Hub, Springleaf deals lead $3.3 billion session; new bonds mostly higher; broad market firm

By Paul Deckelman and Paul A. Harris

New York, Sept. 17 - The high-yield primary parade resumed on Tuesday, more than making up for the total lack of pricings during Monday's session.

Junkbondland syndicate sources reported that some $3.3 billion of new fully junk-rated, dollar-denominated paper came to market via six domestic issuers in seven tranches.

The market saw two $950 million transactions, both coming out of the financial sector. Insurance brokerage company Hub International Ltd. brought a single downsized tranche of eight-year notes, while lender Springleaf Financial Corp. priced a two-part offering consisting of eight- and 10-year notes.

Also from the financial sphere, private equity firm American Capital Ltd. did a $350 million five-year deal.

Apart from the financials, supermarket operator BI-LO Holdings LLC rang up an upsized $475 million of five-year paper.

TV station group owner Nexstar Broadcasting, Inc. did a $275 million add-on to its existing 2020 notes, while maritime energy drilling operator Hercules Offshore, Inc. priced $300 million of eight-year notes.

Traders said that the new deals were mostly modestly higher when they hit the aftermarket, although Hercules - appropriately - showed particular strength.

The overall market was seen firmer, and statistical measures of market performance ended higher across the board for a third consecutive session.

HUB prices mid-talk

A busy Tuesday primary market saw six issuers price a total of $3.33 billion.

Hub International priced a downsized $950 million issue of eight-year senior notes (Caa2//) at par to yield 7 7/8%.

The deal was downsized from $1,035,000,000, with $85 million of proceeds shifted to the concurrent term loan, raising the loan to $1.87 billion from $1,785,000,000.

The yield printed in the middle of the 7¾% to 8% yield talk.

BofA Merrill Lynch was the left bookrunner for the LBO deal. Morgan Stanley & Co. LLC, RBC Capital Markets, Macquarie, BMO Securities and UBS Investment Bank were the joint bookrunners.

Springleaf two-part deal

Springleaf Finance priced $950 million of non-callable senior notes (Caa1//B-).

A $650 million tranche of notes due Oct. 1, 2021 priced at par to yield 7¾%, and a $300 million tranche of notes due Oct. 1, 2023 priced at par to yield 8¼%.

Both yield printed on top of the respective yield talk.

BofA Merrill Lynch was the left bookrunner. Citigroup Global Markets and Credit Suisse Securities (USA) LLC are the joint bookrunners.

The Evansville, Ind.-based consumer finance company plans to used the proceeds for general corporate purposes, including the repayment or repurchase of a portion of its outstanding debt.

In a Tuesday press release, Springleaf announced that $500 million of the notes due 2021 and $200 million of the notes due 2023 are being issued in a concurrent exchange for $700 million of its outstanding 6.9% medium term notes, series J, due 2017.

BI-LO PIK toggles

BI-LO Holdings priced an upsized $475 million issue of five-year senior PIK toggle notes (Caa1/CCC+) at 99 to yield 8 7/8%.

The notes pay a cash coupon of 8 5/8%, which steps up by 75 basis points, to 9 1/8%, in the event of a PIK payment.

The deal was upsized from $400 million.

The coupon printed in the middle of the 8½% to 8¾% coupon talk. The reoffer price came on top of price talk. The yield came in the middle of the 8¾% to 9% yield talk.

Deutsche Bank Securities Inc. and Citigroup Global Markets Inc. were the joint bookrunners for the dividend deal.

Hercules drives through

Hercules Offshore priced a $300 million issue of eight-year senior notes (B3/B) at par to yield 7½%.

The yield printed at the tight end of the 7½% to 7 5/8% yield talk.

Deutsche Bank Securities Inc., UBS Investment Bank, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and Capital One Securities managed the debt refinancing.

American Capital at wide end

American Capital priced a $350 million issue of five-year senior notes (B3/B+/BB-) at par to yield 6½%.

The yield printed at the wide end of the 6¼% to 6½% yield talk.

J.P. Morgan Securities LLC, BofA Merrill Lynch, BMO Securities, Citigroup Global Markets Inc., Goldman Sachs & Co. and UBS Investment Bank were the joint bookrunners for the general corporate purposes deal.

Nexstar taps 6 7/8% notes

Nexstar Broadcasting priced a $275 million tack-on to its 6 7/8% senior notes due Nov. 15, 2020 (Caa1/B) at 100.25 to yield 6.814%.

The reoffer price came in the middle of the 100 to 100.5 price talk.

Credit Suisse Securities (USA) LLC, Wells Fargo Securities LLC, RBC Capital Markets, BofA Merrill Lynch, Barclays, SunTrust Robinson Humphrey were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Talking the deals

Looking to Wednesday's session, PRA Holdings, Inc. talked its $375 million offering of 10-year senior notes to yield 9¼% to 9½% in a deal set to price on Wednesday.

