No deals price but calendar builds; Access Midstream up on Williams merger plan; Forest falls

By Paul Deckelman and Paul A. Harris

New York, June 16 – The high-yield primaryside started the new week on Monday on a relatively quiet note with no new issues pricing.

However, syndicate sources said the forward calendar was building as several new junk bond deals were announced during the day with the companies all starting roadshows to market them to potential investors.

They said that Evertec, Inc., which processes credit card transactions in the Caribbean and Latin America, is shopping a $400 million eight-year secured notes deal around for pricing at the end of the week.

Global Partners LP, a midstream oil and gas company, plans to sell $375 million of eight-year notes, with pricing expected this week.

Low-cost airline operator Allegiant Travel Co. will be doing a $300 million five-year notes deal.

And oilfield services provider SAExploration Holdings, Inc. is offering $150 million of five-year secured notes.

Sources heard price talk on railroad operator All Aboard Florida’s upsized $405 million of five-year secured PIK toggle notes, which are expected to price on Tuesday afternoon.

Away from the new deals, traders said that Access Midstream Partners LP’s bonds firmed smartly, some of them in heavy trading, on the news that the Williams Cos. Inc., which already owns a chunk of the Oklahoma City-based midstream energy partnership, plans to acquire a 100% interest in its general partnership entity and a 50% stake in its limited partnership entity.

Out of the same energy sector, however, came the news that Forest Oil Corp. has postponed syndication on an $850 million bridge loan planned to be part of the funding for Sabine Oil & Gas LLC’s previously announced acquisition of Forest. That news caused a slide in the company’s bonds and its shares in heavy trading.

Overall, statistical indicators of junk market performance were mixed for a fourth consecutive session.

All Aboard upsize, talk

All Aboard Florida upsized its offering of five-year senior secured PIK toggle notes to $405 million from $390 million and talked the notes to price with a cash yield in the 12% area, amid numerous changes to the structure of the deal.

The PIK toggle coupon is structured so that the first coupon payment will be 50% cash and 50% PIK. Thereafter, coupon payments may be made entirely in cash, or 50% cash and 50% PIK, with the PIK coupon paying a 75 basis points increase to the cash coupon.

Books close at 2 p.m. ET on Tuesday, and the deal is set to price Tuesday afternoon.

J.P. Morgan and Morgan Stanley are the joint bookrunners for the project financing.

Evertec five-year bullet

Puerto Rico-based transaction clearing company Evertec began a roadshow on Monday for its $400 million offering of non-callable eight-year senior secured notes (expected ratings B1/BB-).

The debt refinancing deal, via joint bookrunners J.P. Morgan and BofA Merrill Lynch, is set to price Friday.

Global Partners starts roadshow

Global Partners began a roadshow on Monday for its $375 million offering of eight-year senior notes.

The debt refinancing deal, via joint bookrunners BofA Merrill Lynch, J.P. Morgan, Wells Fargo and RBS, is set to price before the end of the week.

Allegiant five-year bullet

Allegiant Travel began a roadshow on Monday in Boston for its $300 million offering of non-callable five-year senior notes via bookrunner Goldman Sachs.

The roadshow wraps up on Thursday.

The Las Vegas-based low-cost airline plans to use the proceeds to pay for ownership interests in the special purpose companies owning the 12 Airbus A320 series aircraft on lease to a European carrier currently under contract and, along with cash on hand, for the purchase of 11 Airbus A320 series aircraft under contract or letter of intent for purchase during 2014 and 2015.

SAExploration roadshow

SAExploration Holdings plans to roadshow a $150 million offering of five-year senior secured notes through the end of the present week.

Jefferies LLC is the bookrunner for the debt refinancing and capital expenditures deal.

BUT sets roadshow

French home equipment retailer BUT SAS plans to start a roadshow on Tuesday for its €170 million offering of five-year senior secured notes.

The roadshow wraps up on Friday, and the deal is set to price thereafter.

Bookrunner Goldman Sachs will bill and deliver.

The Emerainville, France-based company plans to use the proceeds to repay its mezzanine facility, as well as to repay a shareholder loan and to finance a reduction of the share capital of its parent guarantor.

Access up on acquisition plan

In the secondary market, with no deals seen having priced during the session, traders said that the main focus of the day appeared to be Access Midstream Partners, whose bonds were solidly higher on the news that current investor Williams Cos. will buy up all of the 50% of outstanding general partnership interests in Access that it does not already own and will also double its current stake in the Access limited partnership entity to 50%.

Williams will buy those interests from their current owner, Global Infrastructure Partners II, for a total $6 billion in cash and equity.

The combination of the two companies would create a midstream energy powerhouse company with a market value of nearly $40 billion. It also put forward an offer to merge Access with its own Williams Partners LP partnership entity, a proposal that the Access board said it would consider.

