No deals price, but five hit the road; new Transocean’s gains continue, market generally better

By Paul Deckelman and Paul A. Harris

New York, July 11 – The high yield market opened the new week on Monday with no dollar-denominated, junk-rated deals seen having priced – but syndicate sources said that a quintet of such deals had begun roadshows, with all of them expected to get done sometime this week.

The soonest could be the $250 million of five-year secured notes that International Wire Group, Inc., a maker of electrical wire products, is doing; that deal, marketed to investors via a conference call, could come to market as early as Tuesday.

Other deals that were introduced on Monday are expected to price later in the week.

The biggest would be from energy concern Extraction Oil & Gas Holdings, LLC, which is shopping $500 million of five-year paper to potential investors.

Two issuers based in Pittsburgh have deals in the market – heavy equipment rental company Cloud Crane, with $470 million of eight-year secured notes, and casino operator Rivers Pittsburgh, looking to sell $415 million of five-year secured notes.

Intermodal freight company US Express Enterprises Inc. plans $320 million shipment of eight-year notes by the week’s end.

Primaryside players reported one Monday pricing, out of Europe, as Italian construction and civil engineering company Salini Impreglio SpA did a €171.7 million add-on to its existing 2021 notes.

Back in the domestic market, there was a split-rated crossover deal priced by energy operator EnLink Midstream Partners, LP, which did an upsized $500 million of 10-year notes. Those notes saw considerable aftermarket activity.

The most recently priced purely junk-rated offering, from global deep-water energy drilling contractor Transocean Ltd., firmed solidly in active trading for a second straight session from the price at which it had come to market on Thursday.

Solid gains in busy trading were also seen in such recently priced credits as Dell, Inc., DISH Network Corp. and Cheniere Energy Partners, LP.

Statistical market performance measures were higher across the board for a third consecutive session on Monday, having strengthened on Thursday and again on Friday after having been mixed for three straight days before that. Including four consecutive stronger sessions last week, Monday marked the indicators’ seventh higher session in the last 10 trading days.

Salini prices tap

Italy's Salini Impregilo SpA priced Monday's sole deal, a €171,736,000 add-on to its 3¾% senior notes due June 24, 2021 (BB+/BB) that came at 102.25 in a quick-to-market transaction.

The reoffer price came in the middle of the 102 to 102.5 revised price talk. Initial talk was 101.75 to 102.

Bookrunner Banca IMI will bill and deliver for the debt refinancing and general corporate purposes deal. BNP Paribas, Goldman Sachs, Natixis and UniCredit were also bookrunners.

International Wire pricing Tuesday

In the dollar-denominated market the active forward calendar took aboard a handful of roadshow deals, all of which are expected to price by the end of the week.

International Wire Group, Inc. plans to price $250 million of five-year senior secured notes (B3/B) on Tuesday.

The offering was scheduled to be marketed by means of an investor conference call on Monday.

Jefferies the left bookrunner for the debt refinancing deal. Wells Fargo and KKR are joint bookrunners.

The notes become callable after three years at par plus 50% of the coupon.

The Camden, NY-based manufacturer and marketer of wire products plans to use the proceeds to refinance debt.

Extraction Oil & Gas roadshow

Extraction Oil & Gas Holdings, LLC and Extraction Finance Corp. began a roadshow on Monday in Los Angeles for a $500 million offering of five-year senior notes (Caa1).

Early guidance has the deal coming with a yield in the low-to-mid 8% context.

Barclays is the lead left bookrunner for the debt refinancing deal. Goldman Sachs, RBC and Wells Fargo are the joint bookrunners.

Cloud Crane second-lien deal

Cloud Crane plans to price a $470 million offering of eight-year senior secured second-lien notes (expected ratings Caa1/B) on Friday, at the conclusion of a roadshow.

JP Morgan, Barclays and Jefferies are the joint bookrunners.

Proceeds will be used to finance the acquisition and merger of AmQuip Crane Rental and Maxim Crane Works by Apollo Global Management LLC.

Rivers Pittsburgh secured notes

From the gaming sector, Rivers Pittsburgh, operator of the Rivers Casino in Pittsburgh, Pa., started a roadshow on Monday for a $415 million offering of five-year senior secured notes.

Early guidance has the deal coming with a yield in the 6½% area.

Goldman Sachs is the left bookrunner. Wells Fargo, Fifth Third and US Bancorp are the joint bookrunners.

Proceeds, together with a $50 million draw on the super-priority revolver and cash on hand, will be used to pay off the existing credit facility, redeem all outstanding 2019 notes, and to fund the repurchase by Pittsburgh Gaming Holdings of the Holdco notes and minority interests.

US Xpress eight-year deal

US Xpress Enterprises Inc. started a roadshow on Monday for a $320 million offering of eight-year senior notes.

Early guidance has the notes pricing with a yield in the 9% area.

JP Morgan and Wells Fargo are the joint bookrunners.

The Chattanooga, Tenn.-based intermodal freight company plans to use the proceeds to repay its term loan and its 2007 restated term loan.

Inflows on Friday

The dedicated high yield funds saw daily inflows on Friday, the most recent session for which data was available at press time.

High yield ETFs saw $491 million of inflows on the day.

Actively managed funds saw $20 million of inflows on Friday.

Crossover EnLink deal busy, better

In the secondary realm, a trader said that there was considerable aftermarket activity in EnLink Midstream Partners’ split-rated (Ba2/BBB-/BBB-) $500 million offering of 4.85% notes due 2026, with over $59 million seen having traded. They finished at 100 7/16 bid.

