Three-part CIT drive-by leads deal parade; Ball, William Lyons, Buena Vista also price; Teva on tap

By Paul Deckelman and Paul A. Harris

New York, March 6 – After a quiet day on Monday, the high-yield primary market was back with a vengeance on Tuesday, as four issuers combined for a total of six quick-to-market tranches, generating more than $2.7 billion of new U.S. dollar-denominated and fully junk-rated paper – one of the biggest-volume sessions seen so far this year.

Banking company CIT Group, Inc. had the big deal of the day – a $1.4 billion three-part bond behemoth, consisting of three-, seven and 10-year notes.

Packaging manufacturer Ball Corp. did an upsized $750 million of eight-year notes.

Builder William Lyon Homes came to market with $350 million of 5.5-year paper.

And tribal casino operator Buena Vista Gaming Authority rolled the dice with a $205 million issue of five-year secured notes, which priced at a steep discount to par.

And away from the deals that actually got done on Tuesday, junk market primaryside sources said that Israel’s Teva Pharmaceutical Industries Ltd. set price talk for its $3.5 billion equivalent four-part offering of non-callable senior notes; that big deal, split into tranches of dollar- and euro- denominated notes, could price after the order books close on Wednesday.

In the secondary realm, traders saw a fair amount of initial aftermarket activity in the new William Lyon notes, which firmed solidly from their issue price.

Away from new-deal related names, the traders saw busy upside trading in several issues of Frontier Communications Corp. paper, after the wireline telecommunications provider announced a tender offer for a number of its outstanding bonds.

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

CIT prices three-part offering

In a Tuesday primary market session that came with a heavy volume of news, CIT Group Inc. priced $1.4 billion of high-yield notes in three tranches, the company announced.

The deal included $1 billion of senior notes (expected ratings Ba2/BB+) in two tranches and $400 million of 10-year senior subordinated notes (expected ratings Ba2/BB-).

CIT priced $500 million three-year senior notes at par to yield 4 1/8%.

The company priced $500 million of seven-year notes at par to yield 5¼%.

The $400 million of 10-year senior subordinated notes priced at par to yield 6 1/8%.

Pricing of each tranche was identical to talk.

BofA Merrill Lynch, Barclays, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc. were the joint bookrunners.

The New York-based bank holding company plans to use the proceeds from the senior notes to redeem $500 million of its 3 7/8% senior notes due February 2019 at 101.306 and redeem the remaining $383 million 5½% senior notes due February 2019 at 102.537, with any remaining proceeds for general corporate purposes, including a distribution to shareholders.

Ball Corp. upsizes

Ball Corp. priced an upsized $750 million issue of non-callable eight-year senior notes (Ba1/BB+/BB+) at par to yield 4 7/8% in a drive-by.

The issue size was increased from $500 million.

The yield printed at the tight end of yield talk in the 5% area.

Deutsche Bank, BofA Merrill Lynch, Goldman Sachs, Rabo, Mizuho, SMBC Nikko, UniCredit, Santander and KeyBanc were the joint bookrunners.

The Broomfield, Colo.-based provider of packaging solutions plans to use the proceeds, together with cash on hand, to repay debt under its term loan and revolving credit facilities as well as certain short-term borrowings, and for general corporate purposes.

William Lyon prices tight

William Lyon Homes priced a $350 million issue of 5.5-year senior notes (B2/B+) at par to yield 6% in a drive-by.

The yield priced at the tight end of official price talk and initial guidance which were both set at 6% to 6¼%.

JP Morgan was the left bookrunner.

Proceeds, together with $200 million in cash generated from certain land banking arrangements, and cash on hand, will be used to finance the acquisition of RSI Communities LLC and three additional related real estate assets, and to pay off California Lyon’s $150 million 5¾% senior notes due 2019.

Buena Vista Gaming 13% secured

Buena Vista Gaming Authority priced $205 million of 13% five-year senior secured notes (Caa1/B-) at 95.00 to yield 14.425%.

Jefferies was the bookrunner.

The Ione, Calif.-based tribal gaming authority plans to use the proceeds, along with about $15 million additional subordinated debt from Caesars Entertainment Corp. or its subsidiaries, to finance the development of Harrah's NorCal Casino.

Teva talks $3.5 billion

Away from the dollar-denominated issues that actually priced, Israel’s Teva Pharmaceutical Industries Ltd. set price talk for its $3.5 billion equivalent four-part offering of non-callable senior notes (Ba2/BB/BB).

The deal is coming in tranches of dollar- and euro-denominated notes.

Teva Pharmaceutical Finance Netherlands III BV, the dollar-denominated issuing entity, is selling $2.25 billion of notes in two tranches to be split between six-year notes talked at 6% to 6¼%, and 10-year notes talked at 7% to 7¼%.

