Upsized Memorial Resource, Endo drive-by, CNH pace $2.2 billion day; Memorial moves up

By Paul Deckelman and Paul A. Harris

New York, June 25 – There was no letup on Wednesday in the high-yield primary arena, which continued to churn out new deals in the waning days of the calendar second quarter and first half.

Syndicate sources said that five deals totaling some $2.2 billion of new dollar-denominated, fully junk-rated paper priced on Wednesday, on top of the $3 billion that got done in four tranches on Tuesday.

The biggest deal of the day came from pharmaceuticals provider Endo International plc, which priced $750 million of 8.5-year notes in a quick-to-market transaction via a pair of financing subsidiaries after the deal was upsized.

There was also a $600 million offering of eight-year notes from energy master limited partnership Memorial Resource Development Corp. That quickly shopped deal was also upsized before pricing; afterward, traders saw those new bonds having firmed smartly in initial aftermarket activity.

CNH Industrial NV drove by with a $500 million five-year deal that priced at one of the tightest levels anyone in Junkbondland had recently seen.

Oilfield services provider SAExploration Holdings, Inc. priced $150 million of five-year secured paper, which moved up modestly in secondary trading.

And builder AV Homes Inc. did a $200 million issue of five-year notes. Both AV and SAExploration were regularly scheduled deals that priced off the forward calendar.

Statistical market-performance indicators stayed mixed on Wednesday for a second consecutive session after having been higher for three consecutive sessions before that.

Endo upsized and tight

The sizzling primary market seemed to turn up the heat on Wednesday.

A session that turned out a hefty news volume saw five issuers price single-tranche deals to raise a combined total of $2.2 billion.

Notable among Wednesday's execution were two deals that were massively upsized and still priced at the tight end of price talk.

Endo accomplished that feat, and came as a drive-by deal to boot.

The Malvern, Pa.-based specialty health-care company priced an upsized $750 million issue of 8.5-year senior notes (B1/B) at par to yield 5 3/8%.

The deal was upsized from $500 million.

The yield printed at the tight end of yield talk in the 5½% area.

Citigroup and RBC were the joint bookrunners.

Endo plans to use the proceeds for general corporate purposes, which may include acquisitions, including the acquisition of Dava Pharmaceuticals, Inc.

Memorial doubled and tight

Memorial Resource Development doubled the size of its deal to $600 million from $300 million and priced the issue of eight-year senior notes (Caa1/B-) at par to yield 5 7/8%.

The yield printed at the tight end of yield talk in the 6% area; that talk came at the tight end of earlier guidance of 6% to 6¼%, a trader said.

Citigroup, BofA Merrill Lynch, Barclays, BMO, J.P. Morgan, RBC and Wells Fargo were the joint bookrunners.

The Houston-based upstream master limited partnership plans to use the proceeds to repay bank debt.

CNH prints a three-handle

CNH Industrial Capital LLC priced a $500 million issue of non-callable 3 3/8% five-year senior notes (Ba1/BB) at 99.426 to yield 3½%.

The yield printed at the wide end of the 3 3/8% to 3½% yield talk.

The quick-to-market deal was announced at benchmark size on Wednesday morning and was marketed by means of a roadshow presentation that was made available on the internet to qualified investors. There was no investor call.

Joint bookrunner Barclays will bill and deliver. BNP Paribas, BofA Merrill Lynch and Credit Suisse were also joint bookrunners.

Proceeds will be used to fund working capital, to repay debt and for general corporate purposes.

AV Homes five-year deal

AV Homes priced a $200 million issue of five-year senior notes (Caa1/B-) at par to yield 8½%.

The yield printed on top of yield talk but wide of earlier guidance in the 8% area, according to a junk bond trader.

There were also covenant changes.

JPMorgan, Citigroup, RBC, Credit Suisse and Deutsche Bank were the joint bookrunners.

The Kissimmee, Fla.-based homebuilder plans to use the proceeds for general corporate purposes, including land purchases, land development, home building and acquisitions.

SAExploration five-year secured

SAExploration Holdings priced a $150 million issue of 10% five-year senior secured notes (Caa1/B-).

Earlier in the day the deal was talked with a yield in the 10% area.

Jefferies ran the books.

