Active deal calendar balloons; energy sector’s rise continues; Altice, SFR up on buyout rumors

By Paul A. Harris and Abigail W. Adams

Portland, Me., April 16 – While no high-yield deals priced on Monday, the primary market’s active calendar ballooned with an onslaught of deals set to price before the week’s end.

OCI NV set price talk for its $1 billion equivalent dual-tranche offering of five-year senior secured notes (B1/BB-/BB-), which is expected to price on Tuesday.

Softbank Group Corp. is expected to sell a benchmark-size four-part, dual-currency offering of senior notes (Ba1/BB+) as early as Tuesday.

Fidelity & Guaranty Life Holdings, Inc., BBA Aviation, Nufarm Ltd., LSB Industries, Inc., Apergy Corp., and Conuma Coal Resources Ltd. all launched roadshows for dollar-denominated offerings.

In the European market, Piaggio & C. SpA opened the books for its deal and Samsonite Finco Sarl and Gamenet Group SpA launched roadshows for euro-denominated offerings.

As the primary market prepares new paper, CGG Holding (US) Inc.’s new 9% senior secured notes due 2023 (B2/B) continued to climb on Monday after pricing on Friday.

The energy sector saw further gains on Monday, despite a drop in crude oil. California Resources Corp.’s 8% senior notes due 2022 were up another ¾-point.

SFR Group SA’s 7 3/8% senior secured notes due 2026 (B1/B+) and Altice SA’s 7¾% senior notes due 2022 were among the major volume movers in the secondary market on Monday.

The notes were making gains amid reports telecommunications conglomerate Bouygues was in discussions to acquire Altice’s subsidiary SFR Group.

OCI talks $1 billion dual-currency deal

OCI NV set price talk for its $1 billion equivalent offering of five-year senior secured notes (B1/BB-/BB-).

A $400 million minimum amount of dollar-denominated notes is talked to yield 7% to 7¼%, in line with initial talk in the low 7% area.

A €400 million minimum amount of euro-denominated notes is talked to yield 5 ¼% to 5½%, tighter than initial talk in the mid-to-high 5% area.

The deal is expected to price on Tuesday.

Softbank four-part benchmark

Softbank Group is expected to place a benchmark-size four-part offering of senior notes (Ba1/BB+) as early as Tuesday.

The deal is coming in tranches with five-year and seven-year maturities, to be issued in dollar-denominated and euro-denominated notes.

Included are:

• Dollar-denominated five-year notes with initial guidance in the 5½% area;

• Euro-denominated five-year notes with initial guidance in the 4 1/8% area;

• Dollar-denominated seven-year notes with initial guidance in the 6 1/8% area; and

• Euro-denominated seven-year notes with initial guidance in the 4 5/8% area.

Fidelity & Guaranty’s bullet

Fidelity & Guaranty Life Holdings plans to roadshow a $550 million offering of seven-year senior bullet notes (existing ratings Ba2/BB+/BB) on Monday and Tuesday.

The deal, via RBC, Wells Fargo and BofA Merrill Lynch, is set to price on Tuesday.

The issuer, a Cayman Islands-based holding company that owns a leading U.S. annuity and life insurer and a Bermuda-domiciled reinsurer, plans to use the proceeds to repay its 6 3/8% senior notes due 2021, as well as to repay borrowings under its revolver and for general corporate purposes including incremental capital for its insurance subsidiaries.

BBA begins roadshow

BBA Aviation started a roadshow on Monday for a $500 million offering of eight-year senior notes.

Initial price talk has the deal coming to yield 5½% to 5¾%.

Pricing is expected on Friday.

JP Morgan, Barclays, BofA Merrill Lynch, HSBC, NatWest, SMBC Nikko and SunTrust are the joint bookrunners for the debt refinancing deal.

Nufarm via UBS

Nufarm plans to market a $450 million offering of eight-year senior notes on a roadshow set to run through Thursday.

UBS is the lead bookrunner.

The Melbourne, Australia-based crop protection company plans to use the proceeds to repay debt.

LSB starts roadshow

LSB Industries started a roadshow on Monday for a $400 million offering of five-year senior secured notes.

Goldman Sachs is the left bookrunner. Jefferies is the joint bookrunner.

The Oklahoma City-based manufacturing, marketing and engineering company plans to use the proceeds to fund a concurrent tender offer for its 8½% notes due Aug. 1, 2019 and to redeem any notes not tendered, with any remaining funds to be used for general corporate purposes.

Apergy pricing Friday

Apergy started a roadshow on Monday for a $300 million offering of eight-year senior notes (B1/B).

The deal, via JP Morgan, Deutsche Bank, HSBC, Mizuho and Wells Fargo, is set to price on Friday. Proceeds will be used as to help finance the spin off of the Woodlands, Texas-based provider of highly engineered technologies to the oil and gas industry from Dover Corp.

Conuma markets secured notes

Conuma Coal Resources is marketing a $200 million offering of five-year senior secured notes on a roadshow that started on Monday.

The roadshow continues into Tuesday and the offer is set to price later that day.