Access’ 4 7/8% notes due 2023 jumped some 1 7/8 points, a market source said, to close at 107 bid, on volume of more than $25 million, making it one of the most actively traded junk issues on the day.

The company’s 4 7/8% notes due 2024 likewise shot up by some 2 1/8 points to end just above the 107 bid line. Volume was a brisk $17 million.

Access’ 5 7/8% notes due 2021 rose 1½ points to end at 107¾ bid, with more than $14 billion changing hands.

The biggest rise came in the Access 6 1/8% notes due 2022, which were up more than 2¼ points to end at 111 bid. But only about $2 million of the activity was in round-lot-sized transactions, with the rest coming in smaller odd-lot transactions.

Senior analyst Philip C. Adams of the Gimme Credit independent advisory service said in a Monday research note analyzing the planned transactions that “clearly ACMP bondholders are prospective winners, as the merger with WPZ, if approved, will likely result in ratings upgrades, probably to investment grade, and sooner than ACMP would have arrived on its own.”

He said that Gimme Credit was maintaining its recent “outperform” assessment on the Access bonds, although it remains cautious on the debt of both Williams Cos., which is being lowered to junk bond status by Standard & Poor’s, and Williams Partners, even though the latter entity remains investment grade.

Access Midstream’s New York Stock Exchange-traded shares rose $1.21, or 1.85%, to end at $66.57, on volume of 2.21 million shares, over six times the norm. Williams Cos.’ NYSE shares jumped by $8.84, or 18.74%, to close at $56.02. Volume of 37.4 million shares was around eight times the usual turnover.

Forest falters on loan delay

The day’s other big news in the secondary market was the slide in Forest Oil’s bonds and its shares as well. This came on news that the Denver-based oil and gas exploration and production company had delayed – at least temporarily – its proposed $850 million bridge loan transaction, the proceeds of which are to be used to repay Forest’s existing debt as part of the previously announced acquisition of Forest by Sabine Oil & Gas.

“The funding was pulled and the bonds dropped,” a trader declared, seeing Forest’s 7¼% notes due 2019 fall some 2¾ points to 97¼ bid, on volume of over $22 million.

He saw its 7½% notes due 2020 also drop to 97¼, a 3½-point slide, though volume was only about $6 million.

Fears that the delay could throw the whole Sabine deal off track also pushed Forest Oil’s NYSE-traded shares down 43 cents, or 17.62%, to $2.01; volume of 17.5 million shares was over four times the daily average.

Sanchez hangs in

A trader said that he saw “nothing doing” among recent new deals on Monday, with “only Forest Oil and ACMP doing anything.”

However, a second trader said that the new Sanchez Energy Corp. bonds “did very well,” seeing them trading on Monday at 102 3/8 bid, 102¾ offered.

The Houston-based oil and natural gas exploration and production company priced an upsized $850 million of 6 1/8% notes due 2023 at par on Friday, after the deal was enlarged from the originally planned $700 million.

Those bonds had shot up to around a 101-to-102 bid complex in initial dealings, then firmed to above the 102 bid level late in the day on Friday and continued to build on that during Monday’s session.

Market indicators stay mixed

Statistical indicators of junk market performance, meanwhile, were mixed for a fourth consecutive session on Monday.

The KDP High Yield Daily index fell by 5 basis points to 74.98, after having gained 7 bps on Friday. Its yield, however, which would normally rise in tandem with a fall in the index reading, unusually did the exact opposite, coming in by 7 bps to close at an even 5%, its third straight narrowing.

On Friday, it had tightened by 1 bp.

The Markit CDX Series 22 index eased by 3/32 on Monday to close at 108 3/8 bid, 108½ offered, after having been unchanged on Friday. Monday’s retreat was the index’s fourth downturn in the last five sessions.

But the widely followed Merrill Lynch High Yield Master II index continued to roll along, posting its ninth consecutive gain on Monday, when it was up by 0.074%, on top of Friday’s 0.015%.

That lifted its year-to-date return to 5.355%, its eighth straight new peak level for 2014, eclipsing the old mark of 5.278% that had been set on Friday.

Several other index components also reached new milestones for the year on Monday.

The index showed an average issue price of 105.7309, a new high for the year so far. That was up from 105.711006 on Friday and up as well from the previous high for the year of 105.716789, set last Tuesday. Its yield-to-worst declined to 4.94%, a new low for the year and in fact, a new all-time low.

That was down from 4.982% on Friday and down as well from the previous 2014 and all-time low 4.977%, set this past Wednesday.

The spread-to-worst over comparable Treasury issues tightened to a new low for the year on Monday at 362 basis points, narrowing from 366 bps on Friday and from the previous tight level for the year so far of 365 bps, set this past Tuesday and matched on Wednesday.

However, although junk bond yields are currently right near their all-time lows, spreads remain well above their historical tight levels around 250 bps over comparable Treasuries, first set back in 1997 and matched in 2007.

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