Brand, Oppenheimer, BevMo! price to cap $3.2 billion primary week; new Brand gains; supermarkets slide

By Paul Deckelman and Paul A. Harris

New York, June 16 – After several sessions of relative inactivity, the high-yield primary sphere was respectably busy on Friday, churning out three new regularly scheduled forward calendar deals generating a total of $1.09 billion of dollar-denominated and fully junk-rated paper.

Brand Energy & Infrastructure Services, Inc., a provider of specialized services to energy, industrial and infrastructure customers, had the big deal of the day – $700 million of eight-year notes. Traders said the new issue firmed smartly when it hit the aftermarket and was one of the busiest junk credits of the day.

Also pricing were a pair of smaller five-year deals – financial services company Oppenheimer Holdings, Inc.’s $200 million issue of unsecured notes, and beer, wine and liquor retailer Beverages & More, Inc.’s $190 million of secured paper. Both of those issues traded at or slightly above their respective issue price in thin aftermarket dealings.

Those three deals brought the week’s total of new dollar-denominated junk bonds up to $3.2 billion, according to data compiled by Prospect News, although it was only about half the volume seen last week.

Away from the new issues, traders saw considerable volume in the bonds of supermarket operators such as Fresh Market, Albertsons and SuperValu, which all fell on the news that retailing giant Amazon is buying grocer Whole Foods, potentially creating a powerhouse competitor.

Energy issues such as California Resources Corp., Halcon Resources Corp. and Chesapeake Energy Corp. ended lower, even though crude oil prices recovered slightly Friday after having sagged badly on Wednesday and stayed lower on Thursday. But Hornbeck Offshore Services Inc.’s bonds jumped as the oilfield services company announced an enlarged and extended new credit facility.

Statistical market performance measures were lower across the board for a second consecutive session on Friday; they had turned southward on Thursday after having been mixed on Wednesday and higher all around on Monday and again on Tuesday.

The indicators meanwhile were closing out the week mixed versus where they had been last week, ended June 9, which had been their first lower week after two straight higher weeks, which, in turn, had followed two straight weeks of mixed results and a lower-across-the-board week before that.

Brand Energy prices $700 million

News volume picked up on Friday in the primary market, as three issuers crossed the finish line with single-tranche deals at the conclusions of their respective roadshows, raising a combined total of $1.09 billion.

None of the three was upsized.

Executions saw one deal come at the tight end of talk while the other two came in the middle of talk.

Brand Energy & Infrastructure Services, Inc. priced a $700 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 8½%.

The yield printed on top of final yield talk, which had been revised from earlier talk in the 8% area.

Initial talk was in the high 7% to low 8% area.

Final terms emerged along with investor friendly covenant changes including an increase in the first call premium; the notes become callable after three years at par plus 75% of the coupon, up from 50%.

Other covenant changes saw debt incurrence and leverage restrictions tightened.

Barclays was the left bookrunner. Goldman Sachs, Natixis, ING, SG and Credit Agricole were joint bookrunners for the merger financing.

Oppenheimer prices tight

Oppenheimer Holdings Inc. priced a $200 million issue of five-year senior secured notes (B1/B+) at par to yield 6 ¾%.

The yield printed at the tight end of the 6¾% to 7% yield talk. Early guidance was in the 6½% area, a trader said.

Oppenheimer ran the books for its own deal, sources say.

The New York-based financial institution plans to use the proceeds to redeem its 8¾% senior secured notes due April 15, 2018 in full, with the remaining proceeds to be used for general corporate purposes, which may include acquisitions.

BevMo! prices secured paper

Beverages & More, Inc. (BevMo!) priced a $190 million issue of 11½% five-year senior secured notes (Caa1/B-) at 98.00 to yield 12.044%.

The reoffer price and yield came in line with talk which specified a 12% yield including about two points of OID.

Jefferies was the sole bookrunner for the debt refinancing deal.

Exela brings secured and unsecured

Exela Technologies plans to start a roadshow on Monday for an $825 million two-part offering of notes.

RBC is the left bookrunner for a $525 million tranche of six-year senior secured notes.

Credit Suisse Securities (USA) LLC is the left bookrunner for a $300 million tranche of seven-year senior unsecured notes.

Proceeds will be used to help fund the creation of the company through the merger of Quinpario Acquisition Corp. 2, SourceHOV LLC and Novitex Holdings Inc.

j2 Cloud starts Monday

j2 Cloud Services, LLC plans to start a roadshow on Monday in New York for a $550 million offering of eight-year senior notes (expected ratings Ba3/BB).

The debt refinancing deal is set to price during the week ahead.

Citigroup is the left bookrunner. Jefferies, MUFG, Barclays, Wells Fargo and JMP are the joint bookrunners.

