Pricing scene quiet, though primary calendar builds; recent deals quiet; Intelsat Jackson jumps

By Paul Deckelman

New York, March 5 – Beginning the first full trading week in March, the high-yield primary market fell silent on Monday, with no U.S.-dollar-denominated and fully junk rated paper seen having priced.

That was a comedown even from Friday’s anemic session, when just $200 million had priced in one add-on transaction, to say nothing of Thursday’s super-session that produced nearly $2.6 billion of new junk bonds.

But while nothing priced on Monday, there was activity going on behind the scenes, as the forward calendar saw a slew of new-deal announcements.

Travel industry services provider Travelport Worldwide Ltd. was heard by high-yield syndicate sources to have begun a roadshow for a proposed $650 million offering of eight-year senior secured notes. That marketing campaign will continue all week, with pricing expected at the end of the week.

There was a trio of deals coming out of the energy sector.

CNX Midstream Partners LP and its wholly owned CNX Midstream Finance Corp. subsidiary were preparing to hit the road on Tuesday to sell investors on a $400 million eight-year notes deal. That deal is also expected to price after wrapping up on Friday.

Two companies that provide compression equipment and services for oil and natural gas producers were heard to be in the market.

USA Compression Partners, LP plans to sell $725 million of eight-year senior notes, with pricing expected by Friday.

And CSI Compressco LP and its wholly owned CSI Compressco Finance Inc. subsidiary were heard to be offering some $350 million of seven-year secured paper, with timing on that transaction still up in the air.

A pair of potential new deals meantime appeared in the European junk market – euro-denominated offerings from British debt purchaser Arrow Global Finance plc and from the Netherlands arm of international vehicle rental giant Hertz Global Holdings, Inc.

Away from the upcoming deals, secondary market traders reported a lackluster Monday in Junkbondland, with little activity seen even in recent new issues such as Friday’s add-on from builder Meritage Homes Corp. or Thursday’s two-part megadeal from global power producer AES Corp.

However, one name which was moving up on relatively decent volume was satellite communications company Intelsat Jackson Holdings SA.

Statistical market performance measures were mixed for a second session in a row on Monday; they had turned mixed on Friday, after having been lower all around on Wednesday and again on Thursday. The indicators had also been mixed last Tuesday.

Travelport shops eight-year offering

In the primary sphere, high-yield syndicate sources heard that Travelport Worldwide Ltd. had kicked off a roadshow on Monday in New York for a proposed $650 million offering of eight-year senior secured notes (expected ratings B1/B+).

That marketing blitz was scheduled to continue there through Tuesday with a mid-morning investor meeting and conference call, then move on to Boston on Wednesday and finish up the week on the U.S. West Coast with presentations Thursday and Friday in Los Angeles and San Francisco.

Pricing is expected after that.

The deal is bring brought to market via bookrunners Citigroup Global Markets Inc., Goldman Sachs & Co., .Bank of America Merrill Lynch, Morgan Stanley & Co. Inc. and UBS Securities LLC.

The Langley, U.K.-based provider of a wide range of electronic travel commerce services to the global travel and tourism industry and its customers expects to use the proceeds from the senior secured notes offering, together with borrowings a concurrently planned new senior secured credit agreement, to repay borrowings under its existing credit agreement in full and pay fees and expenses related to the offering.

CNX Midstream hits the road

The syndicate sources also heard CNX Midstream Partners LP and CNX Midstream Finance Corp. getting ready to open a roadshow on Tuesday for their $400 million of eight-year notes this week.

That marketing is expected to continue through Friday, with pricing expected thereafter.

That deal is being done through bookrunners J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, PNC Capital Markets LLC, Mitsubishi UFJ Securities International plc, B-of-A Merrill Lynch, TD Securities (USA) LLC and Capital One Securities.

CNX Midstream Partners, a Pittsburgh-based master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia, plans to use most of the net proceeds from the sale of the notes to fund its previously announced $265 million acquisition of its corporate parent CNX Resource Corp.’s 95% interest in the Shirley-Pennsboro gathering system, which gathers and transports gas in the core wet gas region of the Marcellus Shale in West Virginia, for $265 million.

The remaining proceeds from the note issue will be used to repay existing debt under CNX Midstream’s revolving credit facility and for general partnership purposes.

The notes will be subject to a special mandatory redemption at 100% of the issue price if the Shirley-Pennsboro transaction is not completed on or before June 1.

USA Compression pricing this week

Also in the energy arena, USA Compression Partners, will be shopping around $725 million of senior notes due 2026, with high-yield syndicate sources seeing a likely pricing Friday via bookrunners J.P. Morgan and Barclays Capital Inc.

They said that initial whispers on the deal in the marketplace indicated a yield in the low 7% area.