The Houston-based oilfield services company plans to use the proceeds to refinance debt and fund the one-time purchase of equipment for its Alaska operations.

Boparan: Two tight, one inside

Boparan Finance plc priced three tranches of senior notes (B1/B+).

The deal included a £250 million tranche of five-year notes that priced at par to yield 5¼%, at the tight end of the 5¼% to 5½% yield talk.

Boparan also priced a £330 million tranche of seven-year note at par to yield 5½%,at the tight end of the 5½% to 5¾ yield talk.

In addition, the company priced a €300 million tranche of seven-year notes at par to yield 4 3/8%. The yield for the euro-denominated notes priced 12.5 basis points inside of the 4½% to 4¾ yield talk.

Global coordinator Goldman Sachs International will bill and deliver. JPMorgan is also a global coordinator.

Barclays, BNP Paribas, HSBC and Royal Bank of Scotland are the joint bookrunners.

Proceeds will be used to repay the company’s existing notes due 2019, for working capital and for general corporate purposes.

Novafives two-part secured

France-based Novafives SAS priced a €580 million two-part offering of senior secured notes (B1/BB-).

The Paris-based industrial engineering group priced a €380 million of seven-year fixed-rate notes at par to yield 4½%, the tight end of the 4½% to 4¾% yield talk.

The company also priced a €200 million tranche of six-year floating-rate notes at par to yield three-month Euribor plus 400 bps, the tight end of the Euribor plus 400 bps to 425 bps spread talk.

Global coordinator JPMorgan will bill and deliver. Deutsche Bank is also a global coordinator.

Barclays, BNP Paribas, HSBC and SG CIB are joint bookrunners.

Proceeds will be used to refinance debt.

Debenhams upsized and tight

In the European session, Debenhams plc launched and priced an upsized £225 million offering of non-callable seven-year senior notes (Ba3/BB-) at par to yield 5¼%.

The deal is upsized from £200 million.

Yield talk was 5¼% to 5½%.

Physical bookrunner Barclays will bill and deliver. Royal Bank of Scotland and Lloyds were also physical bookrunners.

The London-based department store chain plans to use the proceeds to refinance debt.

Talking the deals

Carlson Wagonlit Travel talked its $360 million offering of five-year senior PIK toggle notes (Caa1//) to yield in the 7¾% area.

Books close at 10:30 a.m. ET on Thursday, and the deal is set to price thereafter.

Morgan Stanley and JPMorgan are the joint bookrunners.

Elsewhere, Crown European Holdings SA, a subsidiary of Crown Holdings Inc., talked its €500 million offering of non-callable eight-year senior notes (expected Ba1/confirmed BB-) with a yield in the 4% area.

Books close Wednesday for accounts in the United States but will remain open for European accounts until 6 a.m. ET on Thursday.

The deal is set to price thereafter.

BNP Paribas and Royal Bank of Scotland are joint physical bookrunners.

BofA Merrill Lynch, Barclays, Credit Agricole CIB, Deutsche Bank, Santander and Wells Fargo are joint bookrunners.

RJS Power brings $1.25 billion

RJS Power Holdings LLC began a roadshow on Wednesday for a $1.25 billion offering of five-year senior notes, according to market sources.

JPMorgan, Citigroup Global Markets, Goldman Sachs & Co. and Morgan Stanley & Co. are the joint bookrunners for the Rule 144A and Regulation S for life offer.

Barclays, BNP Paribas, BofA Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Mitsubishi UFJ and RBC Capital Markets are the co-managers.

The deal is structured as a five-year senior note with two years of call protection, with the notes becoming callable after two years at par plus 50% of the coupon. And the notes feature a 101% change of control put and high-yield covenants.

If the merger of PPL Energy Supply LLC with RJS Power Holdings is consummated, the new entity, Talen Energy Corp., will be the issuer. In that event the deal will be structured as a five-year bullet with investment-grade covenants, and there will be no change of control put. In this scenario, the coupon will feature a 50 bps step-down in the event that combined ratings are better than either Ba2 from Moody's and BB- from Standard & Poor's, or Ba3 from Moody's and BB from Standard & Poor's.

The Maryland-based power producer plans to use the proceeds to repay bank debt.

C&S starts roadshow

C&S Group Enterprises began a roadshow on Wednesday for a $400 million offering of eight-year notes, according to market sources.

