Upsized Concordia, Charter, Univision price, new Concordia jumps; Chrysler, Mallinckrodt busy

By Paul A. Harris and Paul Deckelman

New York, April 13 – The new week kicked off in Junkbondland on Monday with a busy primary session, syndicate sources said.

They saw upsized drive-by offerings from cable operator Charter Communications, Inc. and Hispanic broadcaster Univision Communications Inc. – the former a $1.9 billion two-part transaction split into eight- and 10-year notes, the latter an $810 million add-on to the 10-year secured notes that the company originally sold back in late February. Both deals were quoted trading a little above their respective issue prices when they reached the aftermarket later in the day.

The syndicate sources also saw one regularly scheduled deal price off the forward calendar – Canadian pharmaceuticals company Concordia Healthcare Corp.’s upsized $735 million of eight-year notes. Traders said those bonds firmed smartly in secondary dealings.

All told, $3.46 billion of new U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers got done on Monday, in contrast to Friday’s session, which had seen no new high yield issues priced, though Thursday’s frenetic session had seen $6.6 billion of new paper from eight separate issuers come to market in nine tranches.

There was continued busy aftermarket action Monday in the big two-part deal from Fiat Chrysler Automobiles NV that had priced on Thursday, as well as last Wednesday’s two-part megadeal from pharmaceuticals maker Mallinckrodt plc.

Statistical market performance measures ended mixed for a fourth straight session on Monday.

Charter upsizes

Three issuers completed upsized bond sales, raising a combined total of $3.46 billion during a busy Monday session.

Two of the three issuers came with drive-by transactions.

Altogether there were four tranches, of which three came either in the middle of talk or on top of talk, while the fourth came at the tight end of talk.

Leading the session, Charter Communications priced an upsized $1.9 billion amount of senior notes (B1/BB-) on Monday.

A $1.15 billion tranche of eight-year notes priced at par to yield 5 1/8%.

A $750 million tranche of 10-year notes priced at par to yield 5 3/8%.

The notes in both tranches priced on top of yield talk.

The overall amount of issuance was increased from $1.5 billion.

Credit Suisse, BofA Merrill Lynch, Deutsche Bank and Goldman Sachs were the joint bookrunners for the quick-to-market deal.

The St. Louis-based cable company plans to use the proceeds to refinance its existing senior notes and for general corporate purposes.

Univision taps 5 1/8% notes

Univision Communications priced an upsized $810 million add-on to its 5 1/8% senior secured notes (B2/B+/B+) at 101.375 to yield 4.91%.

The deal was increased from $600 million.

The yield printed in the middle of the 101.25 to 101.5 price talk.

Deutsche Bank was the left bookrunner for the quick-to-market debt refinancing deal.

BofA Merrill Lynch, Barclays, Credit Suisse, J.P. Morgan, Wells Fargo, Natixis and Mizuho were the joint bookrunners.

Concordia at the tight end

Concordia Healthcare priced an upsized $735 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 7%.

The deal was expanded by $125 million from $610 million. The concurrent bank loan was downsized by $75 million.

The yield printed at the tight end of the 7% to 7¼% yield talk.

RBC was the left bookrunner.

Morgan Stanley and TD were the joint bookrunners.

Proceeds will be used to help fund the acquisition of Zug, Switzerland-based specialty pharmaceutical company Covis Pharma Holdings Sarl for $1.2 billion in cash and to refinance debt.

Trinseo’s dual-currency deal

Trinseo plans to start an international roadshow on Tuesday for a $750 million equivalent offering of seven-year senior notes in dollar- and euro-denominated tranches.

The minimum tranche sizes will be $300 million and €300 million. Final tranche sizes remain to be determined.

Deutsche Bank, Citigroup, Barclays, Goldman Sachs, HSBC, Mizuho, Scotia and SMBC are the joint bookrunners for the debt refinancing deal.

Orange plans CHF 2.014 billion

Orange Switzerland SA plans to sell CHF 2.014 billion equivalent of notes in a four-tranche, dual-currency deal expected to price in the early to middle part of the present week.

Matterhorn Telecom SA, a special purpose vehicle, is selling CHF 1.712 billion equivalent of seven-year senior secured notes. The secured notes are coming in tranches of CHF 750 million and €445 million of fixed-rate notes, and €480 million of floating rate notes.

Matterhorn Telecom Holding SA, the ultimate parent of Orange, is selling €290 million of eight-year senior unsecured notes.

Global coordinator Credit Suisse will bill and deliver. BNP Paribas, JP Morgan, SG CIB, Goldman Sachs and Natixis are joint bookrunners.

The telecommunications company, which has headquarters in Luxembourg, plans to use the proceeds, together with cash on its balance sheet, to redeem in full all the existing notes issued by various entities of the Matterhorn group, terminate or amend existing hedging obligations, and make a distribution to Matterhorn group’s shareholder.

Abengoa plans five-year notes

Abengoa Finance SAU plans to start a roadshow on Tuesday for a €375 million offering of non-callable five-year senior notes (B2/B/B).

Citigroup and HSBC are the global coordinators.

The Seville, Spain-based engineering and clean technology company plans to use the proceeds to partially refinance its notes due in 2016.

