Bill Barrett brings eight-year notes; primary otherwise light; Freeport McMoRan up on Indonesia news

By Paul Deckelman and Paul A. Harris

New York, April 25 – For a second consecutive session, activity in the high-yield dollar-denominated segment was light on Tuesday with just a single deal seen having priced, as oil and natural gas producer Bill Barrett Corp. was heard by syndicate sources to have gotten a $275 million eight-year offering done.

That was slightly more new U.S. dollar-denominated and fully junk-rated paper than had come to market on Monday, when communications-oriented real estate investment trust Uniti Group Inc. priced $200 million of 2024 bonds. Traders meantime saw the latter bonds continuing to firm in the aftermarket.

No other news was heard out of the domestic primary sphere, while in the euro-denominated segment of the market, France’s La Financiere Atalian SA and Germany’s Senvion Holding GmbH hit the road to market their respective upcoming deals to investors.

Away from the new-deal realm, traders saw metals miner Freeport McMoRan Inc.’s bonds firm across its capital structure, as the company announced a resumption of copper concentrate exports from Indonesia after a lengthy regulatory dispute with that nation.

Canadian lumber producer Resolute Forest Products Inc.’s bonds got chopped down by the news that the United States will slap a hefty tariff on wood coming in from that country.

Statistical market performance measures improved across the board for a second consecutive session on Tuesday; they had turned northward on Monday, after having been mixed over the three previous sessions and lower all around the session before that. Monday was the first time that the indicators had all been up since April 3.

Bill Barrett prices mid-talk

Bill Barrett Corp. priced Tuesday's sole deal, a $275 million issue of eight-year senior notes (Caa2/CCC+) that came at par to yield 8¾%.

The yield printed in the middle of yield talk in the 8¾% area, and cheap to initial guidance in the 8½% area.

BofA Merrill Lynch, JP Morgan, BMO, Citigroup, Deutsche Bank and Wells Fargo were the joint bookrunners for the debt refinancing deal.

Although news flow in the primary market was decidedly light on Tuesday, there is definitely a demand for new bonds out there, a portfolio manager said.

Right now the market looks rich to the investor who was marking the JP Morgan high-yield index with a 6.15% composite yield on Tuesday.

Euro roadshows

Activity in the European new issue market remains robust.

On Tuesday La Financiere Atalian SA started a roadshow for a €600 million offering of seven-year senior notes (expected ratings B2/B+).

The deal is set to price on Wednesday.

Joint global coordinator and physical bookrunner Credit Suisse will bill and deliver. BNP Paribas is also a joint global coordinator and physical bookrunner.

The Paris-based provider of outsourced building services plans to use the proceeds to take out its 7¼% senior notes due 2020, pay off existing bilateral agreements and for general corporate purposes including acquisitions.

And Hamburg-based Senvion Holding GmbH started a roadshow on Tuesday for a €400 million offering of 5.5-year senior secured fixed-rate green bonds (existing ratings B2/B+).

Joint global coordinator and joint physical bookrunner Deutsche Bank will bill and deliver. JPMorgan is also a joint global coordinator and joint physical bookrunner.

BNP Paribas and Credit Agricole CIB are joint global coordinators and joint bookrunners for the debt refinancing deal.

Monday inflows

The daily cash flows of the dedicated high-yield bond funds were positive on Monday, the most recent session for which data was available at press time.

High-yield ETFs saw $71 million of inflows on the day.

Asset managers saw $60 million of inflows on Monday.

Dedicated bank loan funds saw $100 million of inflows on Monday.

Barrett comes late in the day

In the secondary realm, traders initially reported no immediate aftermarket dealings in the new Bill Barrett Corp. 8¾% notes due 2025, noting that the Denver-based oil and natural gas developer’s offering – which had surfaced in the market on Monday and which priced after a short roadshow process – came too late in the session for much meaningful activity.

Uniti Group notes firm

The traders meanwhile saw the new Uniti Group Inc. 7 1/8% notes due in December of 2024, which came to market on Monday, having moved up to around a 102 bid context on Tuesday.

