No pricings but calendar builds, Caleres on tap; coal, energy names remain under pressure

By Paul Deckelman and Paul A. Harris

New York, July 20 – After last week’s moderately busy schedule of pricings, including the first megadeal-sized offering in weeks, the high-yield primary market took something of a breather on Monday.

Syndicate sources reported no pricings of any U.S. dollar-denominated, junk-rated offerings from domestic or industrialized-country borrowers.

However, despite the lack of deals coming to market there was plenty of activity in the primary. The sources said that the Junkbondland forward calendar continued to grow, with the addition of several offerings.

The most immediate one is clothing and footwear company Caleres Inc.’s $200 million eight-year issue, which is expected to come to market on Tuesday.

Two other dollar deals joined the forward calendar. One was an $800 million eight-year offering from clean power company TerraForm Global, Inc. – a subsidiary of which just did a $300 million add-on to its existing notes last week.

Hospital operator Prime Healthcare Services, Inc. will shop a $700 million eight-year offering around to potential buyer via an investor call Tuesday, with pricing seen later in the week.

Among recently priced issues, traders again saw brisk activity in the new WPX Energy Inc. $1 billion two-part offering, which priced on Friday. Both tranches were off from their initial aftermarket gains.

Among other deals that priced last week, Genesis Energy LP’s seven-year notes were seen slightly firmer.

But that was the exception to the rule, with most natural resources names, including Consol Energy and California Resources Corp. seen lower.

Statistical market performance indicators were lower across the board for a second straight session.

TerraForm roadshow for Tuesday

Amid heavy news volume in the primary market – with announcements of pending deals in dollars, euros and pounds – there were no dollar-denominated issues priced on Monday.

However the dollar calendar saw a substantial buildup of business, all of it expected to price during the run-up to August.

TerraForm Global plans to start a roadshow on Tuesday for a $800 million offering of green-eligible seven-year senior notes (expected ratings B2/B+).

The roadshow is scheduled to wrap up on July 30.

J.P. Morgan and Barclays are the joint physical bookrunners. Citigroup, Morgan Stanley, Goldman Sachs, BofA Merrill Lynch and Deutsche Bank are the joint bookrunners.

Proceeds will fund green-eligible capital expenditures.

Prime Healthcare sets call

Prime Healthcare Services is in the market with a $700 million offering of eight-year senior notes (expected ratings B3/B+).

An investor call is scheduled for 12:30 p.m. ET on Tuesday.

The deal is set to price Friday.

Early guidance on the deal is in the mid-7% yield context, according to a trader.

Wells Fargo is the left bookrunner. Barclays is the joint bookrunner. BBVA, Capital One and CIT are the co-mangers.

The Ontario, Calif.-based owner and operator of acute care hospitals plans to use the proceeds to fund its acquisition pipeline, as well as to refinance its credit facility and fund a special dividend.

Caleres to price Tuesday

Caleres plans to price a $200 million offering of eight-year senior notes (existing ratings B1/BB).

Although no official price talk had surfaced by press time on Monday, the deal is being guided in the low 6s, according to a trader.

BofA Merrill Lynch, Wells Fargo and J.P. Morgan are the joint bookrunners for the debt refinancing deal.

GKFL prices atop talk

The sole junk deal to clear on Monday was a euro-denominated offering that came at the conclusion of a roadshow.

German debt collector GFKL priced a €365 million issue of seven-year senior secured notes (B2) at par to yield 7½%.

The yield printed on top of yield talk.

A proposed tranche of floating-rate notes was withdrawn, and the proceeds shifted to the fixed-rate tranche, leaving the size of the deal unchanged.

Joint bookrunner Goldman Sachs will bill and deliver for the debt refinancing deal. Citigroup, Credit Suisse and ING were also joint bookrunners.

Labco/Synlab plans €1.05 billion

The session saw a formidable buildup in the euro- and sterling-denominated active calendars.

That buildup probably reflects an expectation that investors in France and Germany will be largely unavailable during the month of August, a London-based sellside source commented.

Dealers launched €1.05 billion of high-yield notes backing the acquisition of Germany-based Synlab.

The Labco/Synlab deal is coming in three tranches, two secured and one unseucred.