Goldman Sachs is the left bookrunner. Credit Suisse, Jefferies and BMO are the joint bookrunners.

The Vancouver, B.C.-based metallurgical coal producer plans to use the proceeds, together with approximately $48 million of cash on hand, to repay existing debt as well as to pay a $171 million special dividend to shareholders and to fund the Willow Creek reserve account excess liquidity offer.

Piaggio initial talk 4% area

The European new issue market also generated news on Monday, ahead of what it anticipated to be a busy week.

Piaggio & C. SpA opened the order book on a €250 million offering of seven-year senior notes (expected ratings B1/BB-) with initial price talk in the 4% area.

The deal ran an investor roadshow during the April 9 week

Samsonite plans €300 million

Samsonite Finco Sarl started a roadshow on Monday for a €300 million offering of eight-year senior notes (expected ratings B/BB+).

The roadshow wraps up on Wednesday.

Joint bookrunner Morgan Stanley will bill and deliver. BofA Merrill Lynch, HSBC and SunTrust are also joint bookrunners.

And Gamenet Group SpA launched a €225 million offering of senior secured notes due 2023. The Rome-based online gaming company intends to use the proceeds to refinance debt.

CGG going strong

While trading of the notes tempered on Monday, CGG Holdings’ 9% senior notes due (B2/B) continued to trade higher after a strong secondary market performance on Friday.

The notes were seen trading in a range of 103½ to 104 1/8 on Monday with about $8 million of bonds in play, a market source said.

The notes were seen changing hands in a range of 102 to 103¾ after breaking for trade on Friday.

CGG Holdings priced $650 million equivalent of five-year senior secured notes (B2/B) in two tranches earlier that session.

The dollar-denominated tranche featured $300 million of notes that priced at par to yield 9%.

The euro-denominated tranche featured €280 million of notes that priced at par to yield 7 7/8%.

Near the time that order books were scheduled to close on Friday, demand was heard to be $2 billion and €2 billion, respectively, a trader said.

The strong secondary market performance of the dollar-denominated tranche from the France-based geological and geophysical service provider for oil and gas companies was attributed to the shortage of new paper in the market, the high coupon and the recent strength of the energy sector.

Energy sector returns

And the energy sector remained strong on Monday after seeing large gains with the upswing in the price of crude oil last week.

While the barrel price of West Texas intermediate crude oil was down on Monday after gaining more than $4 dollars last week, California Resources Corp.’s 8% senior notes due 2022 continued to move higher.

The notes were seen at 84½ bid, 85¼ offered on Monday. They were at 83 bid, 84 offered on Friday, a market source said.

The notes were up ¾ point to close the day at 85 after high volume trading with more than $36 million of bonds in play, sources said.

Names in the energy sector saw large gains last week following the rise in the barrel price of West Texas intermediate crude oil for May delivery.

The energy sector in junkbondland saw a 0.16% gain on Monday after a 0.95% gain last week, according to a market source. Gains in the energy sector were 0.16% for the week ending April 6.

The price of crude oil rose more than $4 over the course of last week, reaching its highest point since December 2014.

While crude oil was down on Monday to $66.34, a decrease of $1.05, or 1.56%, that did not affect the strength of high-yield energy names.

Buy-out rumors

The junk bonds of French telecommunications company SFR Group and its parent Altice were the major volume movers in the space with both seeing gains amid speculation that telecommunications conglomerate Bouygues was eyeing SFR Group as an acquisition.

SFR Group’s 7 3/8% senior notes due 2026 (B1/B+) rose 2 1/8 points to trade up to 99 3/8 in high volume trading on Monday, according to a market source. More than $46 million of bonds traded on Monday.

Altice’s 7¾% senior notes due 2022 (B3/B) climbed about 1½ points to trade up to 97¾ on Monday, with more than $29 million of bonds in play, a market source said.

Paris-based Bouygues is considering a bid for SFR Group to consolidate the telecommunications sector in France, which has been squeezed by a four-way rivalry, Bloomberg reported on Monday.

Amsterdam-based Altice has struggled in recent years with declining revenue, loss of customers and debt of $38 billion, which a takeover may help remedy, according to the Bloomberg report.

Discussions were reported to be in the early stages.

The SFR Group was created through the merger of Numericable and Vivendi’s SFR unit in 2014. Altice acquired 95.9% of SFR Group’s share capital in August 2017.

Bouygues has denied that it is in discussions for a possible takeover and Altice has said SFR Group is an essential asset and part of the company’s long-term plan, Reuters reported, following the Bloomberg report.

Indexes

After large gains last week, the KDP High Yield index continued to rise on Monday. The index was up 14 basis points to 71.06 on Monday. The yield dropped to 5.62%.

Monday marks the eighth consecutive trading day of gains for the index.

The Merrill Lynch High Yield index also continued to see gains on Monday after turning positive last week after a long stretch of negative year-to-date returns.

The index was up 14.5 bps on Monday with the year-to-date return now 0.366%. The index entered positive territory on April 12 after a week of large gains.

The CDX high yield 30 index was also up on Monday gaining 37 bps to 107.32.

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