Heidelberger Druckmaschinen to begin roadshow

Germany’s Heidelberger Druckmaschinen AG plans to start a roadshow on Tuesday for a €200 million offering of seven-year senior notes (Caa1/CCC+).

Joint bookrunner Deutsche Bank will bill and deliver.

The Heidelberg, Germany-based manufacturer of offset printing presses plans to use the proceeds to fund the redemption of part of its 9¼% senior notes due 2018.

Concordia credit climbs

In the aftermarket, traders saw healthy price moves in Toronto-based pharmaceuticals company Concordia Healthcare’s scheduled forward calendar offering.

One quoted those 7% notes due 2023 initially trading in a 101½ to 102½ context, already well up from the upsized deal’s par issue price – but said later on in the session that the bonds had appreciated further, ending at 102 7/8 bid, 103 3/8 offered.

At another desk, those bonds were seen going home trading between 102¾ and 103¼ bid.

Charter, Univision firm

The day’s other two deals – upsized offerings from Charter Communications and Univision Communications – were also seen having firmed, but nowhere nearly as much as the new Concordia issue.

A trader quoted both halves of the new Charter deal – its CCO Holdings, LLC 5 1/8% notes due 2023 and its 5 3/8% notes due 2023 – moving around in 100½ to 101 bid range, up from their respective par issue prices.

A second trader meanwhile saw the company’s existing CCO Holdings 6½% notes due 2021 unchanged at 105¼ bid on over $11 million of turnover.

The CCO Holdings 5¼% notes due 2022 ended down ½ point at 102½ bid.

Its 6½% notes due 2021 ended at 105 3/8 bid on over $6 million traded.

The Univision 5 1/8% senior secured add-on notes due 2025 were meantime seen by a trader having moved up to 101¾ bid, 102¼ offered from their 101.375 issue price.

A second trader quoted the Los Angeles-based Spanish-language television network operator and content provider’s issue trading at bid levels between 101½ and 101¾.

Another saw a locked market at 102¼.

Univision priced its original $750 million of those notes at par back on Feb. 10 as part of a two-part $1.25 billion quick-to-market deal that also included $500 million of 5 1/8% senior secured notes due 2023.

Recent deals trade actively

There was active trading in some of the recently priced deals, notably Fiat Chrysler’s big two-part offering that had priced on Thursday.

A trader said that the London-based global auto manufacturer’s new bonds “continued to trade,” seeing its 4½% notes due 2020 “wrapped around” 101¼ bid, while its 5¼% notes due 2023 were ending around 101¾ bid.

Both parts of that $3 billion offering – split into equally sized $1.5 billion tranches of five- and eight-year bonds – had priced at par on Thursday as a regularly scheduled forward calendar offering. After trading a little above their respective issue prices on Thursday, they had moved above the 101 bid level on Friday.

A second trader said that the Fiat Chrysler five-years were the most actively traded notes in the high-yield space on Monday, with over $53 million having changed hands. He saw the paper down 1/8 point on the session, ending at 101 1/8 bid.

But he said the eight-years had moved up by 3/8 point to 101¾ bid, on volume of over $31 million.

Another active trader was the new Mallinckrodt two-part deal, both halves of which had priced at par on Wednesday off the forward calendar via the Dublin, Ireland-based pharmaceutical company’s Mallinckrodt International Finance SA subsidiary.

Its 5½% notes due 2025 were seen by a market source gaining 1/8 point on the session at 102¼ bid, with over $39 million having traded, while its 4 7/8% notes due 2020 were about unchanged at 101½ bid on volume of over $15 million.

A second trader confirmed those levels, terming activity “busy.”

A third said that both tranches “were trading very tightly,” with little movement from the aforementioned levels. “Why even bother with it,” he mused.

That deal – enlarged to $1.4 billion from $1.2 billion originally – was split into equally sized $700 million tranches of the five- and 10-year paper.

All told, a trader said that the day’s focus seemed to be “pretty much the new issues,” with many accounts just waiting around for the Charter megadeal and the day’s other new credits.

“It was a pretty subdued day, price-action- and volume-wise,” he opined.

Indicators stay mixed

Statistical indicators of junk market performance were mixed for fourth straight session on Monday. They had turned mixed last Wednesday, after having risen across the board last Monday and Tuesday and having been higher all around in six out of the previous seven sessions.

The KDP High Yield Daily Index gained 5 basis points to end at 71.70, its second straight rise and its ninth such advance in the last 10 sessions and 14th in the last 16 sessions. On Friday, the index had edged upward by 1 bp.

Its yield declined by 4 bps to 5.19%, its second straight narrowing and sixth such tightening in the last seven sessions. On Friday, the yield had eased by 1 bp.

However, the Markit Series 24 CDX North American High Yield Index posted its second straight loss, its third in the last four sessions, dipping by 7/32 point to end at 107 ½ bid, 107 17/32 offered. On Friday, the index was down by 1/32 point.

Still, the Merrill Lynch U.S. High Yield Master II Index continued to roll along on Monday, posting its 11th straight gain and its 16th such rise in the last 17 sessions. It improved by 0.115%, on top of Friday’s 0.088% increase.

The latest advance lifted its year-to-date return to 3.528% – its fourth consecutive new peak level for the year so far. That was up from 3.41% on Friday, the previous high-water mark.

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