Ashton Woods, Norwegian Cruise, Talos deals cap $12.9 billion week, busiest of fledgling year

By Paul Deckelman and Paul A. Harris

New York, Feb. 1 - The high-yield primary sphere opened the new month by closing out its busiest week of 2013 so far on Friday, paced by a trio of $300 million deals.

Homebuilder Ashton Woods USA LLC priced an issue of eight-year notes following a short roadshow.

Oil and gas company Talos Production LLC and ship operator Norwegian Cruise Lines each brought an issue of five-year paper to market, with Talos also coming off the forward calendar and Norwegian Cruise Lines as a quickly shopped transaction.

Besides those three offerings, Permian Holdings, Inc., a producer of equipment for the energy industry, came to market with an upsized $200 million forward-calendar issue of five-year secured notes.

British education provider Nord Anglia Education Inc. did a quick-to-market $150 million tranche of five-year PIK toggle notes. Another U.K.-based company, Infinis plc, a provider of landfill gas-to-electricity conversion services, did a six-year deal in the sterling market.

When they were freed for trading, most of those new deals hovered around their respective issue prices, except for Permian Holdings, which was heard to have moved up solidly when the bonds hit the aftermarket.

The day's $1.24 billion of new dollar-denominated, purely junk-rated paper capped off the busiest week of 2013 so far - some $12.9 billion of new high yield issuance in 32 tranches, according to data compiled by Prospect News.

That surpassed the year's previous busiest week, ended Jan. 18, when $11.4 billion of new bonds had priced, and in fact was Junkbondland's heaviest week since the $13.6 billion that came to market during the week ended Dec. 14 of last year.

The latest week's tally, in turn, brought year-to-date junk bond issuance up to some $41.6 billion in 89 tranches, according to the Prospect News data, running about 58% ahead of the issuance pace seen at this time last year - a year which ended with record new-deal activity of over $300 billion.

Elsewhere, traders saw good gains in Thursday's deals from NXP BV and Unifrax I LLC.

Statistical measures of junk market performance broke out of their recent rut on Friday, but remained down from where they had been a week earlier.

NCL cruises through

The Friday session saw five companies bring single-tranche deals into the dollar-denominated high-yield market, raising a total of $1.24 billion.

Evidence continued to mount on Friday that the buyside, having weathered historically low junk bond yields for months (witness the D.R. Horton 3 5/8% five-year paper that came earlier in the week), has begun to push back, sources said.

In a market that had seen precious few original issue discounts since the beginning of last autumn, four of Friday's five dollar-deals were priced at discounts.

NCL Corp. Ltd., a subsidiary of Norwegian Cruise Line Holdings Ltd., priced a $300 million issue of 5% five-year senior notes at 99.451 to yield 5 1/8% on Friday, according to a market source.

The yield printed on top of yield talk.

Deutsche Bank was the left bookrunner for the debt refinancing. Barclays and J.P. Morgan were the joint bookrunners.

Ashton Woods at tight end

Ashton Woods USA LLC and Ashton Woods Finance Co. priced a $300 million issue of 6 7/8% eight-year senior notes (Caa1/B-) at 99.239% to yield 7%.

The yield printed at the tight end of the 7% to 7¼% yield talk.

J.P. Morgan and Wells Fargo were the joint bookrunners.

The Atlanta-based homebuilder plans to use the proceeds to redeem its 11% senior subordinated notes due 2015 and its 9½% senior subordinated notes due 2015, as well as to repay its existing second-lien facility and revolver, and for general corporate purposes.

Talos wide of talk

Talos Production LLC and Talos Production Finance Inc. priced a $300 million issue of 9¾% senior notes (Caa1/CCC+) at 99.025 to yield 10%.

The yield printed 50 basis points beyond the wide end of the 9¼% to 9½% yield talk.

Citigroup was the left bookrunner for the acquisition financing. Goldman Sachs, Nomura and TD were the joint bookrunners.

Permian Tank upsizes

Permian Holdings was the only Friday dollar-deal to price without a discount.

The Texas-based company priced an upsized $200 million issue of five-year senior secured notes (B3/B-) at par to yield 10½%.