The company – an Austin, Texas-based third-party provider of compression services to customers across the oil & gas industry, allowing the movement of natural gas and crude oil through the domestic pipeline system – plans to use the net proceeds of the offering, together with the net proceeds from a private placement of its preferred units and borrowings under its asset-based revolver, to fund the $1.7 billion purchase price of its previously announced acquisition of all of the issued and outstanding membership interests in CDM Resource Management LLC and CDM Environmental & Technical Services LLC from Energy Transfer Partners, L.P.

That price includes about $1.225 billion of cash, plus units representing limited partner interests in USA Compression Partners.

CSI Compressco brings secured deal

Compression industry sector peer CSI Compressco LP and its wholly owned CSI Compressco Finance Inc. subsidiary were meantime shopping around some $350 million of senior secured first-lien notes due 2025 (B1/B+).

Information on the timing, marketing plans, investment banks involved in the Rule 144A/Regulation S offering and the call protection status and other features of the notes was not immediately available.

The company – a provider of compression services and equipment for natural gas and oil production, gathering, transportation, processing, and storage based in The Woodlands, Texas – plans to use the net proceeds from the offering to repay all of its outstanding revolver borrowings and terminate that facility and for general partnership purposes, including the expansion of its compression fleet.

Arrow, Hertz bring euro issues

In the European segment of the high-yield market, syndicate sources said that Arrow Global Finance plc will sell €250 million eight-year senior secured floating-rate notes (BB).

J.P. Morgan and HSBC Bank plc. will lead that deal.

The notes will have two years of call protection.

Arrow Global Finance is a subsidiary of Arrow Global Group plc, a Manchester, U.K.-based company that purchases debt from banks, credit card companies and telecommunications businesses.

It plans to use the proceeds from the note s to refinance its existing €230 million senior secured floating- rate notes due 2023.

Also out of Europe, Hertz Holdings Netherlands BV, the wholly owned Netherlands subsidiary of Estero, Fla.-based global vehicle rental and leasing giant Hertz Global Holdings, Inc., plans to sell €500 million of senior notes in a Rule 144A/Regulation S transaction.

There was no immediate word on the timing or tenor of the deal, the investment banks involved, or other structural features of the notes such as their call status.

Nor was there an immediate word on possible use of the new-deal proceeds.

A sleepy secondary market

Away from those new-deal announcements, a trader said that not a lot was going on in the high-yield world on Monday.

“Today kind of stunk,” he flatly declared.

“We saw a handful of deals getting announced, and that took focus from the accounts.

“We were kind of starved for inquiries and responses today.”

He said that he had seen little or no trading in recent issues, for instance, Friday’s offering from Scottsdale, Ariz.-based homebuilder Meritage Homes Corp., which did a downsized $200 million add-on to its existing $200 million of notes that the company had priced back in May of 2015.

That was admittedly just a smallish add-on deal, not likely to trade around much – but he said he hadn’t even seen anything going on with Thursday’s $1 billion two-part offering from global power producer AES Corp.

“That literally didn’t trade today,” despite its hefty size and AES being a very familiar junk bond name.

“It’s kind of crazy”

Intelsat gains altitude

One name that he did see racking up some volume Monday was Intelsat Jackson, a subsidiary of Luxembourg-based communications satellite company Intelsat SA.

He said that the company’s 7½% notes due 2021 were up by 2½ points “on some decent volume,” and “other parts of the [capital] structure were up as well.

He said there didn’t seem to be any fresh news out on the company – “I couldn’t even tell you why [they were up].”

He noted however “that name moves on a daily basis, in both directions pretty well.

At another desk, a market source saw the 7½% notes ending at 93 bid, up 2½ points on the day, with over $15 million having changed hands.

Its 7¼% notes due 2020 gained ¾ point on the session to close at 94½ bid, on more than $17 million of volume.

Indicators stay mixed

Statistical market performance measures were mixed for a second session in a row on Monday; they had turned mixed on Friday, after having been lower all around on Wednesday and again on Thursday. The indicators had also been mixed last Tuesday.

The KDP High Yield Daily Index fell by 4 basis points on Monday to end at 70.47, its fourth straight loss. On Friday, it had slid by 17 bps.

Its yield meanwhile rose by 3 bps to 5.75%, its fourth straight widening out. It had moved up by 7 bps on Friday.

But the Markit CDX Series 29 High Yield Index posted its second straight improvement, moving up by 3/32 point on Monday to 106 23/32 bid, 106¾ offered. On Friday, it had gained 5/32 point, its first such advance after three straight losses before that.

The Merrill Lynch High Yield Index was also on the plus side on Monday, rising by 0.184% breaking a four-session losing streak. On Friday, it had fallen back by 0.335%, following Thursday’s 0.025% decline.

Monday’s gain narrowed the index’s year-to-date deficit to 0.647% from Friday’s 0.83%. Those loss levels were still in from the 1.248% cumulative red ink posted on Feb. 9, its second straight new widest deficit level for the year.

Its peak cumulative gain for the year so far was 0.936%, established on Jan. 26.

© 2015 Prospect News.
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