Ephios Bondco plc is selling €675 million of Labco secured notes due July 1, 2022 (B2) in two add-on tranches. Included are an add-on to the 6¼% notes, €500 million of which priced at par on June 12, and an add-on to the Euribor plus 500 basis points notes, €300 million of which priced 99.5 on June 12.

Tranche sizes remain to be determined.

Lead left bookrunner JPMorgan will bill and deliver for the secured notes.

Ephios Holdco II plc is selling €375 million of new eight-year senior unsecured notes (Caa1).

Lead left bookrunner Goldman Sachs will bill and deliver for the unsecured notes.

JP Morgan and Goldman Sachs are the global coordinators.

Barclays, Deutsche Bank, BNP Paribas, HSBC and Morgan Stanley are the joint bookrunners.

Proceeds will be used to help finance the acquisition of Synlab by Cinven.

Verillia starts roadshow

Verallia began a roadshow on Monday for €860 million equivalent of high-yield notes.

Horizon Holdings III SAS is offering €560 million equivalent of seven-year senior secured notes (expected ratings B1/B+) in dollar- and euro-denominated tranches.

Horizon Holdings I SAS is offering €300 million of eight-year senior unsecured notes (expected ratings B3/B-).

The tranche amounts are target sizes.

The roadshow wraps up on July 28 and the deal is set to price subsequently.

Global coordinator Credit Suisse will bill and deliver. Deutsche Bank is also a global coordinator.

Barclays, BNP Paribas, Nomura and SG CIB are joint bookrunners.

Proceeds will be used to help fund the buyout of the France-based glass packaging manufacturer by Apollo and to repay debt.

Dufry starts Tuesday

Dufry Group SCA plans to conduct a Tuesday-to-Thursday European roadshow for a €500 million offering of eight-year notes.

Global coordinator and bookrunner BofA Merrill Lynch will bill and deliver for the acquisition deal. BBVA, ING, Santander GBM and UniCredit Bank are also joint global coordinators and bookrunners.

Credit Agricole CIB, Goldman Sachs International, HSBC, RBI, Royal Bank of Scotland and UBS are also bookrunners.

Balta starts roadshow

Balta Group began a roadshow on Monday for a €290 offering of senior secured notes.

Joint bookrunner Deutsche Bank will bill and deliver. Barclays, Credit Suisse and ING are also joint bookrunners.

Proceeds will be used to help fund the acquisition of the Baafs-Vijve, Belgium-based soft flooring company by Lone Star Fund IX and to repay Balta debt.

SNAI to bring mirror notes

Italy-based sports betting firm SNAI SpA plans to price €110 million of notes mirroring its 7 5/8% senior secured notes due June 15, 2018 (expected ratings B1/B-) on Tuesday.

Joint bookrunner UniCredit Bank will bill and deliver. JPMorgan is also a joint bookrunner.

The Porcari, Italy-based company plans to use the proceeds to refinance debt and for general corporate purposes, and also to fund costs related to its acquisition of Cogemat SpA.

Center Parcs roadshows

Center Parcs Group began a roadshow on Monday for a £560 million offering of class B2 fixed-rate secured notes.

Joint bookrunner Deutsche Bank will bill and deliver. Barclays, HSBC and JPMorgan are also joint bookrunners.

Proceeds will be used to repay the company’s outstanding class B notes and to help fund the acquisition of Center Parcs by Brookfield Property Partners LP.

Thames Water pricing Tuesday

Thames Water (Kemble) Finance plc started what is expected to be a brief roadshow on Monday for its £175 million offering of non-callable seven-year senior secured notes (B1//BB).

The roadshow is scheduled to wrap up on Tuesday, and the Regulation S only deal is set to price thereafter.

HSBC, Morgan Stanley and Royal Bank of Scotland are the joint bookrunners.

The Reading, England-based provider of water and wastewater services to London and surrounding areas plans to use the proceeds to repay debt and to pay expenses related to the close-out of hedging arrangements.

WPX busy, easier

In the secondary market, traders saw the new WPX Energy two-part deal still trading actively, though at somewhat easier levels than those bonds had notched in initial aftermarket dealings following their Friday pricing.

