Seven Generations, Beazer, GTT, Masonite drive by, calendar builds; energy names jump on crude gains

By Paul Deckelman and Paul A. Harris

New York, Sept. 25 – The final week of September, and the calendar third quarter, got under way on Monday with the high-yield primary sphere continuing its recently busy pace.

Four issuers brought quickly shopped offerings to market, generating a total of $1.38 billion of new U.S. dollar-denominated and fully junk-rated paper.

While that was well down from the $3.85 billion of such notes that had gotten done in three tranches on Friday, it was considerably more evenly spaced out, since almost all of Friday’s new-issuance had been attributable to just one issuer, Avantor, Inc., which had priced a giant-sized, multi-tranche offering.

In contrast, no one transaction Monday reached mega-deal size.

Canadian oil and natural gas exploration and production operator Seven Generations Energy Ltd. had the day’s big deal – $700 million of eight-year notes, which were heard by traders to have firmed on heavy volume when the new bonds hit the aftermarket.

Builder Beazer Homes USA, Inc. did an upsized $400 million of 10-year notes, though it came too late in the session for much secondary dealings.

Earlier, cloud networking services provider GTT Communications, Inc. priced an upsized $125 million add-on to its existing 2024 notes, which firmed a little from its issue price.

Building products maker Masonite International Corp. also brought an upsized add-on deal to market, later in the session.

Syndicate sources meantime said that several other prospective issuers had also begun shopping new deals around to investors.

In the secondary realm, traders saw active dealings in Friday’s new deals from Avantor and from Cincinnati Bell, Inc.

Away from the new issues, energy names such as California Resources Corp. firmed smartly, in line with a big jump in crude oil prices.

Statistical market performance measures turned higher across the board on Monday, after having been mixed on Friday and lower all around on Thursday.

Seven Generations prices tight

In Monday's primary market, amid heavy news volume, Seven Generations Energy Ltd. priced a $700 million issue of eight-year senior notes (Ba3/B+) at par to yield 5 3/8%.

The yield printed at the tight end of yield talk in the 5½% area.

Credit Suisse and RBC were the joint bookrunners.

The Calgary, Alta.-based energy exploration and production company plans to use the proceeds to refinance its 8¼% senior notes due 2020.

Beazer upsized and tight

Beazer Homes USA, Inc. priced an upsized $400 million issue of 10-year senior notes (B3/B-) at par to yield 5 7/8%.

The issue size was increased from $300 million.

The yield printed at the tight end of yield talk in the 6% area. Initial price talk is in the low 6% area.

Credit Suisse, Deutsche Bank and Goldman Sachs were the joint bookrunners.

The single-family homebuilder plans to use the proceeds to partially refinance its existing senior notes due 2019 and 2023.

Masonite upsizes

Masonite International Corp. priced an upsized $150 million add-on to its 5 5/8% senior notes due March 15, 2023 (Ba3/BB-) at 104.

The issue size was increased from $125 million.

The reoffer price came rich to the 103.5 initial guidance.

BofA Merrill Lynch was the sole bookrunner.

Proceeds will be used for general corporate purposes which may include future acquisitions, the repurchase of common shares and working capital needs.

GTT upsized and rich

GTT Communications, Inc. priced an upsized $125 million tack-on to its 7 7/8% senior notes due Dec. 31, 2024 (Caa1/CCC+) at 106.00 to yield 6.498%.

The issue size was increased from $100 million.

The reoffer price came at the rich end of the 105.5 to 106 price talk.

Credit Suisse, Citizens Bank, KeyBanc, SunTrust and Wells Fargo were the joint bookrunners.

The McLean, Va.-based cloud networking services provider plans to use the proceeds for general corporate purposes including an acquisition.

Caesars plans $1.7 billion

Caesars Entertainment Corp. plans to price $1.7 billion of eight-year senior notes later in the Sept. 25 week.

Initial guidance has the debt refinancing deal coming together with a yield in the low 5% area, a trader said.

JP Morgan is the lead bookrunner among a syndicate of banks involved in the deal.

West Corp. roadshows $1.35 billion

West Corp. started a roadshow on Monday in New York for a $1.35 billion offering of eight-year senior notes (B3/CCC+/B-).

A global investor conference call is set for Tuesday.

Initial price talk is in the low 8% area, a trader said.

Joint bookrunner RBC will bill and deliver for the buyout deal. Credit Suisse, Barclays, BofA Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Goldman Sachs are also joint bookrunners.

Pilgrim's Pride roadshow

Pilgrim's Pride Corp. started a two-day roadshow on Monday for a $700 million two-part offering of senior notes.

The deal includes an add-on to the 5¾% notes due March 15, 2025, and new 10-year senior notes, with tranche sizes remaining to be determined.

Joint bookrunner Barclays will bill and deliver. Rabo Securities and RBC are also joint bookrunners.

The Greeley, Colo.-based poultry producer plans to use the proceeds to repay seller note financing that JBS SA provided to fund a portion of the Moy Park acquisition.

