Denbury megadeal, Tenet drive by; new Tenets gain; calendar builds; post-holiday activity dull

By Paul Deckelman and Paul A. Harris

New York, Jan. 22 - The high-yield market returned to work on Tuesday after the extended holiday break, but traders saw activity on the dull side with not everyone back in place yet. They suggested that the growing forward calendar would remain the central focus for now.

Two dollar-denominated junk-rated deals priced during the session, both of them as quickly shopped "drive-by" offerings.

Energy operator Denbury Resources, Inc. priced an upsized $1.2 billion of 10-year senior subordinated notes, although that deal came too late in the day for any kind of an aftermarket.

Earlier, hospital operator Tenet Healthcare Corp. priced $850 million of secured eight-year notes, which rose more than a point when they began trading around.

Among the bonds that priced last week, building products maker Gibraltar Industries, Inc.'s eight-year deal was seen having moved up from the strong initial aftermarket gains it had posted. Other issues, like Gen Corp Inc.'s eight-year secured notes and Zachry Holdings, Inc.'s seven-year paper, held on to their Friday gains.

WEX Inc. and DigitalGlobe, Inc. announced planned new deals that are expected to price later this week, while Sabine Pass Liquefaction LLC added a $1 billion secured deal that is expected to come to market early next week.

Out of Europe came news that British issuer Arrow Global Finance plc had priced an upsized €220 million offering of seven-year secured notes. Irish packaging concern Smurfit Kappa Acquisitions scheduled a €300 million issue of secured notes expected to price on Wednesday.

Statistical measures of market performance were higher across the board.

Big upsize for Denbury

Two dollar-denominated issuers, each packing one large tranche of bonds, raised $2.05 billion as the market got under way on Tuesday.

Both deals came as drive-bys, priced at the tight end of price talk and will bear interest at rates well below 5%.

Denbury Resources priced an upsized $1.2 billion issue of 10.5-year senior subordinated notes due July 15, 2023 (B1/BB) at par to yield 4 5/8%.

The yield printed at the tight end of the 4 5/8% to 4 7/8% yield talk.

Bank of America Merrill Lynch, J.P. Morgan, Credit Suisse, Wells Fargo, RBC and Credit Agricole were the joint bookrunners for the quick-to-market deal, which was upsized from $1 billion.

Proceeds will be used to fund the tender for the company's outstanding 9¾% notes and 9½% notes due 2016, to repay borrowings under the credit facility and for general corporate purposes.

Tenet secured deal

Tenet Healthcare priced an $850 million issue of non-callable eight-year senior secured notes (B1/B+) at par to yield 4½%.

The yield printed at the tight end of the 4½% to 4¾% yield talk.

The deal traded up a point in the secondary, an investor said, well after the Tuesday close.

Merrill Lynch, Barclays, Citigroup and Wells Fargo were the joint bookrunners.

The Dallas-based health care services company plans to use the proceeds to fund the tender for its 10% senior secured notes due 2018, to purchase other outstanding senior secured notes and for general corporate purposes.

Sabine to sell $1 billion

Sabine Pass Liquefaction, a subsidiary of Cheniere Energy Partners, LP, plans to host an investor call at 10:30 a.m. ET on Wednesday to discuss its $1 billion offering of non-callable eight-year senior secured notes (expected ratings Ba3/BB+).

The deal is expected to price early in the week ahead.

Morgan Stanley, Credit Suisse, RBC, Deutsche Bank, SG, Standard Chartered, HSBC, J.P. Morgan, Mitsubishi and Credit Agricole are the joint bookrunners.

The Houston-based liquid natural gas company plans to use the proceeds to pay capital costs in connection with the construction of the LNG train 1 and train 2.

DigitalGlobe eight-year deal

DigitalGlobe expects to price a $500 million offering of eight-year senior notes on Friday.

The deal is in the market via joint bookrunners Morgan Stanley, J.P. Morgan, Mitsubishi and Citigroup.

The company is also putting in place a $700 million senior secured credit facility.