A trader quoted the company’s 8¼% notes due 2023 at 100¼ bid while seeing its 7½% notes due 2020 “right around the par level.”

A second trader saw two-sided markets in the par bid, 100½ offered neighborhood for the 8¼s, which he said was down from Friday’s levels around 100½ bid, 101¼ offered.

He quoted the 7½s at 99 7/8 bid, 100 1/8 offered on Monday, also lower than 100½ bid, 101¼ offered on Friday.

A market source at another desk said that activity in the credits remained robust, seeing over $47 million of the 8¼% notes having changed hands around 100 3/16 bid – calling that down nearly ½ point from Friday’s close.

He saw more than $20 million of the 7½% notes having traded to around par bid at the close, off by ¼ point.

On Friday, WPX, a Tulsa, Okla.-based oil and natural gas exploration and production company, priced $1 billion of the notes at par, in tranches of $500 million each, after the regularly scheduled forward calendar deal was downsized from $1.2 billion originally.

The 7½% notes were seen to have gotten as good as around a 100¼ bid context, with the 8¼s having firmed to 100½ to 100¾ initially. About $50 million of each traded.

Genesis moves up

Also among the recently priced names, Houston-based midstream energy partnership Genesis Energy’s 9¾% notes due 2022 were seen by a trader around the 98½ bid level, which he called up ¼ point on the day. Volume was around $13 million.

Genesis’ quick-to-market $750 million offering had priced on Thursday at 98.629 yielding 7%.

While the new bonds had initially firmed following their pricing – one market source pegged them as high as 99½ bid early Friday – those gains faded away as Friday’s trading wore on, leaving the bonds around 98 to 98¼ bid on volume of more than $36 million.

Energy names trade off

Away from the new or recently priced issues, a trader said that “the theme of the day” was the downturn in the bonds of natural resources companies, such as oil and coal names.

“In the E&P space, we saw names down ½ to 1 point,” he declared, adding that “commodity names, like coal names, were off anywhere from 1 to 3 points.”

For instance, he saw Consol Energy’s 5 7/8% notes due 2022 fall to 74 bid early in Monday’s session from Friday’s closing levels around 78.

After hitting their early lows “they popped up a little bit,” to around 75½ to 76 – still down more than 2 points on the session.

Another trader quoted the bonds around 76½ bid, off 1½ points on the day, with over $23 million traded.

Oil names generally were lower, pulled down by sagging oil price – West Texas Intermediate crude for August delivery slid by 93 cents per barrel, or 1.83%, to $49.96 per barrel.

California Resources’ bellwether 6% notes due 2024 were seen down a deuce on the day at 78 bid, with about $10 million or $12 million traded. The Los Angeles-based E&P operator’s 5% notes due 2020 were off by more than 1¾ points at just under 83 bid.

“Other than that,” one of the traders said, “it was pretty quiet.”

Indicators extend losses

Statistical measures of junk market performance were lower across the board for a second consecutive session on Monday; they had fallen on Friday, after having been higher all around on Thursday. Monday’s downturn was the third in the last four.

The KDP High Yield Daily Index lost 11 basis points on Monday, ending at 69.66, its second straight loss and third in the last four sessions. On Friday, it had slid by 22 bps, after having inched up by 1 bp on Thursday, its second straight gain.

Its yield meanwhile rose by 3 bps to 5.82%, on top of Friday’s 3 bps rise. Before that, the yield had come in by 3 bps on Thursday, its second straight narrowing.

The Markit Series 24 CDX North American High Yield Index was marginally lower on Monday, ending at 106 7/8 bid, 106 15/16 offered. That was its second loss in a row and its third in the last four sessions. It had eased by 1/16 point Friday, after having risen by 5/16 point on Thursday.

The Merrill Lynch North American Master II High Yield Index saw its second straight setback, falling by 0.128% on Monday, in addition to the 0.24% loss posted on Friday. Before that, the index had been unchanged on Thursday and was higher over five consecutive sessions before that.

Monday’s loss dropped its year-to-date return to 2.321% down from 2.452% on Friday.

That year-to-date figure remained well down from the 4.062% reading recorded on May 29, the index’s peak level for the year so far.

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