Range Resources, Boyd price; earnings push around commodity names; funds lose $2.75 billion

By Paul. A Harris and Stephanie N. Rotondo

Portland, Ore., May 7 – The high-yield new issue market continued to crank out a moderate to heavy news volume on Thursday.

Five issuers priced single-tranche deals to raise a combined total of $2.73 billion.

Among them were Range Resources Corp., which brought a $750 million issue of 4 7/8% 10-year notes, and Boyd Gaming Corp., which priced $750 million of 6 7/8% eight-year notes. Both deals were upsized.

Activity in the secondary high-yield market was centered on commodities Thursday.

After releasing earnings late Wednesday, Energy XXI bonds were trading mixed Thursday. SandRidge Energy Inc. also came out with numbers Wednesday, and though those bonds were initially weaker, they finished Thursday with a firmer tone.

MolyCorp Inc. meantime announced its earnings early Thursday, but despite a wider loss, the debt ended steady.

Continuing the earnings trend, Chesapeake Energy Corp. was drifting downward on the heels of results out Wednesday.

Away from commodities, Advanced Micro Devices Inc. was heading higher following the company’s financial analyst day on Wednesday. During its presentation, the company laid out its new strategy to return to profitability in the second half of 2015.

Dedicated high-yield funds saw $2.75 billion of outflows in the week to Wednesday's close, according to a sellside source who was relating data reported by Lipper-AMG.

Of that amount, 79% was withdrawn from high-yield exchange-traded funds, the source said.

The most recent weekly outflow notwithstanding, dedicated high-yield funds have seen $7.71 billion of inflows this year to date, the source said.

Range Resources drive-by

Three of Thursday’s five issuers came with drive-by deals.

Four of the five tranches were upsized.

Executions were tight, especially given the meaningful deal upsizings. Three of the five tranches came at the tight ends of talk, and the other two came either in the middle or on top of talk.

Range Resources priced an upsized $750 million issue of 10-year senior notes (Ba1/BB+) at par to yield 4 7/8%.

The debt refinancing deal was upsized from $500 million.

The yield printed in the middle of the 4¾% to 5% yield talk.

BofA Merrill Lynch was the left bookrunner for the quick-to-market deal. J.P. Morgan Securities LLC, Wells Fargo Securities LLC, Barclays, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. were the joint bookrunners.

Boyd Gaming, upsized and tight

Boyd Gaming priced an upsized $750 million issue of eight-year senior notes (B3/expected CCC+/CCC+) at par to yield 6 7/8%.

The debt refinancing deal was upsized from $500 million.

The yield printed at the tight end of yield talk in the 7% area.

JPMorgan, BofA Merrill Lynch, Deutsche Bank, Wells Fargo, UBS Investment Bank, BNP Paribas Securities Corp. and Nomura were the joint bookrunners.

SM Energy, upsized and tight

SM Energy Co. priced an upsized $500 million issue of 10-year senior notes (Ba2/BB) at par to yield 5 5/8%.

The quick-to-market deal was upsized from $400 million.

The yield printed at the tight end of yield talk in the 5¾% area.

Wells Fargo was the left bookrunner. BofA Merrill Lynch, JPMorgan, Barclays, BBVA and RBC Capital Markets were the joint bookrunners.

The Denver-based independent energy company plans to use the proceeds to fund the repurchase or redemption of its notes due in 2019, to repay bank debt and for general corporate purposes.

A. Schulman at the tight end

A. Schulman, Inc. priced a $375 million issue of eight-year senior notes (B3/B+) at par to yield 6 7/8%.

The yield printed at the tight end of yield talk in the 7% area.

BofA Merrill Lynch was the left bookrunner for the acquisition financing deal. JPMorgan and Citigroup Global Markets Inc. were the joint bookrunners.

PBF prices upsized deal

PBF Logistics LP and its wholly owned subsidiary PBF Logistics Finance Corp. priced an upsized $350 million issue of eight-year senior notes (B3/B+) at par to yield 6 7/8%.

The deal was upsized from $300 million.

The yield printed on top of yield talk.

Joint global coordinator Deutsche Bank was the left bookrunner. Citigroup was a joint global coordinator and bookrunner.

BofA Merrill Lynch, MUFG, RBC and Wells Fargo were joint bookrunners.

Sterigenics talk 6 5/8% area

Sterigenics-Nordion Holdings LLC talked its $450 million offering of eight-year senior notes (Caa1/CCC+) to price with a yield in the 6 5/8% area.

The deal is expected to price on Friday.

JPMorgan, Barclays, Jefferies and RBC are the joint bookrunners.

Condotte postpones

In the only primary market news out of Europe on Thursday, Italian construction company Societa Italiana per Condotte d'Acqua SpA postponed its downsized €200 million offering of seven-year senior notes (B2/expected B+).

The deal – which was downsized from €300 million on Wednesday and was talked to yield in the 8½% area, up from earlier guidance in the mid-6% range – had not been well received by investors, a source said.

