Hologic megadeal, upsized Nabors and Olin drive by; new Olin notes firm; Albertsons off on results

By Paul Deckelman and Paul A. Harris

New York, Jan. 16 – The high-yield market returned to work Tuesday after a long three-day holiday weekend with a surprisingly busy slate of new-deal activity, all of it opportunistically timed and quickly shopped transactions.

All told, some $2.35 billion of new U.S. dollar-denominated and fully junk-rated paper priced during the session in four tranches brought to market by three issuers, up from the $1.8 billion that got done in a trio of deals on Friday.

The junk market and other fixed-income markets in the United States were closed on Monday in observance of the Martin Luther King Day federal holiday.

Hologic, Inc., a medical technology provider, priced $1 billion of new paper in two tranches on Tuesday – a $600 million add-on to its existing notes due in October 2025 that it sold last fall and $400 million of new stand-alone 10-year notes.

Nabors Industries, Inc., an onshore oil, natural gas and geothermal drilling company, did an upsized $800 million of new seven-year paper.

And Olin Corp., a manufacturer of chemicals and firearms ammunition, brought an upsized $550 million offering of 12-year notes to market.

Traders said that only the latter issue saw any appreciable aftermarket volume, firming smartly from its par issue price.

They also saw considerable activity among recently priced issues from CSC Holdings, LLC – the day’s volume leader – Ensco plc and Aramark Services Inc.

Away from the new deals, supermarket operator Albertsons Cos., LLC’s several issues of bonds fell after it reported disappointing fiscal third-quarter results.

Statistical market performance measures were mixed for a second consecutive session on Tuesday. They had first turned mixed on Friday, after having finished higher across the board on Thursday, which in turn followed two straight lower sessions before that.

Hologic prices $1 billion

In Tuesday's primary market Hologic, Inc. priced $1 billion of senior notes (Ba3/BB-) in a two-part drive-by deal.

The debt refinancing deal featured a $600 million add-on to the 4 3/8% notes due Oct. 15, 2025, which priced at par to yield 4¾%. The reoffer price came at the rich end of the 99.5 to par price talk.

In addition Hologic priced $400 million of new 10-year notes at par to yield 4 5/8%. The yield printed at the tight end of yield talk in the 4¾% area.

Goldman Sachs was the left bookrunner. BofA Merrill Lynch, JP Morgan, MUFG, Citigroup, Wells Fargo and Morgan Stanley & Co. were the joint bookrunners.

Nabors upsized and tight

In other drive-by action Nabors Industries, Inc. priced an upsized $800 million issue of seven-year senior bullet notes (Ba3/BB) at par to yield 5¾%.

The debt refinancing deal was upsized from $600 million.

The yield printed at the tight end of the 5¾% to 5 7/8% yield talk.

Goldman Sachs was the left bookrunner. Morgan Stanley, Deutsche Bank, Citigroup and Wells Fargo were the joint bookrunners.

Olin upsized and tight

Olin Corp. also came with a quick-to-market Tuesday deal, pricing an upsized $550 million issue of 12-year senior notes (Ba1/BB) at par to yield 5%.

The issue size was increased from $500 million.

The yield printed at the tight end of the 5% to 5¼% yield talk.

Citigroup was the left bookrunner for the debt refinancing deal. JP Morgan, Wells Fargo, BofA Merrill Lynch, PNC, SMBC Nikko, Scotia, MUFG and Deutsche Bank were the joint bookrunners.

Crown Holdings in dollars and euros

Crown Holdings Inc. scheduled investor conference calls on Wednesday for a three-part offering of senior notes.

Included are $750 million offering of eight-year notes (Ba3), €335 million of five-year notes (Ba2) and €600 million of eight-year notes (Ba2).

Citigroup is the left bookrunner. Deutsche Bank, BofA Merrill Lynch, BNP Paribas, Santander, Wells Fargo, Mizuho, TD and Scotia are the joint bookrunners.

The Philadelphia-based manufacturer of packaging products for consumer marketing companies plans to use the proceeds, together with other available funds, to pay the cash consideration for its acquisition of Signode Industrial Group Holdings (Bermuda) Ltd. and to refinance the Signode debt.

Selecta roadshow

Selecta Group BV is on the road with €1.3 billion equivalent of six-year senior secured notes (expected ratings B3/B).

The deal includes euro-denominated fixed-rate notes, euro-denominated floating-rate notes and SEK-denominated floating-rate notes. Goldman Sachs will bill and deliver for these three tranches.