Most of the interest was generated by high-grade accounts reaching for some yield in the crossover space, rather than from traditional junk investors.

The Dallas-based midstream energy services provider had priced its deal at 345 basis points over comparable Treasuries, equivalent to a price of 99.859, yielding 4.868%, after the offering was upsized from $400 million originally.

Transocean trades up

Back among the purely junk-rated credits, Transocean’s new 9% notes due 2023 dominated the market for a second consecutive session, with a trader seeing the bonds trading anywhere from around 98 7/32 to 98 13/16 bid, as over $46 million changed hands.

“They were pretty active,” agreed a second trader, who saw those notes going home at 98¾ bid, which he called up 1 point on the day.

Yet another market source pegged the notes at 98 5/8 bid, or up ¾ point on the day.

Transocean, a Vernier, Switzerland-based provider of deep-water drilling services to the energy industry, priced $1.25 billion of those notes late in the day on Thursday at 97.5, to yield 9.499%, after the regularly scheduled forward calendar offering had been downsized from its originally planned $1.5 billion.

It was the first pricing seen in Junkbondland since June 20, when AmeriGas Partners LP, a Valley Forge, Pa.-based retail propane distributor, drove by the market with a $1.35 billion two-part offering, consisting of equally-sized $675 million tranches of eight- and 10-year senior notes (in the interim, there had been several small private-placement financings which did not really circulate in the market).

The new bonds, issued by the company’s Houston-based wholly-owned Transocean, Inc. subsidiary, had traded actively on Friday, when they were freed for aftermarket dealings, generating more than $126 million in volume, easily topping Friday’s Most Actives list. The bonds had initially fallen back from their issue price, coursing as low as 96¾ bid, before rebounding to end in a 97¾ to 97 7/8 bid context, the traders said.

Other Transocean bonds bounce

One of the traders said that “RIG’s whole structure was better in general,” referring to Transocean by its ticker symbol.

He said that those bonds were up by anywhere from ¼ point to ¾ point.

For instance, Transocean’s 8 1/8% notes due 2021 firmed by ½ point to 88¾ bid, on volume of more than $15 million.

Its 6½% notes due 2020 likewise improved to 94 5/8 bid, with over $18 million traded.

Transocean’s other bonds had initially firmed last week on the news the company was bringing its new deal and would be using $1 billion of the anticipated proceeds to fund a tender offer for a like amount of its existing notes, including the 6½% paper, but then fell back from those peaks around the middle of the week.

Recent issues rising

Traders said the junk market generally was solidly better, moving in tandem with resurgent equities, and most issues were improved.

Among the notable gainers Monday were some notes that priced in recent weeks.

For example, a trader said that Dell, Inc.’s 7 1/8% notes due 2024 were “much higher” over the past few sessions – he saw them ending at 108¾ bid, 109¼ offered, after having moved in a 108 to 109¼ range all day.

A second trader said that while the Round Rock, Texas-based computer manufacturing giant’s issue was up by about ½ to ¾ point on the day, “they were not outpacing the market per se.”

Dell, though its Diamond 1 Finance Corp. and Diamond 2 Finance Corp. funding subsidiaries, priced $1.625 billion of those bonds, and an equally large tranche of 5 7/8% notes due 2026 – at par on June 8 in a regularly scheduled forward calendar offering.

A trader saw DISH Network’s 7¾% notes due 2026 gain more than 1½ points, to end at 106¾ bid, on volume of over $14 million.

The Englewood, Colo.-based satellite television broadcaster priced $2 billion of those notes at par, also on June 8.

Cheniere Energy’s 5 7/8% notes due 2026 were 1¾ points better, at 104½ bid, with over $12 milllion traded.

The Houston-based liquefied natural gas company had priced $1.5 billion of those notes at par though its Sabine Pass Liquefaction LLC unit – another deal that came to market on June 8.

Indicators extend gains

Statistical market performance measures were higher across the board for a third consecutive session on Monday, having strengthened on Thursday and again on Friday after having been mixed for three straight days before that. Including four consecutive stronger sessions last week, Monday marked the indicators’ seventh higher session in the last 10 trading days.

The KDP High Yield index firmed by 37 bps on Friday to end at 68.89, its ninth consecutive gain and 10th advance in the last 12 sessions. It had also risen by 27 bps on Friday.

Its yield came in by 19 bps on Monday to 5.66% – its third straight new low for the year. The old mark was Friday’s 5.85%. That was its ninth straight narrowing after having widened for two sessions before that. It had also tightened by 12 bps on Friday.

The Markit Series 26 CDX index rose by 11/32 point on Friday to end at 104 9/32 bid, 104 5/16 offered, after having shot up by ¾ point on Friday. It was the fourth straight upturn after two sessions on the downside last week. Counting four straight gains before that, Monday was the index’s eighth upturn in the last 10 sessions.

And the Merrill Lynch High Yield index rose by 0.644%, its third straight gain, on top of Friday’s 0.503% improvement. Monday was ninth upturn in the last 10 sessions.

That gain raised its year-to-date return to 11.60%, its third new peak level for the year, from Friday’s 10.885%, the previous zenith.

It was also the first time the index had closed above the 11% mark since Dec. 31, 2012, when it closed out that year at 15.583%.

© 2015 Prospect News.
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