Cinemark brings add-on; Kraton Polymers relaunches deal; Valeant again active, though mixed

By Paul Deckelman and Paul A. Harris

New York, March 16 – Movie theater operator Cinemark Holdings, Inc. was the star attraction in the high-yield primary arena on Wednesday, pricing a quickly shopped $225 million fungible add-on to its existing 2023 notes via a financing subsidiary, syndicate sources said.

A trader later quoted the new bonds a little above their issue price.

The sources also reported that specialty chemical maker Kraton Polymers LLC relaunched $440 million of 10½% notes due 2023, a deal that had originally gotten done back in early January when dealers converted bridge loans for an acquisition financing into the notes, the first transaction of the year in Junkbondland.

Traders saw robust activity among those relaunched bonds.

Elsewhere, the traders likewise saw brisk dealings in Radian Group Inc.’s upsized offering of five-year notes, which had priced on Tuesday and then firmed smartly when they hit the aftermarket. The bonds rode that upside momentum to further gains during Wednesday’s session.

Away from the new or recently priced deals, Valeant Pharmaceuticals International Inc.’s bonds dominated the junk market’s Most Actives list for a second straight session. Investors continued to react to Tuesday’s announcement by the Canadian drug manufacturer of lowered 2015 year-end and full-year 2016 guidance and the possibility that some of its debt may go into default because of delays in making required regulatory filings. But unlike Tuesday, when the bonds were beaten down by multiple points in heavy volume, traders saw the company’s notes as mixed on Wednesday, with some issues actually up on the day, or at least neutral, while others added to Tuesday’s big losses, all in busy trading.

Statistical market performance measures turned mixed on Wednesday after having been lower across the board on Tuesday. It was second mixed session in the last three trading days.

Cinemark well oversubscribed

The only new dollar-denominated issue to price during the Wednesday session in the high-yield primary market came from Cinemark USA, Inc.

The Texas-based movie chain operator priced a $225 million add-on to its 4 7/8% senior notes due June 1, 2023 (B2/BB) at 99 to yield 5.041%.

The reoffer price came at the rich end of the 98.5 to 99 price talk.

The deal was well oversubscribed, market sources said.

It was up just under a point at the close at 99½ bid, par offered, a portfolio manager said.

Barclays was the left bookrunner for the quick-to-market deal. Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were the joint bookrunners.

The Plano, Texas-based movie chain operator plans to use the proceeds to refinance its 7 3/8% senior subordinated notes due 2021.

Faurecia upsized and tight

In Europe, Faurecia SA launched and priced an upsized €700 million issue of senior notes due June 15, 2023 (Ba3//BB-) at par to yield 3 5/8%.

The deal size was increased from €500 million.

The yield printed on top of yield talk that was revised from earlier talk of 3¾% to 4%.

Global coordinator Citigroup will bill and deliver. Credit Agricole and HSBC were also global coordinators. JPMorgan and MUFG were joint bookrunners.

The Nanterre, France-based automotive equipment supplier plans to use the proceeds to redeem its 9 3/8% notes due 2016. The additional €200 million of proceeds resulting from the upsizing of the deal will be used for general corporate purposes including the repayment of short-term debt.

Constellium roadshow

Constellium NV plans to start a roadshow late this week for a $400 million offering of five-year senior secured notes.

The deal is expected to price in the middle part of next week.

Initial guidance is wide at 6% to 8%, a portfolio manager said.

Goldman Sachs & Co. is the left bookrunner. Deutsche Bank and HSBC Bank are the joint bookrunners.

The Netherlands-based developer of aluminum products plans to use the proceeds for general corporate purposes, which may include investments in Wise Metals and a joint venture with UACJ Corp., capital expenditures, debt repayment, working capital, research and development or future acquisitions. Constellium expects to invest €100 million of the proceeds in Wise Opco.

Earlier this year Constellium acquired Wise Metals and announced a joint venture with Japan-based UACJ.

Kraton prices relaunched notes

Kraton Polymers and Kraton Polymers Capital Corp. relaunched $440 million of 10½% senior notes due April 15, 2023 (B3/CCC+) on Wednesday morning.

The deal priced in the afternoon.

Although the dealer declined to disclose a specific price, traders and other market sources had the notes quoted in the low 90s late Wednesday afternoon.

It was trading with “a 91-handle,” a portfolio manager said, about 90 minutes after the Wednesday close on the East Coast of the United States.

The relaunch, which was marketed by means of a Wednesday morning conference call, came more than two months after dealers converted $440 million of bridge loans into the notes at a reoffer price of 96.225 on Jan. 6.

