Perstorp four-part deal, Weatherford, MultiPlan add-on price, overall market tone better

By Paul Deckelman and Paul A. Harris

New York, Nov. 15 – The high yield primary arena saw its first serious activity in several days on Tuesday, as some $1.7 billion of new U.S. dollar-denominated and fully junk-rated paper came to market in four tranches brought by three domestic or industrialized-country issuers – the first junk bonds to price since Thursday and the biggest volume since Nov. 3.

Swedish chemical company Perstorp Holding AB priced a four-tranche, $1.2 billion equivalent deal that included $275 million of first-lien 4.5-year notes and $420 million of second-lien 4.75-year paper, as well as tranches of euro-denominated fixed-rate and floating-rate secured debt.

Swiss-based oilfield-services company Weatherford International plc did an upsized $540 million of 7.25-year paper.

Meanwhile domestic healthcare cost-management company MultiPlan Inc. came to market with a $460 million add-on offering to its existing $1.1 billion of June 2024 notes sold earlier this year. Those existing bonds moved lower in anticipation of the new deal.

Away from the new deals, traders saw a better tone in the market as the selling pressure seen on Monday faded.

Statistical market performance measures turned higher across the board on Tuesday after having been lower all around on Monday. It was the indicators’ second such stronger session in the last three days.

Perstorp prices four tranches

The primary market sparked to life on Tuesday, as three issuers brought a combined four tranches of notes to raise an overall $1.7 billion.

Two of the three issuers were in the market at least overnight.

One issuer upsized its deal.

Executions ran the gamut, with one tranche pricing inside of talk, one at the rich end, one on top of talk and one well wide of talk.

Sweden's Perstorp Holding AB priced about $1.2 billion equivalent of senior secured notes in four tranches.

The debt refinancing deal, which priced at the end of a full roadshow, didn’t exactly zoom across the finish line, according to a trader who noted that the dollar-denominated portion of the deal was downsized while the euro-denominated portion was upsized.

It included three tranches of first-lien notes due June 30, 2021 (B3/CCC+).

There were €285 million of fixed-rate notes that priced at par to yield 7 5/8%. The tranche amount came within the €275 million to €300 million target size. The price came on top of price talk. The yield printed at the wide end of yield talk in the 7½% area.

A $275 million amount of fixed-rate notes priced at par to yield 8½%. The final amount came $50 million below the $325 million target size. The price came on top of price talk. The yield came 37.5 basis points beyond the wide end of yield talk in the 8% area.

The sole floating-rate tranche featured €200 million of first lien notes which priced at par to yield Euribor plus 762.5 bps. The floating-rate tranche came in an amount that was €25 million higher than the high end of the €150 million to €175 million target size. The price came on top of price talk. The spread came at the wide end of spread talk in the Euribor plus 750 bps area.

In addition Perstorp priced $420 million of 11% second-lien fixed-rate notes (Caa2/CCC-) at 97.00 to yield 11.834%. Price talk was 11% at 97.

Goldman Sachs was the global coordinator, and was also the sole bookrunner for the second lien notes tranche.

Goldman Sachs, HSBC and Nordea were joint bookrunners for the first lien tranches.

Weatherford upsized and inside of talk

Weatherford International Ltd. priced an upsized $540 million issue of 7.25-year senior bullet notes at par to yield 9 7/8%.

The issue size was increased from $500 million.

The yield printed 12.5 basis points below the tight end of the 10% to 10¼% yield talk.

Morgan Stanley was the sole bookrunner for the bank debt refinancing.

MultiPlan taps 7 1/8% notes

MultiPlan Inc. priced a $460 million add-on to the MPH Acquisition Holding LLC 7 1/8% senior notes due June 1, 2024 (Caa1/B+) at 103.50 to yield 6.529%.

The reoffer price came at the rich end of the 103 to 103.5 price talk.

Goldman Sachs was the left bookrunner. Barclays, BofA Merrill Lynch, Citigroup and UBS were the joint bookrunners.

The New York-based provider of health care cost management solutions plans to use the proceeds to make a $455 million distribution to equity holders and for general corporate purposes.

Bombardier benchmark on deck

Bombardier, Inc.'s benchmark offering of non-callable five-year notes (B3/B-) will come with a minimum size of $750 million, according to a trader.

