year senior notes (Ba1/BB+) at a 150 basis points spread to mid-swaps.

The spread came at the tight end of the mid-swaps plus 150 to 155 bps spread talk. That talk was revised downward from earlier spread talk in the 170 bps area.

The reoffer price was 99.633 rendering a yield of 2.542%.

Deutsch Bank, Goldman Sachs and NatWest managed the sale.

Axactor talk Euribor plus 700 bps

Norway-based debt collector Axactor AB talked a €250 million offering of three-year senior secured floating-rate notes with a 700 basis points spread to three-month Euribor.

DNB Markets, Nordea and Arctic Securities are managing the sale.

U.S. Steel issues trade

Pittsburgh-based integrated steel producer U.S. Steel saw its new $650 million of eight-year senior notes take up much of Wednesday’s volume, a market source confirmed.

The 6¼% notes due 2026 ended up settling at 100½ bid.

J.C. Penney active

Plano, Texas-based retailer J.C. Penney’s recent $400 million issue of seven-year senior secured second priority notes picked up in activity on the day.

“Those have been pretty weak,” a trader said.

At 8 5/8% yield, traders reported it ending around 98¼ bid.

Valeant stays active

Canada-based pharmaceutical name Valeant’s $1.5 billion Monday issue of eight-year senior notes continued to stay active two days on.

Market sources confirmed seeing the 9¼% notes due 2026 trade up back to par bid.

Sprint trades down

Overland Park, Kan.-based wireless company Sprint’s recent $1 billion new issue continued a downward trend Wednesday, spurred by Friday’s announcement that the company would lay off 500 employees from its headquarters

The 7 5/8% notes due 2026 traded down to 99 bid.

Volume favorites trade

In telecom, Luxembourg-based satellite communications company Intelsat continues to be heavily traded.

The Intelsat Jackson SA 5½% issues due 2023 lost ½ point to close at 82 bid. The 7¼% issues due 2020 fell ¼ point to close at 94 bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% issues due 2020 fell ¼ point to close at 92 bid.

“The secondary has been dominated by all of these new issues,” a trader said.

Indexes trend down

The KDP High Yield Daily Index saw a sharp drop on the day as it lost 11 basis points to close at 70.43 with the yield rising 4 bps to 5.83%.

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