Market awaits Protection 1 terms; Fresh Market on tap; new Altice bonds up; energy notes gain

By Paul Deckelman and Paul A. Harris

New York, April 20 – For the first time this month, the high-yield primary market finished the day on Wednesday with no new issues seen having priced – maybe.

High-yield syndicate sources said that the market was awaiting terms on alarm company Protection 1’s $3.14 billion offering of second-priority senior secured notes due 2023.

They had been expected to price during the session, but terms had not been seen by the close, the sources said.

Meanwhile, the sources said that Fresh Market’s $800 million seven-year secured deal was waiting in the wings, with price talk on the issue seen on Wednesday and books on the deal expected to close late in the day on Thursday.

Among issues that have already priced, both new 10-year secured deals from European cable, broadband and telecommunications company Altice NV that came to market on Monday and Tuesday were seen having moved up in heavy trading Wednesday.

Away from the new-deal arena, energy and commodity names continued to ride their recent momentum, including such credits as Sanchez Energy Corp., AK Steel Holding Corp. and Freeport-McMoRan Copper & Gold Inc.

Statistical market performance measures were higher across the board for a second consecutive session on Wednesday; they had turned higher on Tuesday after having been mixed for two straight sessions before that. Wednesday was the third such stronger session out of the last five trading days.

Fresh Market talk 9½% to 9¾%

The dollar-denominated primary market generated a very thin news stream on Wednesday.

Fresh Market talked its $800 million offering of seven-year first-priority senior secured notes (Ba2/B) to yield 9½% to 9¾%.

Books close at the Thursday close of business.

Barclays will bill and deliver for the buyout deal.

The market awaited terms on the Protection 1 $3.14 billion offering of second-priority senior secured notes due 2023 (B3/B-) well into Thursday evening.

However, terms were not available at press time, according to sources who drew the late watch.

The deal, backing the buyout of ADT Corp. by Apollo Global Management, was talked to yield 9¼% to 9½% on Tuesday.

Of the $3.14 billion amount, about $1.25 billion is being taken down by sponsor Apollo in a private placement, a trader said.

The remainder, about $1.89 billion, is being sold to accounts; that portion is said to be 1.5-times oversubscribed, the trader added.

Elsewhere early guidance of 11% to 12% surfaced on the dollar-denominated piece of the Corral Petroleum Holdings AB $700 million equivalent offering of five-year PIK toggle notes (/B/B+), which is coming in dollars and euros, a trader said.

The Deutsche Bank-led deal is on a roadshow in Europe this week and comes to the United States in the week ahead.

Buzzi prints 2 1/8% coupon

In the European session, Italy-based cement manufacturer Buzzi Unicem SpA priced an upsized €500 million issue of 2 1/8% senior notes due April 28, 2023 (BB+) at a 200 basis points spread to mid-swaps.

The deal size was increased from €350 million.

The spread came at the tight end of the revised spread talk of mid-swaps plus 200 bps to 205 bps. Earlier talk was in the mid-swaps plus 225 bps area.

The high-yield deal with the ultra-low yield was said to have played to €3.25 billion of orders. The deal came in an investment grade-style execution and was pre-marketed on a non-deal roadshow earlier this week.

Joint bookrunner Banca IMI will bill and deliver. BNP Paribas and Citigroup were also joint bookrunners.

Loxam secured deal

Elsewhere Paris-based equipment rental company Loxam SAS began a brief roadshow for a €210 million offering of senior secured notes due 2023.

Deutsche Bank is managing the sale.

Loxam intends to use the proceeds to redeem its 7 3/8% senior subordinated notes due 2020.

Junk funds see inflows

The dedicated junk bond funds had positive cash flows on Tuesday, the most recent session for which data was available at press time.

High-yield exchange-traded funds saw $217 million of inflows on the day.

Actively managed funds saw $15 million of inflows on Tuesday.

However, the dedicated bank loan funds were negative on Tuesday, sustaining $30 million of outflows.

Altice issues lead actives

In the secondary market, a trader said of the new Altice issues that priced on Monday and Tuesday, “there was big volume there.”

Indeed, the 7½% senior secured notes due 2026 that the Luxembourg-based telecommunications company priced on Monday via its Altice Financing SA unit – Tuesday’s busiest bond by far, with over $358 million traded – remained very active on Wednesday, with another $71 million seen having changed hands.

The trader saw the bonds having moved up to the 101 bid level, versus their 100 3/8 finish on Tuesday, although a second market source said the gain was a little smaller than that.

The company had priced $2.75 billion of the notes at par after having upsized the drive-by issue from $2.25 billion originally.

Meanwhile, Altice’s $1.5 billion of 5½% senior secured notes due 2026 – priced by the company’s Altice-Cequel/Suddenlink U.S. operation at par on Tuesday – had moved up to 100¼ bid, the first trader said.

A second market source saw those bonds ending at 100 5/16 bid, with over $75 million having traded.

One of the market sources said that the week’s actions in Altice “are taking up a lot of people’s attention and volume.”

Energy, commodity issues firm

Outside of the new-deal realm, it was another day of gains for energy names and other companies dealing in commodities such as metals.

One of the biggest gainers were Sanchez Energy’s 6 1/8% notes due 2023, seen up 5¼ points at 68½ bid.

A trader at another desk saw its 7¾% notes due 2021 doing even better, closing the session at 72¾ bid, which he called a gain of 7¾ points on the day.

Houston-based Sanchez reported that its first-quarter total production increased around 25% year over year to 56,500 barrels of oil equivalent per day, exceeding prior guidance of 48,000 to 52,000 barrels.

Freeport-McMoRan’s “whole structure was up by 4 or 5 points,” a trader said, pegging the Phoenix-based energy and metals mining company’s 4.55% notes due 2024 up 4¾ points at 82½ bid.

AK Steel’s bonds were higher as well, with the West Chester, Ohio-based integrated producer’s 7 5/8% notes due 2020 up a deuce on the day at 85¾ bid.

Indicators remain higher

Statistical market performance measures were higher across the board for a second consecutive session on Wednesday; they had turned higher on Tuesday after having been mixed for two straight sessions before that. Wednesday was the third such stronger session out of the last five trading days.

The KDP High Yield Daily index climbed by 24 bps on Wednesday to end at 67.40, its second consecutive gain after one loss and its eighth such advance in the last nine sessions. On Tuesday, it had jumped by 37 bps.

Its yield came in by 9 bps on Wednesday, matching Tuesday’s tightening; it was its sixth straight narrowing and its seventh in the last nine sessions.

For a third straight session on Wednesday, the Markit Series 26 CDX North American High Yield index moved up by 11/32 point, matching the gains posted on Monday and Tuesday. It closed at 103 11/16 bid, 103¾ offered. It was also the eighth gain in the last nine sessions.

The Merrill Lynch North American High Yield Master II index finished up for a ninth consecutive session on Wednesday, climbing by 0.429% on top of Tuesday’s 0.634% improvement.

Wednesday’s advance lifted its year-to-date return to 6.483%, its eighth successive new peak level for the year, from the previous mark of 6.029% set on Tuesday, which had been the first time the index topped 6% since it ended at 7.419% back on Dec. 31, 2013.

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