A $425 million notes offering had earlier been abandoned due to market conditions following an investor roadshow.

As with the earlier offer, the relaunch was led by bookrunners Credit Suisse Securities (USA) LLC, Nomura and Deutsche Bank.

The notes were part of the financing for the acquisition of Arizona Chemical Holdings Corp.

Kraton bonds busy

In the secondary realm, a trader said that the relaunched Kraton Polymers 10½% notes due 2023 were around the 91 bid level after that deal had priced.

At another shop, one of the traders also said that the Houston-based chemical manufacturer’s bonds were hanging around a 91 bid level.

He said that volume of more than $31 million put the credit among the day’s busiest junk market issues.

Cinemark seen better

A trader quoted the new Cinemark add-on to its existing 4 7/8% notes due 2023 in a 99¼-to-par bid context.

That was up from the 99 level at which the bonds had priced.

Another market source meantime said that the existing notes – which had been trading around the 101¾ level on Friday, their last previous sizable trade – came in on Wednesday to 100 5/8 bid, on round-lot volume of more than $2 million.

Radian bonds add to gains

Among recently priced issues, a trader said that Radian Group’s 7% notes due 2021 were busy on Wednesday, with over $21 million of the Philadelphia-based mortgage insurance company’s notes having changed hands.

He said that the bonds were moving around in wide range of 101 on the low side to 103¾ on the high side but that round-lot transactions took place in a 101 7/8-to-102 bid context, “with some odd lots trading up around a 103-plus handle.”

A second trader said the bonds were finishing at 102 bid, which he called a ½-point gain on the day.

Radian had priced its $350 million of the notes at par in a quickly shopped transaction on Tuesday that was upsized from an originally announced $325 million.

The new bonds “shot up right out of the gate” in initial aftermarket dealings on Tuesday, going home around the 101½ bid level.

CNH bonds climb

The traders also saw some upside activity, on sizable volume, in CNH Industrial Capital LLC’s 4 7/8% notes due 2021.

A market source said that over $44 million of the bonds had traded on Wednesday, moving up by 1/8 point to end at 99½ bid.

A second trader pegged the bonds in a 98 15/16-to-99 3/8 context, while a third had them up ¾ point on the day, trading between 99 and 99½ bid.

The Racine, Wis.-based company, the captive U.S. financing arm of London-based international construction and farm equipment manufacturer CNH Industrial NV, priced its quickly shopped $500 million offering on Monday at 99.48 to yield 5%.

Valeant tops actives

Away from the new or recently priced offerings, Laval, Que.-based drug manufacturer Valeant Pharmaceuticals’ bonds dominated the junk market’s Most Actives list for a second straight session as investors continued to react to Tuesday’s announcement of lowered 2015 year-end and full-year 2016 guidance and the possibility that some of its debt may go into default because of delays in making required regulatory filings.

A trader said that more than $426 million of the company’s various issues of bonds traded.

But unlike Tuesday, when the bonds were down as much as 8 or 10 points across the board, they were mixed on Wednesday.

Its 6 1/8% notes due 2025 actually firmed by 3/8 point to end at 76¾ bid, on $162 million of turnover.

But its 6 3/8% notes due 2020 dropped another 5 points on the day to end at 81½ bid.

Indicators turn mixed

Statistical market performance measures turned mixed on Wednesday after having been lower across the board on Tuesday. It was second mixed session in the last three trading days.

The KDP High Yield Daily index rose by 14 basis points on Wednesday to end at 65.48 after having plunged by 24 bps on Tuesday. Wednesday was the index’s fourth gain in the last five sessions.

Its yield came in by 3 bps to 6.72% on Wednesday, versus Tuesday’s 4 bps widening out. Wednesday marked the yield’s third narrowing in the last four sessions.

The Markit Series 25 CDX North American High Yield index jumped by nearly ¾ point on Wednesday, going home at 102 3/8 bid, 102 7/16 offered after having fallen over the previous two sessions, including on Tuesday, when it was off by 9/16 point.

However, it was the index’s fourth gain in the last six sessions.

Despite the upturns in the other indexes, the Merrill Lynch North American High Yield Master II index remained on the downside for a second consecutive session on Wednesday, losing 0.123%.

That followed Tuesday’s 0.315% easing, which followed three straight gains before that.

Wednesday marked the index’s fourth loss in the last seven sessions.

The setback Wednesday cut the index’s year-to-date return to 2.338% from 2.464% on Tuesday and from Monday’s 2.788%, which had been its third consecutive new peak level for the year so far.

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