Silversea, Mattamy add-on close out busy $8.3 billion week; recent new issues trade actively

By Paul Deckelman and Paul A. Harris

New York, Jan. 13 – The high-yield market saw a pair of new deals price on Friday, on top of Thursday’s very busy session, bringing its first full trading week of the new year to a close.

In fact, according to data compiled by Prospect News, the $8.29 billion that priced in 12 tranches during the week was the most new U.S. dollar-denominated and fully junk-rated paper seen in Junkbondland in more than a month, since the week ended Dec. 9, when $9.60 billion of new issuance had gotten done in 16 tranches.

Monaco-based luxury cruise line operator Silversea Cruise Holding Ltd. had the big deal of the day, its $550 million of eight-year secured notes doubled from the offering’s originally announced size.

Besides that regularly scheduled forward calendar offering, Canadian homebuilder Mattamy Group Corp. did a quickly shopped $100 million add-on to the deal the company did back in December.

In the secondary market, traders saw active dealings in some of the new issues which had priced during Thursday’s super-session, when over $4 billion of new paper had made its debut.

Among those new credits trading busily during Friday’s pre-holiday market ahead of Monday’s scheduled Martin Luther King Jr. Day close were those of communications infrastructure provider Zayo Group, LLC, Canadian oil sands producer MEG Energy Corp., physician services organization Team Health Holdings, Inc. and diversified holding company Icahn Enterprises LP.

The traders said that the new Zayo Group bonds and those of MEG Energy did particularly well in the aftermarket.

They said the new-issue dealings of those bonds pretty much dominated Friday’s secondary scene.

Statistical market performance measures turned higher across the board on Friday after having been lower all around for a second straight session Thursday, following Wednesday’s drop – the first overall negative performance since Dec. 14. Before that, they had been mixed for four straight sessions and higher for four sessions before that.

But for the week, the indicators were mixed versus where they had finished last Friday, when they had been higher all over. It was the second mixed week in the last three.

Silversea doubles size

Silversea Cruise Holding priced an upsized $550 million issue of eight-year senior secured notes (B2/BB-) at par to yield 7¼% on Friday, doubling the size of the deal from $275 million.

J.P. Morgan the lead bookrunner.

The privately owned luxury cruise line plans to use the proceeds to repay debt and pre-fund capital expenditures.

Mattamy taps 6 7/8% notes

Mattamy Homes priced a $100 million tack-on to the 6 7/8% senior notes due Dec. 15, 2023 (B1/BB) issued by Mattamy Group Corp. at 101.5 to yield 6.502% on Friday, according to an informed source.

The reoffer price came at the rich end of the 101.25 to 101.5 price talk.

Credit Suisse and RBC were the joint bookrunners for the debt refinancing.

Amigo Loans upsizes

In the sterling-denominated primary market Amigo Loans priced an upsized £275 million issue of seven-year senior secured notes (B1/B+) at par to yield 7 5/8%.

The size was increased from £250 million.

The yield printed 12.5 basis points inside of the 7¾% to 8% yield talk.

Joint bookrunner JPMorgan will bill and deliver. Jefferies and NatWest Markets were also joint bookrunners.

The Bournemouth, England-based financial technology company plans to use the proceeds to repay its revolving credit facility and partially repay a shareholder loan.

Koppers starts Tuesday

Looking to the week ahead, Koppers Inc. plans to start a roadshow on Tuesday in New York for a $400 million offering of eight-year senior notes (B1/B+).

Wells Fargo is the left bookrunner. PNC, BofA Merrill Lynch and Fifth Third are the joint bookrunners.

The Pittsburgh-based provider of treated wood products, wood treatment chemicals and carbon compounds plans to use the proceeds to repurchase all of its outstanding senior notes due 2019, with any excess proceeds to repay debt under the senior secured credit facilities or for general corporate purposes.

RCN Grande acquisition deal

A roadshow starts Tuesday for a $400 million offering of eight-year senior notes backing the acquisitions of RCN Telecom Services LLC and Grande Communications Networks LLC.

The deal, via issuing entities Radiate Holdco, LLC and Radiate Finance, Inc., is set to price on Friday.

UBS is the lead left bookrunner. Credit Suisse, Deutsche Bank and Morgan Stanley are the joint bookrunners.

Mixed Thursday flows

Cash flows for dedicated high-yield bond funds were mixed on Thursday, the most recent session for which data was available at press time.

High-yield ETFs saw $281 million of outflows on the day.

Actively managed funds saw $30 million of inflows on Thursday.

Dedicated bank loan funds were also positive on Thursday, seeing $130 million of inflows on the day.

Busiest week in a while

Friday’s two new-deal pricings brought the week’s total of new U.S. dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers up to $8.29 billion in 12 tranches, according to data compiled by Prospect News.

That was more than 10 times the $811 million which had come to market in two tranches during the previous week, ended Jan. 6, the first trading week of the new year.

It was the most new paper seen in any week in more than a month, since the week ended Dec. 9, when $9.60 billion of new paper had been brought to market in 16 tranches, the data indicated.

This week’s primaryside activity brought year-to-date issuance for 2017 so far up to a robust $9.10 billion in 14 tranches – over seven times the $1.22 billion which had gotten done in three tranches by this point on the 2016 calendar, the Prospect News data indicated.

New deals not initially seen

Traders did not immediately report any initial aftermarket activity in the new Silversea 7¼% senior secured notes.