The offering also includes CHF-denominated fixed-rate notes. Credit Suisse will bill and deliver for this tranche.

The Cham, Switzerland-based self-service coffee and convenience food provider plans to use the proceeds to redeem its existing notes, repay its term loan, pay off its revolving credit facility, undertake the Argenta Group refinancing, repay an Argenta shareholder, repay a Selecta minority investor, and to put cash on balance sheet.

PureGym guidance high 6% area

PureGym set initial price talk in the high 6% area for its £360 million offering of seven-year senior secured notes.

The deal is set to roadshow through Wednesday and is expected to price Thursday.

Joint global coordinator Barclays will bill and deliver. Jefferies is also a joint global coordinator. RBC, Credit Suisse and ING are joint bookrunners.

The Leeds, U.K.-based gym chain plans to use the proceeds to refinance the bridge loan used to finance the acquisition by Leonard Green & Partners.

The market reopens

Traders said that activity in the secondary arena was largely subdued on Tuesday.

“There just was not a lot of stuff around,” one said, noting that “people were just getting back in after a long holiday weekend,” which had seen the junk market officially shuttered on Monday for the King holiday.

However, another market participant noted that “there was decent volume in some names.

Olin trades higher

One of the most notable credits of the day was the new Olin Corp. 5% notes due 2030, which traded actively once they hit the aftermarket following their pricing.

The Clayton, Mo.-based specialty chemicals and firearms ammunition manufacturer’s upsized $550 million issue had priced at par, “then broke late in the day around 101 bid,” a trader said.

Several other traders pegged the notes in a 100¾-to-101¼ bid context.

Another market source saw them going home at 100¾ bid, estimating volume at more than $68 million.

Nabors edges up

While the new Olin paper was the day’s standout performer, traders said, there was considerably less activity in the new Nabors Industries 5¾% notes due 2025, which priced later in the session.

One saw the Hamilton, Bermuda-based onshore oil, natural gas and geothermal drilling company’s new issue having moved up modestly to around 100 3/8 bid from their par issue price.

He said that less than $10 million of the upsized $800 million issue had traded by the close.

And traders did not immediately report any initial aftermarket dealings in either tranche of the new Hologic, Inc. $1 billion issue.

They noted that the Marlborough, Mass.-based medical technology company’s megadeal had also gotten done fairly late in the session.

CSC issue busy but steady

Elsewhere among recently priced issues, a trader said that the new CSC Holdings 5 3/8% senior guaranteed notes due 2028 were hovering around the 100¼ bid level “on pretty good volume.”

A second agreed that the credit was active around that same 100¼ bid level, which he called little changed on the day.

A market source at another desk said that more than $94 million of the new deal changed hands, easily topping the day’s Most Actives list.

CSC, a unit of Bethpage, N.Y.-based cable television company Cablevision – now a part of European cable giant Altice NV – priced an upsized $1 billion of those notes at par on Friday after that regularly scheduled forward calendar offering was doubled in size from an originally announced $500 million.

Moss Creek moves up

Another Friday deal – Dallas-based oil and natural gas exploration and production company Moss Creek Resources Holding, Inc. – was seen trading at solidly higher levels on busy volume for a second straight session.

A market source said those 7½% notes due 2026 gained 1 point on the session, ending at 103¾ bid, on volume of more than $26 million.

On Friday, those bonds had shot up to 102¾ bid in late-session trading after the $700 million regularly scheduled forward calendar offering – upsized from $650 million originally – had priced at par.

Ensco, Aramark stay active

Among other recently priced issues, London-based offshore oil and gas drilling company Ensco’s 7¾% notes due 2026 were seen by one trader unchanged at 101¾ bid on “pretty good volume,” although a second market source located the bonds at 101¼ bid, calling that down ¼ point on the day, on turnover of more than $37 million.

Ensco had priced $1 billion of those notes at par on Thursday, after the forward calendar deal was doubled in size from $500 million originally.

Philadelphia-based business services, foodservice and uniform supply company Aramark’s new 5% notes due 2028 were seen Tuesday having firmed by more than 1/8 point, pushing up to 102 5/8 bid, on volume of over $11 million.

That quick-to-market $1.15 billion transaction had originally priced at par last Wednesday.

Albertsons off after numbers

Away from the new or recently priced deals, traders saw Boise, Idaho-based supermarket operator Albertsons’ several issues of notes trading lower in active dealings Tuesday, with one explaining that “they had their earnings call and were active on the heels of those numbers.”

The company’s 5¾% notes due 2025 fell to 89 bid, a nearly 2-point drop from the levels just under 91 bid at which those bonds had traded during the middle of last week. More than $33 million of the notes changed hands.

