Jaguar prices, jumps; EarthLink, Navios price; NewPage dives after numbers; funds gain again

By Paul Deckelman and Paul A. Harris

New York, May 12 - Jaguar Land Rover plc priced its £1 billion-equivalent, three-part offering on Thursday, consisting of two tranches of dollar-denominated notes and one tranche of sterling-denominated paper. And like the big cat whose image graces the British auto manufacturer's iconic signature product, the new bonds moved powerfully and aggressively when they hit the secondary market, with all three tranches seen up more than two points.

Also pricing during the session was internet service provider EarthLink, Inc.'s downsized $300 million eight-year deal and a quickly shopped $105 million add-on by Greek cargo-shipping company Navios Maritime Acquisition Corp. to its secured 2017 ship mortgage notes. Neither deal was seen trading in the aftermarket.

Spanish metals company Befesa Zinc ASER SA came to market with a €300 million offering of seven-year notes.

Price talk emerged on issues for CoreLogic, Inc., Regent Seven Seas Cruises, Emergency Medical Services Corp. and Houghton Mifflin Harcourt Publishers Inc., the latter sharply slashed in size. These are expected to price on Friday.

Talk was also heard on deals from overseas issuers Odeon & UCI Cinemas Group, PagesJaunes Groupe SA and Ardagh Group SA, which are also all expected to come to market on Friday.

JBS USA LLC, the American arm of Brazilian meat-processing giant JBS SA, was heard shopping around a giant two-part deal for pricing likely late next week.

In the secondary market, NewPage Corp. was the name of the day after it reported lower-than-expected earnings, causing its bonds, especially the ostensibly second-lien paper due 2012, to be hammered down mercilessly in heavy trading. Sector peers like Catalyst Paper Corp. and Appleton Papers also lost ground.

High-yield mutual funds - considered a good barometer of overall junk market liquidity trends - saw their second consecutive weekly gain, establishing a new peak level for the year to date.

Funds gain $358 million

As the session was winding down, market participants familiar with the weekly AMG high-yield mutual fund flow statistics generated by Lipper/FMI said that in the week ended Wednesday, $357.7 million more came into those weekly reporting funds than left them.

It was the second consecutive weekly inflow to the funds, following the $315.2 million cash injection seen in the week ended May 4. That inflow, in turn, followed two straight weeks of losses totaling some $190 million.

The latest inflow raised the year-to-date cumulative inflow total to an estimated $7.353 billion, a new peak level for 2011 so far, according to a Prospect News analysis of the figures. That was up from the previous week's $6.995 billion figure, which was also the previous 2011 peak level, the analysis said.

With 19 weeks gone in the year, there have now been 15 inflows recorded against just four outflows.

Fund-flow patterns began the new year on a roll with cash infusions totaling more than $8 billion seen over a 14-week stretch from early December through mid-March, including the more than $6 billion taken in during the first 10 weeks of this year. Since then, however, fund-flow patterns have been choppy: two weeks of declines in March totaling $1.146 billion followed by three weeks of inflows totaling $1.78 billion and then two more weeks of outflows, as noted, and the two latest weeks' inflows.

EPFR sees $491 million inflow

Another fund-tracking service, Cambridge, Mass.-based EPFR Global, whose methodology differs somewhat from AMG, meantime reported a $491 million inflow in the latest week, the seventh straight gain by the agency's calculations.

That followed a cash addition of $754 million in the week ended May 4.

The latest week's cash infusion lifted the year-to-date net inflow number to $20.64 billion, EPFR said.

For a second straight week, AMG/Lipper's numbers and EPFR's figures pointed in the same direction, as usual, although their actual figures differ since the two services calculate their respective fund-flow totals differently. EPFR includes results from some non-U.S. domiciled funds as well as the domestic funds. Over the two weeks ended April 20 and April 27, there had been a relatively rare divergence between the two services, with AMG reporting outflows in both of those weeks and EPFR recording inflows.

EPFR said its calculations show 17 weeks so far this year of inflows, against just two outflows.

