Windstream, Speedway add-on drive by, up in trading; new MarkWest bonds are again active

By Paul Deckelman and Paul A. Harris

New York, Jan. 8 - The high-yield primary market saw another sizable, quickly shopped bond deal on Tuesday as telecommunications operator Windstream Corp. priced $700 million of new 10.5-year notes.

Traders said the new bonds were up solidly when they hit the aftermarket.

The day also saw a quick-to-market $100 million add-on to an existing bond issue from Speedway Motorsports Inc. Those bonds were also quoted higher on the break, although trading in the smallish addition was limited.

There was brisk trading for a second straight day in MarkWest Energy Partners LP's new 10-year notes, which had priced on Monday and then racked up heavy aftermarket volume. The oil and gas operator's bonds were seen holding onto the gains they had notched when freed after pricing.

Away from credits actually priced, high-yield syndicate sources said that SunCoke Energy Partners, LP and Halcon Resources Corp. announced new deals, the latter an add-on to an existing series of notes. Interface Security Systems Holdings, Inc. was also heard to be shopping around a new deal.

Apart from the new-deal realm, traders said that the junk market maintained the strong tone seen over the past few sessions, but they didn't see any issues really standing out. Secondary market performance measures remained higher across the board.

Windstream oversubscribed

Tuesday became 2013's first multiple-deal day as a pair of issuers raised a combined $800 million.

In a drive-by deal that was multiple-times oversubscribed, according to a trader, Windstream priced a $700 million issue of 6 3/8% 10.5-year notes (Ba3/B/BB+) at par to yield 6.374%.

The yield printed at the tight end of yield talk that was set in the 6½% area.

Wells Fargo was the left bookrunner for the debt refinancing.

Barclays, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, Mitsubishi, Morgan Stanley and SunTrust were the joint bookrunners.

Reverse inquiry for Speedway

In a deal that was driven by reverse inquiry, according to market sources, Speedway Motorsports priced a $100 million add-on to its 6¾% senior notes due Feb. 1, 2019 at 105.

The reoffer price, which came at the rich end of the 104.5 to 105 price talk, rendered a 5.361% yield to worst.

The bonds were trading at 106½ bid, 107¼ offered at the close, according to a trader.

Merrill Lynch, J.P. Morgan, SunTrust and Wells Fargo were the joint bookrunners.

Proceeds will be used to repay the outstanding term loan under the existing credit facility.

Following this offering, the company expects to enter into a new $350 million credit facility, with a portion of those proceeds being used to redeem its 8¾% senior notes due 2016.

Halcon tap for Wednesday

Looking to the Wednesday session, Halcon Resources plans to host an investor call at 11:30 a.m. ET to discuss a proposed $400 million add-on to its 8 7/8% senior notes due May 15, 2021 (expected ratings B3/CCC+).

The deal is set to price on Wednesday afternoon.

Joint global coordinator Wells Fargo is the left bookrunner. RBC is also a joint global coordinator.

J.P. Morgan, Barclays and Goldman Sachs are the joint bookrunners for the debt refinancing and general corporate purposes deal.

Also on Wednesday, look for an issuer at the higher end of the high-yield credit spectrum to bring a $500 million drive-by deal via Merrill Lynch, a market source advised.

"People have been looking for $25 billion to $30 billion of new issuance in January," the source remarked, adding that, at Tuesday's close, there was just $2.7 billion in the book thus far in 2013.

"I guess things will have to pick up in order to reach those expected totals," the source commented.

Citigroup may have a couple of deals to announce before the end of the week, the market source added.

Interface Security roadshow

Elsewhere on Tuesday, Interface Security Systems Holdings and Interface Security Systems LLC started a roadshow on Tuesday in New York for their $225 million offering of five-year senior secured notes (confirmed B3/expected B-).

Imperial Capital is the manager for the debt refinancing and general corporate purposes deal.

SunCoke seven-year deal

SunCoke Energy began a roadshow for its $150 million offering of seven-year senior notes (B1//).

J.P. Morgan, Barclays and RBC are the joint bookrunners.