Elsewhere West Corp. detailed a $1.35 billion senior unsecured bridge facility on Friday.

The bridge is expected to be taken out by means of the issuance of senior unsecured notes.

Commitments are due on Thursday.

RBC, Credit Suisse, Barclays, BofA Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Goldman Sachs are the joint bookrunners.

The bridge is part of the financing of the LBO by Apollo (see related story in this issue).

And Intelsat announced that subsidiary Intelsat Jackson Holdings SA plans on getting at least $1.5 billion in debt financing transactions, with proceeds to fund the redemption of $1.5 billion of 7.25% senior notes due 2019.

Intrum Justitia brings biggest year-to-date euro deal

In the European primary market Intrum Justitia AB priced €3 billion equivalent of senior notes (Ba2/BB+/BB) in four tranches.

The deal included €300 million of Euribor plus 262.5 basis points five-year floating-rate notes, which priced at par, at the tight end of spread talk in the 275 bps area.

An SEK 3 billion amount of Stibor plus 275 bps five-year floating-rate notes also priced at par, at the tight end of spread talk in the 287.5 bps area.

The deal also included a pair of fixed-rate tranches.

A €1.5 billion amount of five-year notes priced at par to yield 2¾%, at the tight end of the 2¾% to 3% yield talk.

And €900 million of seven-year notes priced at par to yield 3 1/8%, at the tight end of the 3 1/8% to 3 3/8% yield talk.

In comparison to all available comparables all four tranches came exceptionally tight, the source said, adding that despite the tight pricings demand was very strong.

Joint bookrunner Goldman Sachs International will bill and deliver. JPMorgan, Morgan Stanley, Danske Bank, Deutsche Bank, DNB Markets, Nordea, Nykredit, Swedbank and UBS Investment Bank were also joint bookrunners.

The Stockholm-based debt collector plans to use the proceeds to refinance debt related to its merger with Netherlands-based Lindorff Group, AB.

Instrum Justitia, with an overall deal size of €3 billion, is the biggest euro-denominated issuer of 2017, to date, eclipsing the €1.43 billion that North Carolina-based health information services provider Quintiles IMS Inc. priced in a single tranche on Feb. 23.

A less busy week

Friday’s trio of new deals brought the amount of new U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers up to $3.2 billion in nine tranches, according to data compiled by Prospect News.

But the week’s total was well down from the $6.35 billion which priced in 11 tranches last week, ended June 9, although it was somewhat larger than the $2.05 billion that got done in just three tranches the week before that, ended June 2, which was one day shorter than a usual trading week would be because of the full shutdown of the debt markets on Monday, May 29, in observance of Memorial Day in the United States.

Issuance figures over the last few weeks have been well off the sizzling $9.7 billion pace seen during the week ended May 26, when 18 tranches of such paper from domestic or industrialized-country borrowers had priced – the biggest new-issuance week seen in Junkbondland since the week ended March 10, which was the biggest primary week ever, with some $17.54 billion of junk bonds having priced in 26 tranches.

This week’s primary activity pushed year-to-date issuance for 2017 so far up to $135.94 billion in 254 tranches – considerably more than the $112.36 billion that had priced in 159 tranches by this point on the 2016 calendar, the Prospect News data indicated.

Full-year issuance in 2016 finished at $226.78 billion in 359 tranches –which ran 12.9% behind the $260.02 billion which had gotten done in 408 tranches in 2015.

Brand-new Brand paper pops

In the secondary market, traders saw the new Brand Energy & Infrastructure Services 8½% notes due 2025 well-received in the aftermarket after the Kenesaw, Ga.-based company’s deal had priced at par.

A trader saw the new notes in a 102½-to-103½ bid context, with a fair number of trades taking place between 103 and 103¼.

At another desk, a trader saw the notes get as good as 103 5/8 bid, before settling into a 102¾-to-103½ bid range.

He said that more than $24 million of the new notes traded, putting the issue high up on the day’s Most Actives list.

BevMo!, Oppenheimer firm slightly

Among the day’s other issues, a pair of traders at different shops saw Oppenheimer’s new 6¾% notes due 2022 having firmed modestly to a 100¼-to-100 3/8 bid area, after that deal had priced at par.

One of the traders said he saw about $8 million of the notes traded.

Concord, Calif.-based alcoholic beverage retailer BevMo!’s new 11½% senior secured notes due 2022 were seen hanging around the 98-to-98¼ bid neighborhood, after that issue had priced at 98 to yield 12.044%.

One trader said he had only seen about $2 million or so of the notes changing hands.

Among other recently priced issues, a trader said that Yum! Brands Inc.’s 4¾% notes due 2027 “were still hanging in there pretty good,” at 101 7/8 bid, 102¼ offered.