The deal comes with guidance in the low-to-mid 5% yield context, a trader said.

Pricing is expected on Friday.

JPMorgan, BofA Merrill Lynch, Wells Fargo Securities and BMO Securities are the joint bookrunners for the Rule 144A and Regulation S for life offer.

SunTrust Robinson Humphrey and US Bancorp are the co-managers.

The notes come with three years of call protection.

The Keene, N.H.-based wholesale grocery distributor plans to use the proceeds to fund the tender for its 8% notes due 2017.

Memorial moves up

In the secondary market, traders saw some upside in the new 5 7/8% notes due 2022 that Memorial Resource Development did.

A trader saw the bonds bid at 100 5/8, up from their par pricing levels.

A second trader pegged the upsized and quick-to-market issue at 101 1/8 bid, 101 5/8 offered.

And at another shop, the bonds were seen going home in a narrow 101 to 101 1/8 context.

Out of that same energy sector, SAExploration Holdings’s 10% senior secured notes due 2019 were going out offered at 100 3/8, with no offer levels seen.

That was up from the par level at which the paper had come to market.

Another trader later quoted them at 100¾ bid, 101¼ offered.

Endo International’s new 5 3/8% notes due in January of 2023 firmed to 100¼ bid, 100½ offered, versus their par pricing level.

Wind blows lightly higher

Wind Telecomunicazioni SpA’s new 4¾% senior secured notes due 2020 were seen by a trader offered in a 100 to 100¼ context.

Another trader quoted them at 100¼ bid, 100½ offered.

The Rome-based wireless, landline and internet telecommunications company had priced that $1.9 billion of new paper at par on Tuesday via its Wind Acquisition Finance SA subsidiary, along with €575 million of senior secured floating-rate notes and €2.15 billion of 4% senior secured notes, both also due in 2020.

Hilcorp heads higher

Among other issues that priced on Tuesday, Hilcorp Energy’s 5% notes due in December of 2024 were seen by a trader “wrapped around” 101½; he quoted them in a 101 3/8 to 101 5/8 context.

The Houston-based oil and natural gas exploration and production company had priced its $500 million of those bonds at par in a quick-to-market transaction, and they had moved up to trading between 100¼ and 100½ bid when they moved into the aftermarket.

The new Belden Inc. 5¼% senior subordinated notes due 2024 were seen having stabilized at the solidly higher level they had reached in Tuesday’s initial aftermarket dealings.

The St. Louis-based electric wire and cable producer’s paper had advanced to a 100 7/8 to 101 bid context, up from the par level at which the quick-to-market deal had priced.

Market indicators stay mixed

Statistical indicators of junk market performance meanwhile were mixed for a second consecutive session on Wednesday after having been higher across the board on Thursday, Friday and again on Monday.

The KDP High Yield Daily index was unchanged for a second straight session at 75.05 after having been up for the previous three sessions including Monday, when it rose by 5 bps.

Its yield was also unchanged at 4.93%, its second straight day at that level. It had declined by 1 bp on Monday.

The Markit CDX Series 22 index rose by ¼ point on Wednesday to end at 108 7/8 bid, 109 offered; on Tuesday it had lost ¼ point.

But the widely followed Merrill Lynch High Yield Master II index finally posted a loss – its first after 15 straight upside sessions, a winning streak that dated back to May 26.

It was down by 0.075%, versus Tuesday’s 0.01% advance.

That dropped its year-to-date return to 5.648% from Tuesday’s 5.727%, which had been its 14th straight new peak level for 2014.

Its yield-to-worst rose to 4.897% from Tuesday’s 4.847%, which had been its fourth consecutive new low for the year as well as an all-time low level.

Its average issue price declined to 105.852, down from Tuesday’s105.9529 and again from Monday’s 105.9617, which had been its third straight new high for the year.

And its spread-to-worst over comparable Treasury issues widened a little to 362 bps from Tuesday’s 355 bps and from Monday’s 353 bps, which was its third successive new tight level for 2014.

Although junk-bond yields are currently at their all-time lows, spreads remain up by more than 100 bps from their historical tight levels around 250 bps over comparable Treasuries, first set back in 1997 and then matched in 2007.

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