PDC Energy drives by, trades up, Iron Mountain brings Canadian deal; new Cablevision issue firms

By Paul Deckelman and Paul A. Harris

New York, Sept. 12 – The high yield primary sphere began the new week with a lone U.S.-dollar denominated deal on Monday, as oil and natural gas operator PDC Energy , Inc. did a quick-to-market $400 million offering of eight-year notes.

Traders said that the new bonds firmed smartly in heavy trading when they hit the aftermarket.

The day also saw a well-known U.S.-based junk issuer tap the Canadian-dollar market, as records and document storage company Iron Mountain, Inc. brought a quickly shopped C$250 million seven-year offering to market via a Canadian subsidiary.

And terms emerged on Cablevision Systems Corp.’s downsized 10.5-year megadeal; that $1.31 billion transaction had actually priced on Friday, although the media and telecommunications company – now a subsidiary of Europe’s Altice NV – did not formally announced those terms till Monday.

When the Cablevision issue moved into the secondary realm, the bonds traded up, in very heavy dealings.

There was also active trading in some of the new deals that had priced last week, including SM Energy Co., Hertz Corp. and Ardagh Group SA; the latter two bonds were seen continuing to trade below their respective issue prices.

Statistical market performance measures turned mixed on Monday, after having been down across the board on Friday.

PDC Energy drives by

Two issuers priced drive-by deals on Monday.

PDC Energy, Inc. priced a $400 million issue of eight-year senior notes (B2/B+) at par to yield 6 1/8%.

The yield printed on top of yield talk.

JP Morgan was the lead.

The Denver-based independent exploration and production company plans to use the proceeds to fund a portion of the cash consideration payable in the acquisition of two privately held companies managed by Kimmeridge Energy Management Co. and for general corporate purposes.

Iron Mountain Canada prices tight

In the Canadian market Iron Mountain Canada Operations ULC priced a C$250 million issue of seven-year senior at par to yield 5 3/8%.

The yield printed at the tight end of yield talk in the 5½% area.

RBC, Scotia and TD were the joint bookrunners.

The assumed corporate credit ratings are Ba3 from Moody's and BB- from Standard & Poor's.

The information storage company plans to use the proceeds to repay bank debt.

Acelity talk9 ½% area

Acelity LP Inc. talked its $1.75 billion offering of five-year second-lien senior secured notes to yield in the 9½% area.

The debt refinancing deal, via left bookrunner Goldman Sachs, is set to price on Tuesday.

Quintiles-IMS Health roadshow

IMS Health Inc. began a roadshow on Monday in London for a $1.5 billion equivalent offering of senior notes as part of the merger of IMS Health with Quintiles Transnational Holdings Inc.

The deal is coming in tranches of eight-year euro-denominated notes and 10-year dollar-denominated notes. Tranche sizes remain to be determined.

The deal is set to price on Wednesday.

Goldman Sachs is the left bookrunner. JP Morgan, Barclays, BofA Merrill Lynch, HSBC and Wells Fargo are the joint bookrunners.

Proceeds, together with the proceeds of the refinancing and certain available cash, will be used to refinance certain IMS Health and Quintiles debt following the close of the merger.

Callon Petroleum eight-year deal

Callon Petroleum Co. expects to price $350 million eight-year senior notes late this week.

JP Morgan is leading the offer.

The Natchez-based independent energy company plans to use the proceeds to repay its second lien term loan and for general corporate purposes, including for a potential increase in drilling activity.

Great Western roadshow

Great Western Petroleum LLC and Great Western Finance Inc. began a roadshow on Monday for a $300 million offering of five-year senior notes, set to price late this week.

Credit Suisse, MUFG, Citigroup and RBC are the joint bookrunners.

The Missoula, Mont.-based energy exploration and production company plans to use the proceeds to refinance bank debt and for general corporate purposes.

PDC Energy issue gains

In the secondary market, PDC Energy’s new 6 1/8% notes due 2024 were seen by traders to have firmed solidly in very busy dealings of more than $50 million, after that drive-by deal had priced at par.

A trader pegged the new bonds at 101½ bid going home.

Another saw them get as good as a 101¾ to 102 bid range before coming slightly off those peak levels.

And a third quoted the issue at 101½ bid, 102 offered.

Cablevision firms on heavy volume

But the volume leader for the day was Cablevision’s 5½% senior guaranteed notes due in April of 2027, which had priced on Friday at par after what began as a $1.91 billion offering had been downsized to $1.31 billion, with the shift of $600 million of borrowings into a concurrently shopped bank debt offering.

A market source said that over $147 million of the new paper had changed hands on Monday, locating the notes at 101 3/8 bid.

Another trader said that the bonds had initially traded in a 99½ to 99¾ bid context when they first broke, by later in the day, they had moved up to around the 101 bid area.

A third trader saw them moving around between 100¾ and 101¼ bid.

Although the quickly shopped deal got done on Friday through the Bethpage, N.Y.-based media and telecommunications company’s CSC Holdings, LLC subsidiary, formal announcement of the terms was not made until Monday.

Cablevision, for years an independent cable operator primarily in the New York metropolitan area and the former owner of the famed Madison Square Garden sports arena and the teams that play there, including the NBA’s New York Knicks, the NHL’s New York Rangers and the WNBA’s New York Liberty, now operates as a subsidiary of Netherlands-based Altice, which acquired the company last year in a $17.7 billion deal that included debt assumption.

Recent deals busy

Traders said that there was some considerable activity in a few of the deals that had priced last week.

Denver-based oil and gas company SM Energy’s 6¾% notes due 2026 gained ½ point on the day to end at 100½ bid, with more than $23 million having traded, after having lost 7/8 point in Friday’s general market downturn.

But other recent deals continued to struggle.

Estero, Fla.-based car-rental giant Hertz was off for a second straight session, losing ½ point to end at 99½ bid, a trader said, with over $19 million traded.

Ardagh Group, a Luxembourg-based packaging maker, also struggled, ending around 99 bid, with over $20 million traded.

Indicators turn mixed

Statistical market performance measures turned mixed on Monday, after having been down across the board on Friday and having firmed on Thursday.

The KDP High Yield index saw its second loss in a row on Monday, retreating by 9 basis points to end at 70.45, on top of Friday’s 24-bps plunge; it had posted two straight gains before that, including Thursday’s 5-bps rise.

That left the index well down from last Thursday’s 70.78 close – its year-to-date and 52-week highs.

Its yield meantime rose by 3 bps to close at 5.30%, its second straight increase, having gapped out by 7 bps on Friday after having come in by 1 bp on Thursday.

The Markit Series 26 CDX index, however, rebounded on Monday after having lost almost 1 full point on Friday; it gained 9/16 point to end at 104 7/32 bid, 104¼ offered.

But the Merrill Lynch High Yield index recorded its second straight loss after five consecutive sessions on the upside, retreating by 0.211% on Monday, on top of Friday’s 0.386% downturn, in contrast to Thursday’s 0.052% improvement.

The loss dropped its year-to-date return to 14.306% on Monday from Friday’s 14.548%. Those levels were down from Thursday’s 14.992%, which had been its fourth straight new 2016 peak cumulative level.

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