Teva Pharmaceutical Finance Netherlands II BV, the euro-denominated issuing entity, is selling €1 billion of notes in two tranches to be split between four-year notes, price talk 3¼% to 3½% and seven-year notes, price talk 4½% to 4¾%.

Final tranche sizes remain to be determined.

Books close at 10 a.m. ET on Wednesday.

Active bookrunner Barclays will bill and deliver for the 10-year notes and seven-year notes. Active bookrunner BofA Merrill Lynch will bill and deliver for the six-year notes and the four-year notes. BNP Paribas, Citigroup, Credit Suisse and HSBC are also active bookrunners.

Morgan Stanley, RBC, Mizuho, MUFG and SMBC Nikko are passive bookrunners.

The Jerusalem-based pharmaceutical company plans to use the proceeds to fully repay its existing dollar-denominated and yen-denominated term loans due 2018 through 2022, as well as to fund the partial early redemption of its existing senior notes due 2018, and for general corporate purposes.

Belden euro deal

In the euro-denominated primary market St. Louis-based Belden Inc. priced a €350 million issue of 10-year senior subordinated notes (Ba3/BB-) at par to yield 3 7/8%.

The yield printed in the middle of the 3¾% to 4% yield talk.

Deutsche Bank, Goldman Sachs, JP Morgan and Wells Fargo were the bookrunners for the debt refinancing deal.

Elsewhere in the European primary market Arrow Global Finance plc set price talk in its dual-currency offering of senior secured notes.

The debt refinancing deal includes €150 million of eight-year senior secured floating-rate notes talked at a 350 basis points to 375 bps spread to Euribor.

In addition there is a £120 million add-on to the 5 1/8% senior secured notes due Sept. 15, 2024 talked 99.5 to 99.75.

Pricing is expected on Wednesday.

HSBC and JP Morgan are the global coordinators and physical bookrunners. ABN Amro, DNB Markets, Lloyds and NatWest are bookrunners.

One of the year’s biggest days

The slightly more than $2.7 billion of new dollar-denominated paper that got done on Tuesday was one of the biggest new-issuance days seen so far this year, according to data compiled by Prospect News.

It lagged only the $3.35 billion of new issuance from domestic or industrialized-country junk borrowers that got done in three tranches that got done back on Feb. 20, spearheaded by Vancouver, B.C.-based mining concern First Quantum Minerals Ltd.’s two-part $1.85 billion issue of new six- and eight-year notes, and by Overland Park, Kan.-based wireless operator Sprint Corp.’s $1.5 billion issue of eight-year paper.

William Lyon notes active

In the secondary market, traders said the new issue of William Lyon Homes 6% notes due 2023 were among the most actively traded credits of the day in Junkbondland.

One market source saw the Newport Beach, Calif.-based homebuilder’s deal shoot up to 100¾ bid from their par issue price.

He said that more than $24 million of the notes changed hands.

“William Lyon was the only one of the day’s new deals that we saw actively trading,” he declared.

Frontier firms on tender

Away from the new issues, traders saw Frontier Communications’ various series of bonds firm, after the Norwalk, Conn.-based wireline telecommunications company announced a tender offer for as much as $1.6 billion face amount of seven series of its outstanding paper (see related story elsewhere in this issue).

A trader said that Frontier’s 10½% notes due 2022 “easily topped the Most Actives list,” with over $35 million having traded.

He saw that paper up ¼ point at 85 bid.

Frontier’s 7 1/8% notes due 2023 firmed by over 1½ points, to end at just under 67 bid, with over $28 million of volume seen.

And its 11% notes due 2025 shot up by 2 3/8 points, ending at 79 7/8 bid, on more than $26 million of turnover.

Indicators stay mixed

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

The KDP High Yield Daily Index rose by 9 basis points to end at 70.56 on Tuesday, its first such improvement after four straight losses. On Monday, it had fallen by 4 bps, while on Friday, it had slid by 17 bps.

Its yield, however, atypically rose by 3 bps on Tuesday despite the index having risen; the yield and the index reading usually move inversely, with one rising as the other falls and vice versa.

It was the fifth straight widening out, and matched Monday’s 3 bps rise; on Friday, it had moved up by 7 bps.

But the Markit CDX Series 29 High Yield Index retreated on Tuesday after two straight sessions on the upside, falling back by almost 5/32 point to end at 106 9/16 bid, 106 19/32 offered. It had improved by 3/32 point on Monday, on top of Friday’s 5/32 point gain.

The Merrill Lynch High Yield Index was on the plus side for a second day in a row on Tuesday, gaining 0.222%, after rising by 0.184% on Monday to break a four-session losing streak. On Friday, it had fallen back by 0.335%, following Thursday’s 0.025% decline.

Tuesday’s advance narrowed the index’s year-to-date deficit to 0.426% from 0.647% on Monday.

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.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.