Proceeds from the debt financing, together with cash on hand, will be used to fund the cash portion of DigitalGlobe's merger with GeoEye, Inc., as well as to refinance debt under DigitalGlobe's existing credit facility and to fund the discharge and redemption of all of GeoEye's outstanding 9 5/8% senior secured notes due 2015 and its 8 5/8% senior secured notes due 2016.

WEX 10-year notes

WEX is selling a $350 million offering of senior notes due 2023 (expected ratings Ba3/BB) via left bookrunner Wells Fargo.

The deal is expected to price during the present week.

Merrill Lynch, SunTrust and RBS are the joint bookrunners.

The South Portland, Maine-based provider of corporate card payment services plans to use the proceeds to repay a portion of the debt outstanding under the company's senior secured credit facility.

Arrow Global inside talk

The European high-yield primary market's news volume was exceptionally high on Tuesday and can be expected to remain that way for the time being, a London-based debt capital markets banker advised.

England-based Arrow Global Finance priced an upsized £220 million issue of seven-year senior secured notes (B2/BB-) at par to yield 7 7/8%.

The deal was upsized from £200 million.

The yield printed 12.5 basis points through the low end of the 8% to 8¼% yield talk, as it was expected to do, the banker said.

Right now, European accounts are laboring beneath record-setting cash inflows, the banker said, citing anecdotal information based upon conversations with the buyside as well as reports from the mainstream financial press.

People are piling into high yield, and underwriters are telling issuers that the time to come is right now, the source added.

Joint bookrunner Goldman Sachs will bill and deliver for the Arrow Global debt refinancing deal. JPMorgan was also a joint bookrunner.

Smurfit for Wednesday

Elsewhere in the euro-junk market, on-the-run issuer Smurfit Kappa Acquisitions has set an investor conference call at 10 a.m. GMT on Wednesday to discuss its €300 million offering of non-callable seven-year senior secured notes (expected ratings Ba2/BB).

The deal is expected to price later on Wednesday.

Joint lead manager Deutsche Bank will bill and deliver for the debt refinancing deal. Citigroup, Credit Agricole, Credit Suisse, JPMorgan and Royal Bank of Scotland are also joint lead managers.

ENCE Energia roadshow

Spain's ENCE Energia y Celulosa, S.A. began a roadshow on Tuesday in London for its €250 million offering of seven-year senior secured notes.

Joint bookrunner Deutsche Bank will bill and deliver. BBVA, Banesto, Bankia, Barclays and Citigroup are also joint bookrunners.

The Madrid-based pulp producer and renewable energy generator plans to use the proceeds to repay debt.

Zobele five-year deal

Italy's Zobele Holding SpA plans to sell €180 million of five-year senior secured notes (expected B2/B).

The deal is set to price at the conclusion of an investor roadshow that is scheduled to wrap up on Thursday.

Joint global coordinator Goldman Sachs will bill and deliver for the debt refinancing. Unicredit is also a joint global coordinator.

Tenet trades up

When Tenet Healthcare's new 4½% senior secured notes due 2021 were freed for secondary market dealings, the Dallas-based hospital operator's new paper was heard to have traded in a narrow 101 to 101¼ bid range, with a trader seeing most of the action around 101 1/8 bid.

A second trader also saw the bonds at 101-to-1011/4.

The new Denbury Resources 4 5/8% notes came to market too late for any kind of secondary dealings.

Early activity fades

One of the traders said that Tuesday's session was characterized by "a little bit of follow-on trading" on some of the names priced last week.

He said that things "were kind of busy in the morning, then it was lunchtime, and [the market] never got started again."

He suggested that "some guys probably took a long weekend," even on top of the three-day holiday break that saw trading wind down early on Friday, followed by a full market shutdown on Monday in observance of the Martin Luther King Day holiday.

He also noted, "There's still a lot of cash out there. Everybody's waiting for the calendar."

Friday deals hold gains

Among the deals that priced on Friday, a trader saw Gibraltar Industries' 6¼% senior subordinated notes due 2021 trading around the 104 bid area, while a second quoted the Buffalo-based building products company's deal get as good as 104½ bid, 105½ offered, which he called a three-quarter point gain.

That $210 million offering had priced at par and moved up to above the 103 bid area in initial aftermarket dealings on Friday.