The Louisville, Ky.-based corporate parent of the KFC fried chicken restaurant chain, as well as Taco Bell and Pizza Hut, did an upsized, quick-to-market $750 million offering of 4¾% notes due 2027 on Monday, via issuing subsidiaries KFC Holding Co., Pizza Hut Holdings, LLC and Taco Bell of America, LLC.

The deal priced at par after it was enlarged from an originally announced $500 million, and traded higher in busy aftermarket dealings throughout the week.

Grocers groan on Amazon deal

Away from the new issues, the news that internet retailing giant Amazon.com plans to get into the brick-and-mortar grocery store business by acquiring upscale organic supermarket chain Whole Foods caused the bonds of the latter’s various competitors to head lower on the day.

A trader said the biggest loser among the sector was Greensboro, N.C.-based direct Whole Foods rival Fresh Market. Its 9¾% notes due 2023 dropped more than 3 points on the day to end at 84½ bid, with over $35 million having traded, the junk bond volume leader.

Boise, Idaho-based Albertsons, the second biggest pure-play supermarket operator behind the investment-grade rated Kroger Co., was also on the downside, its 5¾% notes due 2025 down a deuce on the day at 97 bid, while its 6 5/8% notes due 2024 was off by nearly 3 points, at 100¾ bid, on volume of over $16 million and over $10 million, respectively.

And another trader quoted Eden Prairie, Minn.-based SuperValu’s 6¾% notes due 2021 down 2½ points on the day at 100¼ bid.

Energy off despite oil upturn

Traders saw energy names getting beat up for a third straight session – even though crude oil prices finally turned north on Friday after two days of decline before that.

Los Angeles-based oil and natural gas exploration and production operator California Resources Corp.’s benchmark 8% notes due 2022 were seen down 1¾ points on the day at 63 bid, with over $28 million traded.

Houston-based E&P operator Halcon Resources’ 6¾% notes due 2025 ended off 5/8 point at 91 3/8 bid, with over $13 million traded.

Another sector loser was Oklahoma City-based Chesapeake Energy’s 6 5/8% notes due 2020, finishing down ¾ point at 103¼ bid – even though West Texas Intermediate crude for July delivery firmed by 28 cents per barrel Friday to settle at $44.74 on the New York Mercantile Exchange.

Hornbeck higher on financing

Covington, La.-based marine oilfield services company Hornbeck Offshore Services’ 5% notes due 2021 jumped more than 7 points on the session to 57 bid, on hefty volume of over $30 million, while its 5 5/8% notes due 2020 gained more than 3 points to end at 59¼ bid.

The bonds got a boost from the news that Hornbeck refinanced its existing $200 million senior secured revolving credit facility with a new first-lien delayed-draw credit facility providing for up to $300 million of term loans The six-year term of the new credit facility extends the maturity of the old credit facility from February 2020 to June 2023.

Indicators stay lower

Statistical market performance measures were lower across the board for a second consecutive session on Friday; they had turned southward on Thursday after having been mixed on Wednesday and higher all around on Monday and again on Tuesday.

The indicators meanwhile were closing out the week mixed versus where they had been last week, ended June 9, which had been their first lower week after two straight higher weeks, which, in turn, had followed two straight weeks of mixed results and a lower-across-the-board week before that.

The KDP High Yield Daily index lost 6 basis points on Friday to end at 72.37, its second straight loss after having ended unchanged on Wednesday; it had also slid by 12 bps on Thursday.

Its yield rose by 2 bps to 4.93%, after having risen by 1 bp on Thursday. Before that, it had come in by that same 1 bp in each of the previous three sessions.

Those levels compared unfavorably with last Friday’s 72.44 index reading, although the yield was unchanged on the week.

The Markit CDX Series 28 High Yield index saw its third loss in a row Friday, dropping by nearly 9/32 point to 107 3/16 bid, 107¼ offered. It had fallen by 1.4 point on Thursday, while on Wednesday, it had posted its first loss after three straight better sessions before that, retreating by 3/32 point.

The index was also down from last Friday’s 107 17/32 bid, 107 1/9 32 offered finish.

And the Merrill Lynch North American High Yield index lost 0.72% on Friday, its second straight downturn, after having stumbled by 0.131% on Thursday, its first setback after four straight gains, including Wednesday’s 0.039% rise.

Friday’s retreat cut the index’s year-to-date return to 4.959% from Thursday’s 5.035%; those levels were also down from Wednesday’s close at 5.173%, which had been its second consecutive new 2017 year-to-date peak level.

For the week, however, the index rose by 0.03%, its first weekly gain after having fallen by 0.093% last week, which had been the first weekly loss after four straight weeks before that on the upside.

© 2015 Prospect News.
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