Viking prices, calendar builds; recent deals soften along with market; Wynn dives amid allegations

By Paul Deckelman and Paul A. Harris

New York, Jan. 29 – No new junk bond deals were heard to have come to market during Monday’s session – but Viking Cruises Ltd. announced late Monday evening that it had, in fact, priced a scheduled $950 million two-part forward calendar offering, consisting of $675 million of 10-year senior secured notes and a $275 million add-on to its existing 2027 unsecured notes.

Syndicate sources said meantime that there was considerable activity going on behind the scenes, with new-deal announcements from several prospective issuers.

They said that high-tech firm Western Digital Corp. plans to sell $2.3 billion of eight-year notes.

In the energy arena, natural gas and natural gas liquids company Indigo Natural Resources LLC will sell $650 million of eight-year notes, while Dubai-based offshore jackup rig operator Shelf Drilling Holdings, Ltd. hit the road Monday to market a $550 million notes offering.

And gambling technology company Scientific Games plans to soon roll the dice on a three-part offering that includes a $500 million add-on to its existing 2025 notes, as well as new stand-alone tranches of euro-denominated eight-year secured and unsecured notes.

In the secondary market, traders said that Friday’s new issue from Hunt Cos. Inc. traded off on Monday, giving up the smallish gains it had notched in initial aftermarket dealings.

They also saw easier levels, on somewhat greater volume, on recent deals from T-Mobile USA, Inc., Meredith Corp., Noble Holding International, Ltd. and Aramark Services, Inc.

But the dominant name in Junkbondland Monday was Wynn Las Vegas LLC. The gaming company’s notes swooned, along with its shares, in the wake of sexual-abuse allegations leveled at company founder and chief executive officer Steve Wynn, who has denied the charges.

Statistical market performance measures turned lower across the board on Monday, after having been mixed on Friday and higher all around on Thursday.

Viking two-part prices

Viking Cruises Ltd. had the sole new issue of the day Monday, as the Los Angeles-based cruise line announced late Monday evening that it had priced $950 million of high-yield notes in two parts.

The company press release said that it had priced $675 million of new 10-year 5% senior secured notes (Ba2/BB-), as well as a $275 million add-on to its existing $550 million of 5 7/8% senior unsecured notes due Sept. 15, 2027 (B3/B) that it had originally sold last September.

Pricing terms on the regularly scheduled forward calendar offering were not immediately available.

BofA Merrill Lynch, Wells Fargo Securities LLC and Credit Suisse Securities (USA) LLC managed the sale.

The company plans to use proceeds of the secured notes offering to prepay all outstanding amounts under the loan agreements used to finance the building of two new ocean vessels, the Viking Star and the Viking Sky, and to repurchase another ocean newbuild, the Viking Sea, and discharge the related sale-leaseback financial agreement.

It intends to use the net proceeds of the add-on notes for general corporate purposes, which could include debt repayment.

Primary news heats up

Meanwhile, primary market news volume intensified on Monday.

Western Digital Corp. plans to sell $2.3 billion of notes due 2026.

BofA Merrill Lynch and J.P. Morgan Securities LLC are the lead bookrunners for the public offer. RBC Capital Markets, Mizuho Securities and Wells Fargo are joint bookrunners.

The San Jose, Calif-based data solutions provider plans to use the proceeds, together with cash on hand, to fund its concurrent tender offer.

Indigo eight-year notes

Indigo Natural Resources LLC plans to sell $650 million of eight-year senior notes late in the Jan. 29 week.

Initial price talk is in the high 6% area, a trader said.

JP Morgan Securities LLC is leading the Rule 144A and Regulation S offer.

The Houston-based independent natural gas and natural gas liquids company plans to use the proceeds to repay debt.

Indigo Natural Resources also announced on Monday that it has submitted a draft registration statement to the U.S. Securities and Exchange Commission relating to its proposed initial public offering. The size and price range for the proposed offering remain to be determined.