Credit Suisse Securities (USA) LLC, Jefferies Securities LLC, UBS Investment Bank, KKR Capital Markets and Citigroup Global Markets Inc. are the joint bookrunners.

Also slated for Wednesday is Prospect Mortgage, which talked its $200 million offering of five-year senior notes (B2/B+) to price with two points to three points of original issue discount and to yield 11%.

Credit Suisse Securities (USA) LLC and BofA Merrill Lynch are the joint bookrunners.

Finally, it was radio silence on Tuesday for the Beazer Homes USA, Inc. $200 million offering of eight-year senior notes (Caa2//CCC+), which was talked on Monday to yield in the 7¼% area.

The deal was scheduled to price on Monday. No new information on the deal, however, was available at the Tuesday close, market sources said.

A buyside source said that price talk may push out to 7¾%.

Goldman Sachs & Co., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and UBS Investment Bank are the joint bookrunners.

Day's deals move up

In the secondary market, traders saw most of the day's new deals firm, with Hercules Offshore's paper living up to the company's ticker symbol and performed particularly heroically.

One said that the Houston-based offshore energy drilling services provider's quickly shopped 7 ½% notes due 2021 were finishing at 101 bid, 102 offered, after having priced at par.

A second saw the bonds at 101½ bid, 102 offered, while a third pegged them as high as 102 bid, 103 offered.

Among the day's other issues, Hub International's 7 7/8% notes due 2021 were quoted by a trader at 100½ bid, 101 offered, while a second said that the Chicago-based insurance brokerage company's paper got as good as 100¾ bid, 101 offered.

Traders did not see any immediate aftermarket dealings in either tranche of Springleaf Finance's quick-to-market $950 million transaction.

But they did see activity in Jacksonville, Fla.-based supermarket operator BI-LO Holdings' new deal. Those upsized 8 5/8%/9 1/8% senior PIK toggle notes due 2018 "had a pretty good little pop," a trader said, seeing them at 100 3/8 bid, 100¾ offered.

That was up from the 99 level where the bonds had priced.

Another trader saw them improve to 100¼ bid, 101¼ offered.

American Capital Ltd.'s 6½% notes due 2018 were seen by two separate traders to have moved up to 100 5/8 bid, 101 1/8 offered.

The Bethesda, Md.-based private equity company and asset manager had priced its bonds earlier at par.

Nexstar Broadcasting's 6 7/8% add-on notes due 2020 firmed to 100¾ bid, 101 offered. The Irving, Texas-based television station ownership group had priced its drive-by deal at 100.25.

Tenet trades up

Among the deals that priced earlier in the week, a trader saw Tenet Healthcare's $4.6 billion two-part deal continuing to show strong aftermarket levels.

He saw the Dallas-based hospital operator's $1.8 billion of 6% senior secured notes due 2020 having firmed to 102 1/8 bid, 102 5/8 offered, versus Monday's closing quotes around 101¾ bid, 102 1/8 offered. The bonds had priced last Friday at par.

The company's $2.8 billion of 8 1/8% senior unsecured notes due 2022 firmed slightly to 103½ bid, 103¼ offered. Those bonds had already moved into a 103 bid context after pricing Friday at par.

A firmer market

A trader said that "secondary-wise, the market felt firm pretty much all day. Stocks rallied a little bit and Treasuries are up a little bit and our market's up a little bit."

He said that junk was "maybe up" by a ¼ point.

"Some of the stuff that had gotten really beat up, particularly in the E&P space" was doing better, he said, including Kodiak Oil & Gas Corp.'s 8 1/8% notes due 2019, which "rallied off the bottom to end around 109½ bid..

Market indicators rise again

Statistical junk market performance indicators were higher on Tuesday for a third consecutive session after having been mixed on Thursday. It was the fifth session in the last six with those market gauges up across the board.

The Markit Series 20 CDX North American High Yield index rose for a third straight session on Tuesday, gaining 7 /16 point to end at 106 1/8 bid, 106¼ offered, the first time the index has been above the psychologically potent 106 level since July 22, when it stood at 106 11/32 bid, 106 13/22 offered. Tuesday's advance followed Monday's 1/2-point improvement.

The KDP High Yield Daily index added on 4 basis points to end at 73.73, its sixth straight gain. On Monday, the index jumped by 21 bps. Its yield came in for a fourth consecutive session, narrowing by 3 bps to go out at 6.15%, on top of Monday's decline of 7 bps.

And the widely followed Merrill Lynch High Yield Master II index notched its eighth consecutive winning session on Tuesday, adding on 0.021%. It had risen by 0.320% on Monday.

The latest gain lifted its year-to-date return to 3.545% up from Monday's 3.523%.

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