Jonah Energy pricing Friday

Jonah Energy LLC is marketing $500 million of eight-year notes in a deal expected to price on Friday.

Initial guidance anticipates a yield in the low 7% area.

JP Morgan is leading the debt refinancing deal.

FLY Leasing starts roadshow

FLY Leasing Ltd. started a roadshow on Monday for a $300 million public offering of seven-year senior notes.

Initial guidance has the deal coming in the low 5% area, a trader said.

Jefferies is the sole bookrunner for the debt refinancing deal.

Friday outflows

The daily cash flows of the dedicated high-yield bond funds were flat-to-negative on Friday, the most recent session for which data was available at press time, according to a trader.

High-yield ETFs sustained $48 million of outflows on the day.

Actively managed funds saw $45 million of outflows on Friday.

Dedicated bank loan funds were also flat-to-negative on the day, sustaining $25 million of outflows.

Seven Generations seen better

In the secondary arena, a trader said that “we were expecting a bunch of deals” to come to market – and observers were not disappointed.

The new Seven Generations 5 3/8% notes due 2025 were seen by traders to have moved up when they were freed for aftermarket dealings, with one pegging the notes at 101 bid, well up from their par issue price.

A market source at another desk saw them going home at 100 7/8 bid and said that the Canadian energy operator’s new deal was easily the day’s busiest credit in Junkbondland, with over $76 million having changed hands by the close.

GTT add-on firms

Traders also saw GTT Communications’ 7 7/8% add-on to its existing $450 million of 7 7/8% notes due in December of 2024 had firmed by around ½ point, to a 106½-to-107 bid context, after pricing at 106 bid earlier.

The traders meantime did not immediately report any initial aftermarket dealings in the day’s other two issues, which had come to market later in the session – Atlanta-based homebuilder Beazer’s 5 7/8% notes due 2027, or Tampa, Fla.-based door manufacturer Masonite International’s add-on to its existing $475 million of 5 5/8% notes due in March of 2023.

Avantor adds to gains

The traders said that there were active aftermarket dealings Monday in Friday’s huge deal from Avantor, Inc., adding to the hefty gains notched when the bonds initially traded right after pricing.

They saw its 6% senior secured notes due 2024 move up to around a 102¼-to-102½ bid context, up from the 101¾ bid level that the notes had reached on Friday, when the Center Valley, Pa.-based manufacturer of ultra-high-purity materials for the life sciences and advanced technology industries had priced $1.5 billion of those notes as part of a $4.1 billion equivalent three-part regularly scheduled forward calendar offering. That tranche priced at par after having been upsized from an originally planned $1.401 billion.

A market source said that more than $35 million traded on Monday.

And the source also said that about the same amount of new 9% senior unsecured notes due 2025 had moved around, seeing that paper up ½ point on the day at 100¾ bid.

Avantor had priced $2 billion of those notes at par Friday, after the tranche was downsized from an originally announced $2.25 billion, and the new notes gained around ¼ point initial secondary trading.

The deal also included €500 million of 4¾% senior secured 2024 notes, which also priced at par.

Cincinnati Bell eases

Friday’s other offering – Cincinnati Bell’s 8% notes due 2025 – was seen to have lost a little ground in Monday’s trading, with one trader seeing the Ohio-based telecommunications company’s new notes down 1/8 point, at 100¾ bid, 101¼ offered, while at another desk, they were located at 100¾ bid, called down ¼ on the day.

More than $14 million traded on Monday.

The company had priced $350 million of the notes at par on Friday via CB Escrow Corp., and they had gained around 1 point in initial secondary dealings.

Energy names up big

Away from the new deals, the traders noted that oil and gas names had shot up notably, with world crude oil prices having likewise soared on Monday.

California Resources Corp.’s 8% notes due 2022 zoomed by almost 3½ points on the day, to just under 66½ bid, on volume of around $18 million.

Jones Energy Inc.’s 6¾% notes due 2022 – a credit which one trader said “we don’t usually see” – jumped by 2½ points, to 80¼ bid, with over $14 million traded.

November-delivery West Texas Intermediate crude gained $1.56 per barrel in Monday trading on the New York Mercantile Exchange, settling at $52.22

Indicators turn better

Statistical market performance measures turned higher across the board on Monday, after having been mixed on Friday and lower all around on Thursday.

The KDP Daily High Yield Index firmed by 5 basis points on Monday to end at 72.32, its first advance after two straight losses of 3 bps each on Thursday and Friday.

Its yield was unchanged at 5.12% after having widened by 3 bps on Friday.

The Markit CDX Series 28 High Yield Index was up by 1/32 point Monday, ending at 107 1/32 bid, 107 1/16 offered, after having edged up slightly on Friday, which followed two straight losses.

The Merrill Lynch North American High Yield was up by 0.092% on Monday, after gaining 0.015% Friday – its first gain after two straight losses.

That lifted its year-to-date return to 6.827% – a new peak level for the year – from Friday’s 6.729%, and from the former peak level of 6.751%, set last Wednesday.

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