The issue was upsized from $175 million.

The yield printed at the tight end of the 10½% to 10¾% yield talk.

Timing was moved up; previous timing had the deal pricing in the middle of the week ahead.

Jefferies ran the books.

Proceeds will be used to refinance debt and pay a distribution to the owners.

Nord Anglia's PIK toggle deal

Also on Friday an English company issued into the dollar market.

Nord Anglia Education priced $150 million of 8½% five-year senior PIK toggle notes (Caa2/CCC+) at 98 to yield 9%.

The coupon steps up 100 basis points to 9 ½% should the issuer elect to make an in-kind coupon payment.

The reoffer price and cash coupon came on top of price talk.

Goldman Sachs ran the books.

Proceeds will be used to partially redeem the company's preferred shares.

Infinis brings sterling deal

Also in England, Infinis priced a £350 million issue of six-year senior notes (Ba3/B+) at par to yield 7%.

Joint bookrunner Deutsche Bank will bill and deliver. Credit Suisse was also a joint bookrunner.

Proceeds will be used to refinance debt, make a distribution to Infinis Energy Holdings Ltd., and to partially fund the acquisition of landfill gas assets owned by other subsidiaries of the holding company.

Cantor starts roadshow

Look for the new issue market to remain active in the week ahead, sellside sources advised on Friday.

One deal took a place on the active forward calendar during Friday's session.

Cantor Commercial Real Estate Company, LP and CCRE Finance Corp. began a roadshow on Friday in New Jersey for their $250 million offering of five-year senior notes (/B/).

Pricing is set for Thursday.

Deutsche Bank is the left bookrunner. Merrill Lynch and Cantor Fitzgerald are joint bookrunners.

The New York-based commercial real estate finance company plans to use the proceeds to put cash on its balance sheet and for general corporate purposes.

Permian pops in secondary

When the new Permian Holdings 10½% senior secured notes due 2018 were freed for secondary dealings, a trader pegged the bonds at 101¾ bid, 102 offered. A second trader likewise saw the bonds at 101¾ bid, 102¼ offered.

Permian, an Odessa, Texas-based manufacturer of wellsite fluid processing and containment systems for oil and gas exploration and production, priced the notes at par.

Day's deals stay near issue

The day's other new bonds were pretty much quoted around their respective new issue prices.

A trader quoted Talos Production's new 9¾% notes due 2018 at 99¼ bid, 100¼ offered, while a second had them at a tighter 99 7/8 bid, 100 3/8 offered.

The Houston-based oil and gas exploration and production company priced the bonds at 99.025.

The day's two other $300 million issues, from Miami-based cruise ship operator Norwegian Cruise Lines and from Atlanta-based homebuilder Ashton Woods USA LLC, both were quoted at par bid, 100½ offered after pricing.

Ashton Woods had priced its 6 7/8% notes at 99.239, while Norwegian Cruise's 5% notes came to market at 99.451

Nord Anglia Education's 8½% PIK toggle notes were seen by a trader at 99 bid, par offered. The deal had priced at 98

Infinis' 7% notes were quoted at par bid, 100½ offered. The British provider of landfill gas-to-electricity conversion services' new deal had priced at par.

Thursday deals move up

Among the deals that priced on Thursday, NXP BV's 5¾% notes due 2021 had moved up to 101¼ bid, 102¼ offered.

The Eindhoven, Netherlands-based semiconductor manufacturer and its NXP Funding LLC subsidiary priced its quickly shopped $500 million issue at par late Thursday.

One of Thursday's other deals, from Niagara Falls, N.Y.-based insulation products distributor Unifrax's 7½% notes due 2019, was also seen by a trader in that same 101½ bid, 102 offered neighborhood. That $205 million deal had also priced at par, after having been downsized from $250 million originally.

Other deals hold steady

A market source said that D.R. Horton, Inc.'s quick-to-market new two-part deal was unchanged Friday from the levels at which it traded on Thursday.

The Fort Worth, Texas-based homebuilder's $400 million issue of 3 5/8% notes due 2018 had priced late in the day on Wednesday at par, and had traded up to 101 bid, 101½ offered on Thursday.