Albertsons’ 6 5/8% notes due 2024 were likewise seen down 1¾ points on the day, closing at 94¼ bid, with over $11 million having traded.

The bonds retreated after Albertsons reported results for its 2017 fiscal third quarter ended Dec. 2.

Among other data points, the company reported that its net sales and other revenue of $13.6 billion remained flat for the quarter versus the year-earlier period.

While Albertsons enjoyed a big revenue boost from fuel sales at gas stations it operates of $117.6 million, and $95 million at newly opened or acquired stores, these increases were more than offset by a decrease in sales of $225.3 million attributable to a 1.8% fall in sales at stores open at least a year, a key retailing industry metric. Those identical-store sales were impacted by minimal food price inflation and pricing actions taken in response to a heightened competitive environment.

Gross profit margin decreased to 26.7% for the third quarter of fiscal 2017 compared to 28.1% a year earlier; the company said this was primarily attributable to investments in promotions and price made to respond to the competitive environment in addition to higher shrink expense partially driven by system conversions.

Adjusted EBITDA fell to $429 million from $674.8 million a year earlier, primarily reflecting lower gross profit, higher employee wage and benefit costs and deleveraging of sales on fixed costs in the third quarter of fiscal 2017 compared to the third quarter of fiscal 2016, Albertsons said.

Energy mostly off as crude declines

A fall in crude oil prices – the first after five straight sessions on the upside - helped to drag oil and gas names lower, traders said.

Among the losers were Plano, Texas-based E&P operator Denbury Resources, whose 9% notes due 2021 slid by more than ¾ point on the session to just over 104 bid, with over $16 million having traded.

Houston-based oilers Sanchez Energy and EP Energy were also both lower, with Sanchez’s 6 1/8% notes due 2023 falling ¼ point to 89¾ bid, also on around $16 million of turnover. EP’s 8% notes due 2025 were likewise off by ¼ point, at 79¾ bid, on over $12 million of volume.

But Los Angeles-based California Resources’ 8% second-lien senior secured notes due 2022 managed to hang in and actually gain 1/8 point, ending at 87½ bid, with over $12 million moving around.

Key domestic grade West Texas Intermediate for February delivery lost 57 cents per barrel in New York Mercantile Exchange dealings Tuesday, settling at $63.73, while the main international grade, March-contract North Sea Brent crude, was off by $1.11 per barrel in London futures trading, ending at $69.15

Frontier firms up

Frontier Communications’ several issues “were up a little on the day,” a trader said, seeing the Stamford, Conn.-based wireline telecommunications provider’s 11% notes due 2025 at 74¼ bid.

Another market source, who also saw the bonds finishing there, said the gain was more substantial, estimating around a 1½-point rise on the day, with over $22 million of volume.

Frontier’s 7 1/8% notes due 2023 were seen up 1 point on the day, at 67 bid, on $10 million of volume.

Its 7 5/8% notes due 2024 jumped by 1¾ points to 67½ bid.

The traders saw no fresh positive news that might explain that improvement. Frontier’s New York Stock Exchange-traded shares meantime swooned by 48 cents, or 5.78%, ending at $7.82, though on lighter-than usual volume.

Indicators stay mixed

Statistical market performance measures were mixed for a second consecutive session on Tuesday. They had first turned mixed on Friday, after having finished higher across the board on Thursday, which in turn followed two straight lower sessions before that.

The KDP High Yield Daily index rose by 4 basis points on Tuesday to 72.15, after having dropped by 6 bps on Friday.

The index was not published on Monday, with the market officially closed for the Martin Luther King Day federal holiday.

Its yield came in by 2 bps to 5.18%, after having risen by 1 bp on Friday.

But the Markit CDX Series 29 index was off by 3/32 point Tuesday, to 108½ bid, 108 17/32 offered, its third consecutive loss.

On Friday, it had eased by 1/16 point, after having gained more than 3/16 point on Thursday.

On Monday, the index – which was published despite the holiday-induced market close – had fallen back by almost 1/16 point.

The Merrill Lynch High Yield index, though posted its fourth successive gain on Tuesday, moving up by 0.05%, on top of gains of 0.114% on Thursday, of 0.019% on Friday, and of 0.051% on Monday, when the index was published despite the market close.

The latest gain raised its year-to-date return to 0.838%, up from Friday’s 0.736% and Monday’s 0.787%. However, it remains down from last Monday’s close at 0.862%, its peak cumulative level for the new year so far.

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