However the Quebec-based aerospace and transportation company would like to place as much as $1.4 billion, at which size it could address its 2018 maturities, the trader said.

The deal, which is in the market with initial guidance in the high 8% to 9% yield context, is playing to strong demand, the source added.

BofA Merrill Lynch, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, National Bank of Canada and UBS are the joint bookrunners.

Source Energy starts Wednesday

Source Energy Services plans to start a roadshow on Wednesday in Toronto for a C$130 million offering of unrated senior secured first lien notes.

Final timing on the deal remains to be determined.

BMO is the left bookrunner. Raymond James is the joint bookrunner.

The Calgary, Alberta-based company plans to use the proceeds to repay debt under its existing credit facility and prepayment note and for general corporate purposes.

The issuing entities will be Source Energy Services Canada LP and Source Energy Services.

Big Monday outflows

The dedicated high yield bond funds saw big daily cash outflows on Monday, the most recent session for which data was available at press time, a fund manager said.

High yield ETFs saw $541 million of outflows on the day.

Actively managed funds sustained $325 million of outflows on Monday.

Dedicated bank loan funds were strongly positive, however, posting $225 million of daily inflows on Monday, the source added.

New deals unseen

Traders did not immediately report any initial aftermarket activity in the day’s three new issues.

However, MultiPlan’s existing $1.1 billion of 7 7/8%notes due June 1 2024, which had been trading around 105 bid before the news that the company was going to do a sizable add-on tranche, was seen by a trader to have dropped back by 1 point ahead of the pricing, to 104 bid, with over $37 million of the bonds changing hands.

Better tone seen

Away from the new issues, traders said that things looked better in Junkbondland on Tuesday than they had on Monday, when high yield, along with other fixed-income markets, had trailed along as U.S. Treasury issues moved notably lower on Monday, with yields on the government paper backing up to their highest levels since January.

“Yesterday [Monday], you had a lot of ETFs just selling,” one of them observed.

“That’s what made the market go down like that.”

Junk bonds had been off by anywhere from 1 to 3 points on average on Monday – while in contrast, on Tuesday, with the Treasury rates mixed and only a few basis points of difference from where they had ended on Monday, junk issues were mostly higher.

“We definitely saw a snap-back today,” another trader opined.

For instance, he said, “with oil up by $2 [per barrel], the E&P space names that had been getting beat up were better today.”

As an example, he said that Oasis Petroleum Corp.’s 6 7/8% notes due 2022 were up by ½ point on Tuesday, with the Houston-based exploration and production company’s paper ending at par bid.

Other oilers seen doing better included Denver-based Whiting Petroleum Corp.’s 5% notes due 2019, which ended up 3¾ points on the day at just under 97 bid.

Away from the energy names, the trader said, hospital operator HCA Inc.’s capital structure “was up 1½ to 2 points,” with its 5 3/8% notes due 2025 last trading at 98 bid, up 2 points on the day, with over $12 million of volume.

The Nashville-based healthcare company’s 5% notes due 2024 gained 1¾ points on the session to end at 100¼ bid, with more than $14 million of turnover.

Stamford, Conn.-based wireline telecom operator Frontier Communications Corp.’s 11% notes due 2025 gained 1 point on the day to close at 98¼ bid, with more than $21 million having traded.

Indicators on the rise

Statistical market performance measures turned higher across the board on Tuesday after having been lower all around on Monday. It was the indicators’ second such stronger session in the last three days.

The KDP High Yield index rose by 22 basis points to close 69.88, after having plunged by 65 bps on Monday, its third straight loss.

The index’s yield, meantime, came in by 6 bps on Tuesday to 5.91%, after ballooning out by 24 bps on Monday, its third consecutive widening.

The Markit Series 27 CDX index shot up by 7/8 point on Tuesday to finish at 103 27/32 bid, 103 7/8 offered. On Monday, it had dropped by 19/32 point.

The Merrill Lynch High Yield index rebounded by 0.5.26% on Tuesday, after having plummeted by nearly a full point on Monday, when it was down by 0.934%. Tuesday was its second gain over the last three days.

That lifted its year-to-date return to 14.204% from Monday’s close at 13.606%.

However, those levels remain well below its peak level for this year of 16.768%, established on Oct. 25.

© 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.