The other part of that deal, its $300 million of 4¾% notes due 2023, after pricing on Wednesday at par, had traded at 99¾ bid, 100¼ offered on Thursday, and stayed there on Friday.

Meanwhile, First Data Corp.'s 11¼% notes due 2021 were seen hanging in on Friday at 100 1/16 bid, 100 3/16 offered.

The Atlanta-based electronic transaction processing company priced its quickly shopped $785 million deal at par on Wednesday, and it initially traded below its issue price - but it moved back up above par on Thursday, and remained there on Friday.

Euro issues improve

Euro-denominated junk bonds traded higher on Friday after the U.S. Labor Department reported weaker job growth than forecast, bond sources in London said.

"It's been quiet, but [bonds] are generally trading a bit better today," one source said. "The market is rallying with the non-farm payrolls, that's what it comes down to on what's been running this afternoon."

A London-based trader said euro bonds traded up about ¼ on average over the session.

Securitas up on offer side

Securitas Direct AB's three-month Euribor plus 650 basis points series A floating-rate notes due 2018 traded at 101 bid, 103 offered in the secondary market, a source at a London desk said.

Securitas Direct sold a €100 million add-on to the notes at 101 during Thursday's session.

The Malmo, Sweden-based company provides monitored home alarm systems.

Odigeo lower

Odigeo's €325 million issue of 7½% senior secured notes due 2018 traded at 99½ bid, 100½ offered on Friday, a bond source said.

The Barcelona, Spain-based online travel services provider special-purpose vehicle and issuing entity, Geo Debt Finance SCA, sold the notes at par on Jan. 23.

DuPont Performance rises

DuPont Performance Coatings' euro-denominated 5¾% senior secured notes due 2021 rose to 100¼ bid, 100¾ offered over the day, a trader in London said.

The issue was seen on Wednesday at 100 5/8 bid.

The Wilmington, Del.-based supplier of vehicle and industrial coating systems sold €250 million of the notes on Jan. 16 at par.

Voyage Care higher

Voyage Care Bondco plc's 6½% senior secured notes due 2018 traded higher going out on Friday at 101 bid, 102 offered, a source said.

The company priced £222 million of the notes at par on Jan. 16.

Voyage Care is a Cannock, England-based services provider for individuals with disabilities.

'Taking a breather'

Back in the dollar-denominated market, a trader called Friday's session "boring."

He suggested that with uncertainty about the future direction of interest rates and the still-stumbling economy, as evidenced by Friday's jobs figures, investors might be "taking a little breather 'till they see what happens next."

In such an environment, he said, he said the watchword was caution - "don't get crazy, and take things as they come."

But he said that with earnings season now upon us, "earnings are looking pretty decent. We're not expecting any major negative surprises."

Another trader, meanwhile, looking back over what the junk market has been doing lately, opined that high yield in general is under pressure. We continue to see these lower-coupon deals that have come recently fade with Treasuries, with the 10-year backing up to around 2%, definitely this higher-quality 10-year paper has been under a significant amount of pressure."

He said that after a long stretch of little paper for sale, "we're finally seeing the pendulum swinging swung in high yield - there's definitely more for sale than to buy at this point, for the first time in a long time."

Market measures turn higher

But overall, statistical junk market performance indicators turned higher on Friday, after having pretty much struggled for most of the week. However, they were lower on a week-to-week basis.

The Markit Series 19 CDX North American High Yield index gained ½ point on Friday - its second straight advance - to end at 102 5/8 bid, 102 7/8 offered. It had also risen 1/8 point on Thursday, to break a string of three consecutive losses.

However, the index remained below its finish the previous Friday, Jan. 25, when it closed out the week at 102 7/8 bid, 103 1/8 offered.

The KDP High Yield Daily Index posted its first gain after four straight losses on Friday, moving up by 4 basis points to end at 75.70, versus Thursday's 25 bps plunge.

Its yield was unchanged at 5.55%, after having risen by 7 bps on Thursday, its fourth straight increase.

Those levels still compare unfavorably with last Friday's 76.23 index reading and 5.38% yield.

Cristal Cody contributed to this review

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