A trader said that GenCorp's 7 1/8% second-priority senior secured notes due 2021 were trading near the same 1031/4-to-103½ range at which the Sacramento, Calif.-based aerospace and defense company's $460 million issu8e had traded on Friday after pricing at par.

A second trader pegged the bonds in a 103-to-103¼ bid context.

A trader saw Zachry Holdings' 7½% notes due 2020 at 102¾ bid, 103¾ offered, up a little from Friday's 102½ bid, 103¼ offered quote.

He said that having seen a 102¾ bid fairly late in the session, "they might be as good as a 103 bid, but 103 to 103½ covers it."

A second trader saw the San Antonio, Texas-based engineering concern's $250 million offering about unchanged from Friday's levels.

Earlier deals trade around

A trader saw Georgia Gulf Corp.'s 4 7/8% notes due 2023 open at 102¼ bid, 102¾ offered, later going out at 102 1/8 bid, 102 3/8 offered.

A second trader saw the Atlanta-based chemical company's quick-to-market $450 million issue at 102 bid, 102¼ offered, calling that down a quarter-point from the levels the bonds hit after pricing at par on Thursday.

The second trader also saw the Georgia Gulf-related Eagle Spinco 4 5/8% notes due 2021 at 102¼ bid, 102¾ offered, unchanged from Friday's level. The first trader didn't see any Tuesday action in that latter deal.

Eagle SpinCo, a specialty vehicle for financing GGC's acquisition of PPG Industries' commodity chemicals operation, priced $688 million of notes at par as a scheduled forward-calendar issue also on Thursday.

Clearwater Paper Corp.'s 4½% notes due 2023 were seen on Tuesday at par bid, 100½ offered. That was up a little from the 99¾ bid, 100¾ offered level seen late Friday.

The Spokane, Wash.-based paper manufacturer had priced its quick-to-market $275 million offering on Thursday at par, and the new bonds firmed slightly to 100½ bid, 101 offered by the day's end, but came off those levels in Friday's dealings.

The Hexion U.S. Finance Corp. 6 5/8% notes due 2020 traded at 100 5/8 bid, 100 7/8 on Tuesday, a trader said, "a little lower" than the 101 1/8 bid levels seen on Thursday and Friday.

Hexion, a unit of Columbus, Ohio-based Momentive Specialty Chemicals Inc., priced that $1 billion of the bonds on Wednesday as an add-on to its existing notes, at 100.75 to yield 6.45%.

A trader said that he did not see anything at all going on Tuesday in SunCoke Energy Partners, LP's 7 3/8% notes due 2020. The last he had seen on the issue was a 104 bid on Friday.

He noted that "it was just a small deal," at $150 million and thus "is one that's more likely to go away and not see any markets because of its size."

The bonds had moved up smartly to the 104 bid level after the Lisle, Ill.-based producer of metallurgical coke and its SunCoke Energy Partners Finance Corp. subsidiary had priced their deal at par off the forward calendar last Wednesday.

Market measures stay strong

Overall, he said that while there was "some secondary" activity, "there was not a lot of change."

Issues, he said, were mostly "up a quarter-point to down a quarter, depending on who needed to put money to work and who needed to raise cash."

Statistical junk market performance indicators were generally better for a fourth straight session on Tuesday.

The Markit Series 19 CDX North American High Yield index gained 1/16 of a point on Tuesday to end at 102 5/8 bid, 102¾ offered, on top of Friday's 1/8 point rise. It was the index's third straight gain.

The KDP High Yield Daily index was up by 1 basis point Tuesday, its second straight gain, ending at 75.91. It had risen by 4 bps Friday. The index's yield was unchanged after coming in by 2 bps to 5.46% on Friday.

The widely followed Merrill Lynch U.S. High Yield Master II index was up for a fifth straight session on Monday, gaining 0.063%, on top of the 0.06% rise recorded in very light dealings on Monday with most U.S. trading closed. This followed Friday's 0.086% advance.

Tuesday's gain lifted its year-to-date return to 1.665%, a new peak level for the year so far, eclipsing the old mark, 1.601%, notched on Monday, and it was up as well from Friday's 1.54% reading.

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