Shelf Drilling roadshow

Dubai-based Shelf Drilling Holdings, Ltd. started a roadshow on Monday for $550 million of senior notes.

Credit Suisse Securities (USA) LLC is the lead bookrunner for the Rule 144A and Regulation S for life offer. Clarksons, DNB Markets, ING and UBS Investment Bank are the joint bookrunners.

The offshore jackup rig operator plans to use the proceeds to repay outstanding notes maturing in 2018 and 2020.

Scientific Games in dollars and euros

Scientific Games Corp. is in the international high-yield bond markets with three tranches of notes.

The deal includes a $500 million add-on to the 5% senior secured notes due Oct. 15, 2025 (Ba3/B+).

JP Morgan Securities LLC is leading the add-on.

It also includes €325 million of eight-year senior secured notes (Ba3/B+) and €250 million of eight-year senior unsecured notes (Caa1/B-).

Deutsche Bank is leading the euro-denominated tranches.

The Las Vegas-based gaming technology company plans to use the proceeds, together with borrowings under its term loan B, to redeem a portion of its outstanding 7% senior secured notes due 2022.

KME starts roadshow

Italian copper supplier KME AG started a roadshow on Monday in London City for a €300 million offering of five-year senior secured notes (expected ratings B3/B).

Joint global coordinator Goldman Sachs International will bill and deliver. BNP Paribas and Deutsche Bank are also joint global coordinators. Banca Akros SpA and Gruppo Banco BPM are joint bookrunners. Banca IMI and Raiffeisen Bank are co-managers.

The Milan-based company plans to use the proceeds to repay debt under its borrowing base facility, to pay off Intek Group loans, and for general corporate purposes.

Infopro offers notes due 2022

Infopro Digital Group announced in a Monday press release that it intends to offer €150 million senior secured notes due 2022, subject to market conditions.

The Paris-based multi-media products and services provider plans to use the proceeds to partially finance the acquisition of Docu Group (Lux 1) Sarl.

Mixed Friday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Friday, the most recent session for which data was available at press time, an investor said.

High-yield ETFS saw $145 million of inflows on the day.

Hunt Cos., Waste Pro easier

In the secondary market, a trader said that Friday’s new offering from Hunt Cos. “didn’t really trade much today,” seeing those 6¼% senior secured notes due 2026 off about 5/8 point to finish around par, on “not super-heavy volume.”

A market source at another desk estimated that perhaps $7 million of those notes had traded at those lower levels on Monday.

The privately held El Paso, Texas-based company, which invests in businesses focused on the real estate and infrastructure markets, priced $600 million of those notes at par on Friday in a regularly scheduled forward calendar offering that was upsized from an originally announced $550 million.

The new paper was heard to have firmed by around 5/8 to ¾ point in initial aftermarket trading of some $78 million, topping the junk market’s Most Actives list that session.

A trader meantime said that Thursday’s new deal from Waste Pro USA Inc. was “not an active name,” with perhaps $5 million changing hands.

That was well down from the busy dealings seen over the previous two sessions, after the Longwood, Fla.-based solid-waste services company had priced its $500 million deal at par off the forward calendar, after the offering was upsized from $450 million originally.

A trader said that Thursday’s activity had zoomed to a 102-to-102¼ bid context, with over $120 million of the notes having traded. He said that the issue had been 10-times over-subscribed, resulting in “a lot of flipping” in the new name.

On Friday, around $31 million had traded, with the notes seen down ¼ point on the day at 101¾.

The notes eased a further 1/8 point on Monday, a market source said, to 101 5/8 bid.

Recent deals trade easier

Among other recently priced credits, a trader said that “one of the new issues from last week that was pretty active was Meredith Corp.,” with those 6¼% senior secured notes due 2026 “off about ¼ but still hanging in at 102¾.”

At another desk, a trader saw those notes down 3/8 point, at 102 5/8 bid, with around $30 million of turnover.

