Upsized Sanchez prices, also TransMontaigne and Halcon tap; new bonds rise; Wynn gains as CEO quits

Paul Deckelman and Paul A. Harris

New York, Feb. 7 – The high-yield market saw a trio of new deals totaling $1 billion get done on Wednesday, with all three regularly scheduled offerings off the forward calendar coming out of the energy sector.

The big deal of the day was oil and natural gas exploration and production operator Sanchez Energy Corp.’s upsized $500 million of five-year senior secured notes.

It was joined by refined petroleum products marketing and distribution company TransMontaigne Partners LP’s $300 million of eight-year paper.

Late in the session, E&P outfit Halcon Resources Corp. priced a $200 million add-on to its existing $425 million of 6¾% notes due 2025 that it sold last year.

Traders said that the new TransMontaigne notes firmed smartly in busy trading when they were freed for aftermarket dealings.

And they saw heavy volume at somewhat higher levels in the new Sanchez issue, although its existing paper fell.

There was also brisk trading, at higher levels, in Tuesday’s new two-part issue from modular building manufacturer Algeco Scotsman.

Away from the new or recent deals, Wynn Las Vegas LLC’s bonds shot up in active trading, after embattled CEO Steve Wynn stepped down amid sexual-abuse allegations.

Statistical market performance measures were mixed for a second straight session on Wednesday; they had turned mixed on Tuesday after having been down across the board on Thursday, Friday and again on Monday. The indicators had also been mixed last Wednesday.

Sanchez Energy upsizes

In Wednesday's primary market Sanchez Energy Corp. priced an upsized $500 million issue of 7¼% five-year senior secured first-lien notes (B1/BB-) at 98.973 to yield 7½%.

The issue size was increased from $400 million.

The yield printed at the tight end of the 7½% to 7¾% yield talk, which came tight to initial guidance in the high 7% area.

Citigroup was the left joint global coordinator. J.P. Morgan and RBC were also joint global coordinators. ABN Amro, Capital One, ING and SunTrust were joint bookrunners.

The Houston-based oil and gas exploration and development company plans to use the proceeds to repay borrowings under its existing RBL credit facility and for general corporate purposes, including capital expenditures.

TransMontaigne oversubscribed

TransMontaigne Partners LP and Finance-Co. priced a $300 million issue of eight-year senior notes (B2/BB-/BB) at par to yield 6 1/8%.

The yield printed in the middle of the 6% to 6¼% yield talk.

The deal was three-times oversubscribed, a trader said.

Joint bookrunner RBC will bill and deliver. BofA Merrill Lynch, Citigroup, Credit Suisse, MUFG and Wells Fargo were also joint bookrunners.

The Denver-based refined petroleum products marketing and distribution company plans to use the proceeds to repay debt and for general partnership purposes.

Halcon at the cheap end

Halcon Resources Corp. priced a $200 million add-on to its 6¾% senior notes due Feb. 15, 2025 (Caa1/CCC+) at 103.00, with a 6.046% yield to maturity.

The reoffer price came at the cheap end of the 103 to 103.5 price talk.

JP Morgan, Goldman Sachs, BMO, Wells Fargo, BofA Merrill Lynch, Natixis and RBC were the joint bookrunners.

The Houston-based independent energy company plans to use the proceeds to fund a portion of its recently announced acquisitions of Southern Delaware Basin assets and for general corporate purposes.

Gran Tierra mid-to-high 6% area

Gran Tierra Energy International Holdings, Ltd. is expected to price a $300 million offering of seven-year senior notes (expected ratings S&P: B+/Fitch: B+) Thursday, New York time.

Initial guidance is in the mid-to-high 6% area.

Global coordinator Credit Suisse will bill and deliver. RBC is also a global coordinator. Scotia is the joint bookrunner.

The Calgary, Alta.-based company plans to use the proceeds to repay debt under its revolving credit facility and for general corporate purposes.

TerraForm mid-6% aera

TerraForm Global, Inc. is guiding a $400 million offering of eight-year senior notes in the mid-6% area.

The deal, which is being led by Citigroup Global Markets Inc., is expected to price on Thursday.

The notes come with four years of call protection.

The Bethesda, Md.-based owner and operator of a renewable power portfolio of solar and wind assets plans to use the proceeds, together with cash on hand, to redeem in full its outstanding senior notes due in 2022.

Apex 8½% to 8¾%

Apex Group, LLC and BC Mountain Finance, Inc. plan to hold an investor conference call at 12:30 p.m. ET Thursday for purposes of marketing $325 million of five-year senior notes (existing ratings Caa1/B-).

Initial talk has the deal coming to yield 8½% to 8¾%, a trader said.

Barclays is the lead left bookrunner. Goldman Sachs, Morgan Stanley, RBC, Deutsche Bank and SMBC Nikko are the joint bookrunners.

The Sparks, Md.-based manufacturer and supplier of hand and power tools plans to use the proceeds, together with its $125 million incremental term loan B, to redeem all of the existing $450 million of senior notes due 2021.