That was up from the 100 7/8 to 101 area where the notes were seen late Monday.

The quick-to-market $200 million offering had priced earlier Monday at 100.5 to yield 7.013%.

Uniti – the Little Rock, Ark.-based communications infrastructure-focused REIT formerly known as Communications Sales & Leasing, Inc. since its 2015 spinoff from high yield telecommunications company Windstream Holdings, Inc. – plans to mandatorily exchange the new notes for a similar series of existing 7 1/8% 2024 paper upon the completion of Uniti’s pending acquisition of Southern Light, LLC.

Those existing notes meantime moved up to 102 1/8 bid late Tuesday, a ½ point gain on the day, with over $22 million traded.

Freeport improved on Indonesia news

Away from the new-deal sphere, a trader noted that “Freeport McMoRan’s whole structure was busy today,” seeing the Phoenix-based copper, gold and oil producer’s paper up between 1 point and 1½ points on the day.

For instance, he said that the company’s busiest bond, it benchmark 3.55% notes due 2022, gained around 1 point to end at 94½ bid.

At another desk, a market source saw those bonds at 93¾, calling it a gain of ¾ point on the session, with over $38 million having changed hands.

He said that Freeport’s 5.45% long bonds due 2043 were going home at 84 bid – although he called that issue down slightly on the day – on volume of around $32 million.

But its 3 7/8% notes due 2023 gained ¾ point, to end at 92 ¾ bid, on turnover of some $19 million.

Yet another trader saw the latter bond late in the day as high as 93 7/8 bid, pegging them up nearly 2 points on the session.

The bonds rose, along with Freeport’s New York Stock Exchange-traded shares, which firmed by more than 7% on the day on twice their usual volume, after the company said that it would shortly be resuming its exports of copper concentrate from Indonesia.

The company and the Jakarta government have been locked in a lengthy regulatory dispute that had suspended those exports – but the government has now lifted those restrictions for a six-month period while Freeport

negotiates a new licensing deal.

“Net-net, it’s positive for the name,” one of the traders observed.

Resolute Forest falls

On the other side of the world, a trade dispute, between neighbors U.S. and Canada, pushed Montreal-based wood products producer Resolute Forest Products’ 5 7/8% notes due 2023 down by 1 full point, to 91½ bid, on volume of over $17 million.

A market source at another desk saw the notes ending lower on the day at 92 bid.

They fell after U.S. Commerce Secretary Wilbur Ross said on Monday his agency will impose new anti-subsidy tariffs averaging 20% on Canadian softwood lumber imports – a move that escalates a long-running trade dispute between the two countries.

Canada denies U.S. allegations that it is unfairly subsidizing exports by its lumber producers.

Indicators stay higher

Statistical market performance measures improved across the board for a second consecutive session on Tuesday; they had turned northward on Monday, after having been mixed over the three previous sessions, and lower all around the session before that. Monday was the first time that the indicators had all been up since April 3.

The KDP High Yield Daily index rose by 8 basis points on Tuesday to end at 72.04, its third consecutive gain after seven losses in a row before that. On Monday, it had firmed by 9 bps, on top of Friday’s 3 bps gain.

Its yield came in by 3 bps on Tuesday to 5.19%, its third straight tightening; it had also been down by 4 bps on Monday and by 1 bp on Friday, which had been its first narrowing after having been unchanged on Thursday and having widened over the two sessions before that.

The Markit CDX Series 28 index firmed for a second day in a row, improving by 5/16 point to close at 107 5/8 bid, 107 11/16 offered; it had also moved up by more than ½ point on Monday, in contrast to Friday, when it had finished marginally lower.

And the Merrill Lynch North American High Yield index made it five successive sessions on the upside on Tuesday, advancing by 0.149%. On Monday, it had gained 0.255%.

Tuesday’s advance lifted the index’s year-to-date return to 3.583%, its second straight new year-to-date high point, surpassing the previous 2017 high of 3.438%, set on Monday.

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