Cumulative fund-flow estimates, whether from Lipper/FMI or EPFR, may be revised upward or downward or be rounded off and could include unannounced revisions and adjustments to figures from prior weeks.

Analysts say the continued flow of fresh cash into junk - and the mutual funds represent but a small, though observable and quantifiable percentage of the total amount of money coming in - fueled the record new deal borrowing binges seen in both 2009 and then in 2010 as well as the robust secondary market seen both years. Both of those trends have been pretty much continuing in 2011 as well.

More inflows

"People seem to have a lot of cash to put to work because you are not seeing a lot of selling into this massive calendar," remarked a trader from a high-yield mutual fund.

Elsewhere, the bank loan mutual funds crept ever closer to an uninterrupted year of inflows, according to a market source who cited a $603.7 million inflow for the week to Wednesday.

That's the 45th consecutive positive flow into the loan funds extending year-to-date flows to $13.7 billion.

Jaguar prices three-part deal

Jaguar Land Rover priced £1 billion-equivalent of senior notes (B1/B+/BB-) in three tranches on Thursday.

The Graydon, England-based automobile manufacturer priced a £500 million tranche of seven-year notes at par to yield 8 1/8%.

The yield printed on top of price talk that had been reduced from earlier talk of 8¼% to 8½%.

The company also priced a $410 million tranche of seven-year notes at par to yield 7 ¾%. The dollar-denominated seven-year notes also priced on top of price talk that had been reduced from earlier talk in the 8% area.

Finally, Jaguar Land Rover priced a $410 million tranche of 10-year notes at par to yield 8 1/8%. Again, the yield printed on top of price talk which had been reduced from earlier 8¼% to 8½% price talk.

Citigroup, Credit Suisse, JPMorgan and Standard Chartered Bank were the joint physical bookrunners.

The company plans to use the proceeds to refinance debt and for general corporate purposes.

EarthLink downsized deal

Elsewhere, EarthLink priced a downsized $300 million issue of 8 7/8% eight-year senior notes (B2/B-) at 96.555 to yield 9½%.

The yield printed at the wide end of the 9¼% to 9½% price talk.

Deutsche Bank Securities Inc., Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC were the joint bookrunners for the issue which was downsized from $400 million.

The Atlanta-based Internet service provider plans to use the proceeds to redeem its 3¼% convertible notes and for general corporate purposes.

Navios ship mortgage notes

Navios Maritime and Navios Finance Acquisition (US) Inc. priced a $105 million add-on to their 8 5/8% first-priority ship mortgage notes due Nov. 1, 2017 (B2/B) at 102.25 to yield 8.009%.

The re-offer price came on top of the price talk.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners for the quick-to-market add-on.

Proceeds, along with additional funds, will be used to purchase the crude oil carrying ship, Shinyo Kieran.

Barret Xplore six-year deal

Canada's Barrett Xplore Inc. priced a C$230 million issue of six-year PIK notes with warrants.

The notes priced with a 9% cash coupon and a 13% PIK coupon, both priced on top of price talk.

UBS Investment Bank was the lead left bookrunner. BMO Nesbitt Burns was the joint bookrunner.

Proceeds will be used to repay and discharge certain existing credit facilities, to fund an escrow account for serving certain interest payments on the notes and for general corporate purposes.

A big Friday on tap

Dealers set the stage for what figures to be a massive Friday session, rolling out price talk on no fewer than eight deals.

Emergency Medical Services talked its $950 million offering of eight-year senior notes (Caa1/B-) with a yield in the 8¼% area.

Barclays Capital Inc., Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Morgan Stanley & Co. Inc., RBC Capital Markets, UBS Investment Bank, Citigroup Global Markets Inc. and Natixis Bleichroeder are the underwriters.

Meanwhile, CoreLogic talked its $350 million offering of 10-year senior notes (Ba3/B+) with a yield in the 7¼% area.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Wells Fargo Securities LLC and Barclays Capital Inc. are the joint bookrunners.

Houghton Mifflin slashes deal

Houghton Mifflin slashed the size of its eight-year senior secured first lien notes offer to $300 million from $1.35 billion on Thursday.