Mixed Tuesday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Tuesday, a trader said.

High-yield ETFs saw $176 million of inflows on the day.

However actively managed high yield funds took it on the nose, sustaining $545 million of outflows on Tuesday, the source said.

TransMontaigne trades up

In the secondary arena, traders said that the new 6 1/8% notes due 2026 from Denver-based refined petroleum products marketer and distributor TransMontaigne Partners notched solid gains when they hit the aftermarket after having priced at par.

“They traded really well,” said one market source, who saw the notes firm to a 101-to-101½ bid context.

A second trader said the bonds traded in a range of 100½ to 101½ before finally going out in a tighter 101-to-101 1/8 bid neighborhood.

He said that more than $47 million of the new issue had changed hands by the close.

Sanchez slightly better

That trader said that top volume honors on the day, though, went to the new Sanchez Energy 7¼% senior secured first-lien notes due 2023 with over $113 million having traded, topping the day’s Most Actives list.

Movement in the Houston-based E&P operator’s bonds was more modest, though; he saw the new notes initially trading between 98 5/16 and 99 9/16 bid, before finally settling in late in the day in a 99¼-to-99¾ bid context, up from their 98.973 pricing level.

A second trader initially saw the paper between 98½ and 99 bid, later improving to a 99½-to-par bid range.

Sanchez’s existing paper, on the other hand, took its lumps, with the 6 1/8% issue due 2023 dropping to under 79½ bid going out, a loss of more than 2½ points on the day.

More than $19 million of those notes were traded.

Algeco issue improves

The traders meantime saw better levels in both halves of Algeco Scotsman’s new five-year deal, which had priced on Tuesday.

Its 8% senior secured notes due 2023 were seen by one trader at par bid, a gain of ¼ point from Tuesday’s close, with more than $27 million of turnover.

At another desk, a trader saw the bonds move around between 99½ and par bid, finally settling in a 99 7/8-to-par bid context.

The Baltimore-based manufacturer of portable storage units and modular structures had priced $520 million of those notes Tuesday at 97.997, yielding 8½%, and they had moved up to around a 99-to-99¾ bid range by Tuesday’s close.

The other part of that deal – its $305 million of 10% senior unsecured notes due 2023 – jumped by 1 5/8 points on Wednesday, to 98 1/8 bid, a trader said, while a second saw the notes in a 98 1/8-to-98½ bid context.

Volume was around $10 million.

The company had priced those notes at a deeply discounted 94 to yield 11½%, and they had initially moved up to around a 95-to-96½ bid range Tuesday, on just a handful of trades.

Wynn surges as CEO quits

The news that Steve Wynn had stepped down as chairman and chief executive officer of the eponymous Las Vegas-based gaming company he had founded sent Wynn Las Vegas LLC’s paper sharply higher.

“Investors were relieved that Wynn’s problems won’t be a distraction,” a trader said.

The billionaire casino mogul had recently been accused of a decades-long pattern of sexual abuse and harassment by women who worked for the company, charges which he vehemently had denied.

Those charges hammered the bonds, and the company shares down, though, at the end of January.

Its 5¼% notes due 2027 jumped on Wednesday to just under 99½ bid, a gain of more than 2½ points, with over $34 million traded, while its 5½% notes due 2025 improved by 7/8 point to 101 3/8 bid, with around $30 million changing hands.

At the Gimme Credit independent research service, senior analyst Kim Noland opined in a note that the allegations “resulted in significant negative publicity that (in his words) made it impossible for him to remain effective in his role.”

She said that “the unfolding of potential governmental (gaming board investigations) and political fallout (the company likely won't be first pick for a Japan license) probably caused Mr. Wynn and the board to decide a different role (he still owns over 11% of the stock) was more useful.”

She said that the leadership change, to new CEO Matt Maddox, likely would not have much effect on the company’s credit quality.

Indicators stay mixed

Statistical market performance measures were mixed for a second straight session on Wednesday; they had turned mixed on Tuesday after having been down across the board on Thursday, Friday and again on Monday. The indicators had also been mixed last Wednesday.

The KDP High Yield Daily Index continued to decline for a ninth consecutive session, easing by 3 basis points to 70.91, after having fallen by 15 bps on Tuesday. The index had also nosedived by 26 bps on Monday, and had swooned by 17 bps on Friday.

The Markit CDX Series 29 index lost almost 13/32 point Wednesday to end at 106 7/8 bid, 106 29/32 offered, after having pushed upwards by almost 1/8 point on Tuesday.

But the Merrill Lynch High Yield Index broke out of its rut after having been on the downside for four sessions in a row, gaining 0.324% on Wednesday, versus Tuesday’s 0.356% downturn.

The gain lifted the index’s year-to-date return to a 0.076% loss on the year, improved from Tuesday’s cumulative deficit of 0.399%, which was a new negative peak level.

Those negative levels are down from the index’s most recent positive year-to-date return of 0.181%, seen on Friday. And the current levels are well down from its 0.936% finish on Jan. 26, which had been the third consecutive new peak YTD level for the year so far.

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