Nor did they see any trading around in Burlington, Ont.-based builder Mattamy Group’s 6 7/8% notes.

The new notes are in addition to the $325 million of identical notes which had priced at par back on Dec. 8.

Zayo, MEG star in secondary

There was plenty of trading going on in new issues which had come to market on Thursday, when a total of $4.26 billion had gotten done in seven tranches – the heaviest volume seen in a single session since Nov. 5, when $7 billion of new paper priced in five tranches, anchored by a $3.2 billion two-part offering from Atlanta-based electronic transaction processor First Data Corp.

Boulder, Colo.-based communications infrastructure company Zayo Group’s new 5¾% senior notes due 2027 was the busiest issue of the day, a market source said, seeing more than $63 million changing hands. He quoted the notes up 1/8 point on the session at 101 7/8 bid.

That was well up from the par level at which that quickly shopped $800 million offering had priced.

A second trader said that, counting the odd-lot trades, volume topped the $78 million mark, easily dominating the day’s Most Actives list.

He saw the bonds moving around in a 101¼ to 102 3/8 bid context.

And another trader pegged the bonds at 101¾ bid going home.

Also seen doing well was MEG Energy’s 6½% senior secured notes due 2025, which traded in a 101½ to 102 bid context.

More than $54 million of the Calgary, Alta.-based oil sands energy producer’s new paper traded.

One trader located the notes at 101 5/8 bid, which he called off by ½ point from the highs above 102 that the bonds had initially hit after the $750 million quick-to-market issue had priced at par on Thursday.

Navistar International Corp.’s 8¼% notes due November 2021 were trading in a 101 to 101½ bid range – up from the par level at which the Lisle, Ill.-based truck and bus manufacturer’s $250 million add-on to its existing $1.3 billion of the notes had priced in a drive-by deal on Thursday.

Friday’s volume was about $16 million.

Penn, Icahn, Team Health trade

Thursday’s other new deals were seen trading a little more down to earth.

For instance, Penn National Gaming, Inc.’s 5 5/8% notes due 2027 were seen by one trader at 100¾ bid, while a second had the bonds going out around 100¾ to 100 7/8 bid.

That was still up from the par level at which the Wyomissing, Pa.-based casino and race track operator had priced its quickly shopped $400 million issue.

Friday’s volume was seen around $40 million.

The two halves of Thursday’s biggest deal –New York-based diversified holding company Icahn Enterprises LP’s $1.195 billion issue of five- and seven-year notes – were both seen trading not too far from their respective par issue levels.

A trader said that around $49 million of the Icahn 6¾% notes due 2024 changed hands during Friday’s session, actually finishing slightly below their issue price at 99 7/8 bid., while another market source saw the bonds between 99½ and 100 1/8 bid on Friday.

The issuer’s 6¼% notes due 2022 were seen by a trader ending around 100½ bid, up 1/8 point on the day, with $41 million traded.

Icahn Enterprises had priced $695 million of the five-year notes and $500 million of the seven year notes, both at par, after the regularly scheduled forward calendar offering had been upsized from an originally announced $900 million.

Team Health’s 6 3/8% notes due 2025 were seen by a trader finishing exactly at the par level at which the Knoxville, Tenn.-based physician services organization had priced its $865 million regularly scheduled offering after the deal was downsized from the $1,015,000,000 originally announced. Volume was about $50 million.

But another trader opined that “that one was a dog that barks and bites,” seeing the issue trade as low as 98 7/8 before moving back up to near the par level later on in the session.

He said there had been one trade above that level – at 100 3/8 bid – but that came from “a foreign broker-dealer – everyone else was trading it at par.”

Indicators up on day

Statistical market performance measures turned higher across the board on Friday after being lower all around for a second straight session Thursday, following Wednesday’s drop – the first overall negative performance since Dec. 14. Before that, they had been mixed for four straight sessions after being higher for four sessions.

But for the week, the indicators were mixed versus where they had finished last Friday, when they had been higher all over. It was the second mixed week in the last three.

The KDP High Yield Index broke out of its recent rut on Friday, rising by 5 bps on the day to end at 72.07 – its first gain after four straight losses, including Thursday’s 5 bps retreat.

Its yield was unchanged at 5.14%, its second unchanged session in the last four trading days. On Thursday, the yield had atypically come in by 2 bps even as the index was falling; the yield usually rises as the index reading falls and vice versa.

Friday’s levels compared unfavorably with last Friday’s 72.15 index reading and 72.12 yield.

The Markit Series 27 CDX Index also snapped its losing streak on Friday, firming by more than 1/16 point to close at 106 5/16 bid, 106 11/32 offered. That broke a six-session skid, including Thursday, when the CDX had eased by 1/16 point.

But while it was up on the day, the index was off versus last Friday’s 106 21/32 bid, 106 23/32 offered.

And the Merrill Lynch High Yield Index bounced back from two straight losses, rising by 0.069% Friday after having retreated by 0.027% on Thursday and by 0.05% on Wednesday. Those losses had abruptly snapped a 15-session winning streak that dated back to mid-December.

Friday’s gain raised its year-to-date return to 1.074% from Thursday’s 1.004% finish – although it remains a little below its 1.081% level seen on Tuesday, which was its fifth consecutive new high for the new year and its first time over 1% so far this year.

For the week, the index was up by 0.145% from last Friday’s 0.927% close.

© 2015 Prospect News.
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