The notes (Caa1//B) are talked with a yield in the 10½% area.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Wells Fargo Securities are the joint bookrunners.

The Boston-based educational publisher plans to use the proceeds for general corporate purposes.

The company will upsize the deal to $500 million if the demand is there, according to a mutual fund manager.

Otherwise, the company will do $300 million and put it all on the balance sheet as cash, the buyside source added.

Elsewhere, Regent Seven Seas talked its $200 million offering of eight-year second-lien senior secured notes (B3/B-) with a yield in the 9¼% area.

Deutsche Bank Securities Inc. is the left bookrunner. Barclays Capital Inc. and HSBC are the joint bookrunners.

Thompson Creek Metals Co. Inc. talked its $300 million offering of seven-year senior notes (B3/B) in the 7½% area.

JPMorgan Securities Inc. and Deutsche Bank AG are the bookrunners.

And China's Qinfa Group Ltd. set price talk for its planned $150 million to $200 million offering of five-year notes at 11%. UBS is the bookrunner.

Ardagh ups dollar tranche

Ireland's Ardagh Group upsized the dollar tranche of its dual-currency offering of seven-year PIK notes (Caa1) and set price talk on Thursday.

The dollar tranche is upsized to $345 million from $300 million.

The euro-denominated tranche remains sized at €185 million.

Price talk on both tranches is set in the 11¼% area.

Citigroup Global Markets Inc. has the books.

Odeon adds euro tranche

In other news out of Europe, Odeon added a €150 million minimum floating-rate notes tranche to its £475 million equivalent seven-year senior secured notes deal (B3/B).

The floating-rate notes are talked at a 500 basis points to 525 bps spread to Euribor.

Meanwhile, a sterling-denominated tranche of fixed-rate notes is talked with a 9% to 9¼% yield.

Tranche sizes remain to be determined.

Bank of America Merrill Lynch and Goldman Sachs International are the joint physical bookrunners.

And France's PagesJaunes talked its €350 million offering of seven-year senior secured notes with a yield in the 9% area.

Goldman Sachs International and Morgan Stanley are the bookrunners.

JBS beefs up calendar

The Thursday session brought another $1 billion to the forward calendar.

JBS USA and JBS USA Finance, Inc. will begin a roadshow early in the week ahead for their $1 billion two-part offering of senior notes (existing ratings B1/BB).

The deal will come in tranches of eight-year notes, which come with three years of call protection, and 10-year notes which come with four years of call protection. The initial call premiums for both tranches will be set at par plus 75% of the coupons.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Banco do Brasil, Barclays Capital Inc. and Morgan Stanley & Co. are the joint bookrunners.

JBS USA, LLC intends to use the proceeds to make an intercompany loan to JBS USA Holdings, Inc., which will further transfer the funds to JBS SA. The latter expects to use proceeds to repay short- and medium-term debt.

Jaguar jumps on the break

When the new Jaguar Land Rover bonds were freed for secondary dealings, a trader opined that Jaguar was "up pretty big."

He saw the Tata Motors-owned British luxury car manufacturer's $419 million of dollar-denominated seven-year notes move up to 102 5/8 bid, 102 7/8 offered, while the same-sized tranche of 10-year dollar paper did even better, at 102 7/8 bid, 103 1/8 offered.

The sterling -denominated seven-years meantime traded at 102½ bid, 103 offered. All three Jaguar Land Rover tranches had priced at par.

A second trader agreed that Jaguar "did really well," seeing the seven-year dollar bonds going home at 102¼ bid, 102 5/8 offered, while the 10-year issue got as good as 103 before coming off that peak level to end around 102¾ bid.

Neither the EarthLink $300 million issue of eight-year notes nor Navios Maritime's $105 million add-on deal was seen trading in the secondary on Thursday.

Wednesday deals hold levels

A trader said that "a fair amount" of Range Resources Corp.'s 5¾% senior subordinated notes due 2021 were seen trading around, quoting the bonds at having stayed around the par to 100¼ context within which they had moved in Wednesday's late trading, which followed their earlier pricing at par.