In conjunction with the notes offer, the company has undertaken an initial public offering of 13.5 million of its common units.

The Lisle, Ill.-based producer of metallurgical coke plans to use the proceeds from the notes and units to repay a portion of its term loan, fund a distribution to SunCoke Energy, Inc. and fund cash on the balance sheet at the master limited partnership level in order to prefund obligations.

Windstream deal trades up

When Windstream's 6 3/8% notes due 2023 were freed for secondary dealings, a trader heard the Little Rock, Ark.-based telecommunications company's new deal quoted at 101 bid on the break, up from their par issue price earlier in the session.

He later saw a two-sided market at 101¼ bid, 102¼ offered, and estimated that the bonds would trade in a 1011/2-to-102 context.

A second trader said that the quick-to-market bonds were trading at 101¼ bid, 101¾ offered.

Speedway add-on firmer

The day's other new issue, from Concord, N.C.-based automotive racetrack operator Speedway Motor Sports, was also heard to have firmed, although traders said that trading in the smallish same-day add-on offering to its existing 6¾% notes due 201s limited.

Two traders at different shops each saw those bonds at 106½ bid, 107 offered, versus their 105 issue price, with one remarking that the bonds "were probably right back to where they were" before news of the new deal.

MarkWest stays busy

A market source saw MarkWest Energy Partners' and MarkWest Energy Finance Corp.'s new 4½% notes due 2023 trading at 101 3/8 bid on mid-afternoon volume of some $40 million, putting that credit right at the top of the Junkbondland most-actives list.

It was the second straight session of heavy trading for the Denver-based oil and natural gas exploration and production company's $1 billion offering. That quick-to -market deal had priced at par on Monday and then traded up later that session, eventually rolling up volume of more than $100 million as the bonds firmed to around the 101½ bid, 102 offered area.

On Tuesday, a trader said that the deal had "faded a little bit during the day, but it finished up strong," bid between 101½ and 1013/4, "which is up around the highs."

Yet another trader saw them between 101½ and 1013/4, or 102 bid.

Crown hangs in

A trader said that the new Crown Holdings, Inc. 4½% notes due 2023 that priced on Thursday "look like they've settled in, wrapped around 101."

He quoted them in a 100 7/8-to-101 1/8 context.

He said the $800 million issue "has been relatively active, but obviously, a lot more of the focus has been on MarkWest" and was likely to now shift to Tuesday's Windstream deal.

Crown, a Philadelphia-based maker of beverage cans and other consumer packaging products, priced its deal - upsized from an initially shopped $500 million - at par on Thursday in a quick-to-market transaction via its Crown Americas LLC and Crown Americas Capital Corp. IV subsidiaries.

The paper was initially quoted at 101 bid when it was freed, although another trader saw them get as good as 101 5/8 bid, 102 offered.

The notes dropped back to a little above 101 in Friday's dealings were seen trading on Monday around 1001/4, with one trader seeing them locked at that level.

Secondary stays quiet

A trader said that away from the new-deal world, Tuesday's session was "pretty quiet, unfortunately."

For instance, he said that Energy Solutions Inc.'s 10¾% notes due 2018 - one of the big winners in Monday's session - "held the gains from yesterday," but went no further.

Those bonds had jumped by about 7 points, to a 102-to-103 bid context, on the news that the Salt Lake City-based company, which provides a range of services to the nuclear power industry, had agreed to be acquired by a subsidiary of Energy Capital Partners II, LLC for $3.75 per share in cash - a transaction with an enterprise value of $1.1 billion.

Sears up on CEO exit

Elsewhere, Sears Holdings Corp.'s bonds moved up following Monday's announcement that its current chief executive officer, Louis J. D'Ambrosio, will leave his post in February due to what are described as "family health matters."

The company's chairman, Edward S. Lampert, will take over that role in addition to his current duties.

The Hoffman Estates, Ill.-based department store operator's bonds reacted positively to the news, as a trader saw its 6 5/8% notes due 2018 rising "almost" 1½ points to end around 95 bid.