Des Moines, Iowa-based magazine publisher and broadcasting company Meredith had priced $1.4 billion of those notes at par in a regularly scheduled offering on Jan. 19.

T-Mobile’s new 4¾% notes due 2028 were seen off 3/16 point on Monday, ending at 100 11/16 bid, also on around $30 million of volume.

The Bellevue, Wash.-based wireless service provider had priced $1.5 billion of those notes at par last Monday as part of a $ 2.5 billion two-part drive-by offer that also included $1 billion of 4½% senior notes due 2026.

The latter notes were down around 3/16 point on the day at 100 5/8 bid, with around $2 million having traded.

Going back a little further, Noble Holdings’ new 7 7/8% guaranteed notes due 2026 dropped by 5/8 point to 102 bid, a trader said, seeing $19 million having traded.

The Cayman Islands-based offshore energy drilling company had priced $750 million of those notes at par on Jan. 17, after that quick-to-market transaction was upsized from an originally announced $500 million.

And Aramark’s recent 5% notes due 2028 were likewise 5/8 point lower on Monday, a market source said, seeing then at 102 1/8 bid, on volume of over $16 million.

The Philadelphia-based food service, business services and uniform supply company had priced a quickly shopped $1.15 billion of those notes at par on Jan. 10.

Wynn a big loser

Away from the new or recently priced deals, the most notable name in the junk market on Monday was Wynn Las Vegas, whose bonds slid badly, along with the company’s Nasdaq-traded shares, amid sexual abuse allegations against the Las Vegas-based casino resort operator’s founder and CEO, Steve Wynn.

Wynn has strongly denied the allegations.’

But those denials did not stop the slide in the bonds, with a trader declaring that “the long ends were down

anywhere from 1½ to 2½ points.”

He saw the company’s 5½% notes due 2025 down nearly 2½ points on the day, ending at 102¼ bid, with over $41 million having changed hands.

He saw its 5¼% notes due 2027 down almost 2 points as well at 100¼, on more than $37 million of turnover.

Wynn’s 4¼% notes due 2023 finished down 1 3/8 points at 100½ bid, on volume of around $19 million.

The allegations against Wynn surfaced Friday in a Wall Street Journal story, causing the company’s shares to nosedive some 10%, but one of the traders noted that there was little or no reaction in the bond market at that time.

“Today was really when they picked up steam on the credit side.”

The share meantime continued their freefall for a second consecutive session, plunging another $16.81, or 9.32%, to end at $163.48, on volume of nearly 26 million shares, of 12 times the norm.

Back in the bond market, a trader said that “Wynn Las Vegas was the credit specific name” that saw the biggest drop in active dealings; the company’s Wynn Macau Ltd. 5½% notes due 2027 lost 2 3/8 points with around $6 million traded, ending at 100¼ bid.

The Macau unit’s 4 7/8% notes due 2024 retreated by 1 3/16 points to 100½ bid, but only on around $1 million of round-lot trading.

Indicators end lower

Statistical market performance measures turned lower across the board on Monday, after having been mixed on Friday and higher all around on Thursday.

The KDP High Yield Daily index dropped by 11 basis points on Monday to close at 71.86, its second consecutive loss. It had eased by 2 bps on Friday, its first loss after two straight gains before that. It had risen by 3 bps on Thursday and by 5 bps on Wednesday, after having been unchanged on Tuesday – and having slid for five straight sessions before that.

Its yield widened by 5 bps to 5.29%, after having been unchanged for two sessions before that.

The Markit CDX Series 29 index came down by 7/32 point, closing at 108 9/16 bid, 106 19/32 offered, in contrast to Friday’s 5/32 rise, its second straight improvement.

The Merrill Lynch High Yield Index fell back by 0.121% on Monday, its first loss after five straight gains, including Friday’s 0.03% rise.

That loss dropped the index’s year-to-date return to 0.815% from 0.936% Friday, which had been the third consecutive new peak YTD level for the year so far.

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