In Thursday's dealings in the Fort Worth-based oil and gas exploration and production company's $500 million issue - upsized from the originally announced $400 million - the trader saw the bonds at par bid, 100¼ offered.

He also saw fellow oiler Unit Corp.'s 6 5/8% senior subs due 2021 "fairly active on Trace," going out around 101 7/8 bid, 102 offered.

That was just a touch under the 102 bid levels at which the Tulsa, Okla.-based company's $250 million issue - upsized from the originally announced $200 million - had traded on Wednesday, after pricing earlier at par.

He said there was "some activity, finally," in Eagle Parent, Inc.'s 8 5/8% notes due 2019, seeing the bonds at 102¼ bid, 102½ offered, although he later qualified that, saying there was "not a lot of activity" in the credit.

Eagle - formed for the purpose of borrowing the funds needed to finance the Apax Partners leveraged buyout of two California-based software companies, Activant Group, Inc. and Epicor Software Corp. - had priced the $465 million offering at par earlier on Wednesday. While the notes had been quoted by a trader having risen more than 2 points in Wednesday's dealings, other traders said they had not seen any aftermarket right after the pricing.

Secondary seen mixed

Away from the new issues, a trader saw the CDX North American Series 16 HY index up by one-sixteenth of a point to end at 102 15/16 bid, 103 1/16 offered, after having slid by five-sixteenths of a point on Wednesday.

The KDP High Yield Daily Index meantime lost 2 basis points on Thursday to close at 76.30, after having given up 3 bps on Wednesday. Its yield moved up by 1 bp for a second straight session, to 6.38%.

The Merrill Lynch High Yield Master II Index posted a rare loss on the day, snapping the index's impressive 16-session winning streak, which dated to mid-April. The index lost 0.055%, after having gained 0.071% on Wednesday. That easing lowered its year-to-date return to 5.911%, down from Wednesday's close at 5.969%, the peak level for the year so far.

NewPage pummeled

Among specific names, traders anointed NewPage Corp.'s bonds as clearly the "dog of the day," as the Miamisburg, Ohio-based coated-paper manufacturer "got whacked," as one put it, or "got crushed" as another said.

The company's bonds were "trading like crazy" after the release of quarterly earnings. While they showed some sequential improvement, the earnings were less than expected by Wall Streeters, causing a stampede out of that paper.

A market source said that New Page's battered 10% notes due 2012 "really got beat up," sinking by between 10 points and 12 to drop to 45 bid from prior levels around 57 bid.

He blamed the rout on "less-than-stellar numbers."

He saw the company's 11 3/8% senior secured notes due 2014 down by perhaps 1 point at 99 bid.

The 12% notes due 2013 dropped to 9½ bid from 16 bid previously.

A market source saw over $160 million of the 10% notes changing hands, while $70 million of the 11 3/8s traded.

The bonds were hammered down after NewPage reported first-quarter net sales of $904 million, up from $817 million the year before. The company attributed the increase to higher prices and higher sales volumes.

Adjusted EBITDA was $85 million versus $15 million for the first quarter of 2010. Net loss narrowed to $88 million from $175 million.

At the end of the quarter, NewPage had $170 million of liquidity, consisting of $9 million in cash and equivalents and $161 million available under its revolving credit facility.

As if that news wasn't bad enough, a trader said that adding to NewPage's problems is the fact that "based on the numbers, there is not enough cash flow" to refinance the 10% notes. The company has until Jan. 31, 2012 to repay or refinance the debt - or else its 11 3/8% senior notes due 2014 will be accelerated, moving the maturity up to March 2013 from December 2014.

New Page's woes spilled over onto its sector peers. A trader saw Catalyst Paper Corp.'s 7 3/8% notes due 2014 drop some 2½ points on the day to 62½ bid from Wednesday's close at 65 bid, 65½ offered.

Appleton Papers' 11¼% notes due 2015 ended at 102 bid, down 1½ points on the session.

Stephanie N. Rotondo contributed to this report

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.