However, not everyone in the investment community was as pleased as the bondholders seemed to be; Sears' Nasdaq-traded shares tumbled by $2.76, or 6.43%, to end at $40.16. Volume was 5.1 million shares, or more than four times the norm.

And back in the bond world, Gimme Credit LLC analyst Evan Mann said in a research note: "While we acknowledge Mr. Lampert's insight and expertise when it comes to 'financial engineering,' we are concerned about his lack of merchandising experience at a time when the retailer is struggling to turn around its core Sears and Kmart chains."

Hedge fund operator Lampert was responsible for bringing in Kmart to the Sears fold in 2005.

The New York-based independent research fund also said that despite a decent liquidity cushion, "Sears has a lot of work to do righting the ship."

Published reports said that Lampert is rumored to have a plan to wring out value from the company, but the plan is said to include selling off the brands under Sears that have retained good reputations.

AMD rises despite downgrade

Advanced Micro Devices Inc.'s bonds were inching higher, despite a downgrade from Standard & Poor's that was based on the ratings agency's belief that the Sunnyvale, Calif.-based computer chip maker will continue to struggle as competition increases.

S&P cited expectations that revenues and earnings will remain weak because of declining demand in the overall PC market, as well as a loss of market share to competitors such as industry leader Intel Corp.

Even so, a trader said that the company's bonds were unchanged to better on the day. He pegged its 8 1/8% notes due 2017 at 92 5/8 bid and its 7¾% notes due 2020 at 853/4.

Despite the downgrade, S&P did note that AMD has good liquidity, along with an "opportunity to stabilize its operating performance in 2013."

Exide off its highs

A trader said there has been "a fair amount of activity" lately in Exide Technologies Inc.'s paper, which continued on Tuesday, as more than $13 million of its 8 5/8% notes due 2018 changed hands.

A market source saw the Milton, Ga.-based storage battery manufacturer's bonds get as good as 90½ bid during the session, but by the end of the day, they had come off that peak level to close around 87 7/8 bid, down 3/8 point from Monday's round-lot finish.

However, another trader noted that Exide's bonds have been "near the high end of its trading range" over the past few sessions.

He said, "This bond tends to trade down to around the 80 level and then back up to the mid 80s," having moved up to around 88 at the close on Monday at staying near there on Tuesday.

He said that the climb to those higher levels "is a function of lack of supply, yield" - the bonds are attracting would-be buyers with a yield level currently north of 11% - "and no bad news."

The trader also pointed out that Exide improved last week, helped by what were perceived as positive sales trends at Ford Motor Co. and Chrysler LLC. That carried over into the junk bond market this week, with Auburn Hills, Mich.-based No. 3 carmaker Chrysler's paper strengthening. The 8¼% notes due 2021 pushed into a 112-to-113 bid context from last week's levels around 111, while its 8% notes due 2019 were around 110-to-111.

He also saw strength in Goodyear Tire & Rubber Co.'s bonds, the 8¼% notes due 2020 around 111 bid.

Indicator improvement

Statistical junk market performance indicators were mostly better on Tuesday.

The Markit Series 19 CDX North American High Yield index eased by 1/8 of a point to close at 102¼ bid, 102½ offered, after having gained 1/16 of a point for a second straight session on Monday.

But the KDP High Yield Daily index rose for a sixth consecutive session on Tuesday, moving up by 4 basis points to end at 75.83, after having gained 7 bps for a third straight time on Monday. Its yield came in by 3 bps for a second straight day to end at 5.52% to mark its fifth straight decline.

And the widely followed Merrill Lynch U.S. High Yield Master II index notched its sixth straight gain on Tuesday, rising by 0.09% on top of Monday's 0.166% advance.

That lifted its year-to-date return to 0.963%, a new peak level for the year so far, from 0.872% on Monday.

The index's yield to worst meantime continued to decline on Tuesday, coming in to5.845% from 5.873% on Monday, while its spread to worst versus the comparable Treasury issues remained at 495 bps, the same as on Monday.

Stephanie N. Rotondo contributed to this report

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