Banca IMI, Banca Akros and Barclays were joint bookrunners.

Market softens

Market indexes moved lower on Thursday.

The Markit Series 24 CDX North American High Yield index fell slightly to 106.6 bid, 106.65 offered, according to a market source.

The KDP High Yield index was meantime seen at 71.46 with a 5.27% yield, compared with a reading of 71.58 with a 5.22% yield on Wednesday.

However, recently priced issues managed to hold their ground.

HCA Inc.’s $1.6 billion add-on to its 5 3/8% non-callable senior notes due 2025 held at 103, where the issue priced on Wednesday.

A trader said there was “a myriad of trades” in the issue.

From Tuesday business, Chemours Co.’s $1.35 billion of 6 5/8% notes due 2023 were also seen steady at 99 5/8.

Energy XXI mixed

Houston-based oil and gas company Energy XXI reported its fiscal third-quarter results late Wednesday, missing estimates. On Thursday, the company’s debt was mixed.

A trader saw the 7½% notes due 2021 and 2023 unchanged at 42 and 50, respectively. But the 8¼% notes due 2018 fell 1¼ points to 77 1/8, and the 11% notes due 2020 rose almost half a point to 96 3/8.

For the quarter, Energy XXI posted a net loss of $587.2 million, or $6.22 per share. On an adjusted basis, the loss was $102.3 million, or $1.08 per share.

Revenue was $260.2 million.

Analysts polled by Thomson Reuters expected an adjusted loss per share of $1.01 on revenue of $270.9 million.

Production improved by 2,100 BOE/d during the quarter.

The company ended the quarter with $725 million of liquidity.

SandRidge pushes up

Oklahoma City-based SandRidge Energy also came out with earnings late Wednesday.

In addition to seeing a 36% gain in total production for the quarter, SandRidge reported adjusted EBITDA of $182 million, up from $169 million the year before. Adjusted net income came to $2.3 million, versus $29.5 million the year before.

Still, the total net loss surged to more than $1 billion from $136.34 million the year before.

Though the bonds initially traded lower come Thursday, they finished the session with a firmer tone.

A trader said the 7½% notes due 2021 inched up a touch to 74 1/8, while the 7½% notes due 2023 improved nearly a point to 72 5/8.

He also saw the 8 1/8% notes due 2022 at 73¼, up 1½ points on the day.

Another market source placed the 2021 paper at 74¼ bid, up a quarter point.

MolyCorp holds steady

A trader said MolyCorp’s 10% notes due 2020 “were a little more active,” trading in a 49 to 50 context.

Another trader placed the issue around 50, noting that the paper had gotten as low as 49 but recovered.

He deemed the issue “pretty much unchanged.”

For the first quarter, the Greenwood, Colo.-based rare earth metals mining company reported a net loss of $102.3 million, or 42 cents per share. That compared to a loss of $86.1 million, or 40 cents per share, the year before.

On an adjusted basis, the loss per share was 28 cents.

Revenue declined over 10% to $106.4 million.

During the quarter, average selling prices declined 8% to $30.97 per kilogram, which partially accounted for the wider loss.

The loss was also attributed in part to inventory writedowns.

Cash and equivalents came to $133.6 million, down from $211.7 million the previous quarter.

MolyCorp has been in the process of restructuring its debt and said in its earnings report that it would conduct a significant debt-for-equity exchange.

Chesapeake debt weaker

Investors continued to put pressure on Chesapeake Energy’s debt following its earnings release on Wednesday.

A trader said the 5¾% notes due 2023 slipped over half a point to 99 3/8. The 4 7/8% notes due 2022 ticked down slightly to 94 7/8.

A second market source pegged the 6 5/8% notes due 2020 at 104¾ bid, off half a point.

Oklahoma City-based Chesapeake had a first-quarter net loss of $3.78 billion, or a loss of $5.72 per fully diluted share. This compares to net income of $374 million, or $0.54 per fully diluted share, for the prior-year period.

Adjusted EBITDA for the period was $928 million, down from $1.5 billion a year ago.

The company ended the first quarter with cash of about $2.9 billion and total debt, net of unrestricted cash, of $8.6 billion.

AMD paper improves

Advanced Micro Devices, the struggling Sunnyvale, Calif.-based chip maker, held an analyst day on Wednesday, its first since 2012.

During its presentation, AMD executives laid out its new strategy to return to profitability, which will include paring down to focus on fewer products.

Investors appeared to be pleased with what they heard and pushed the bonds into higher territory come Thursday.

A trader deemed the 7¾% notes due 2020 up 3 points at 84 7/8. The 6¾% notes due 2019 ended half a point better at 88, as the 7% notes due 2024 rose 1¼ points to 80¼.

For 2014, AMD posted a loss of $403 million, or 53 cents per share, on revenue of $5.5 billion. The company said it is aiming to reach long-term annual earnings of 50 cents per share.

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