Upsized Valeant, Continental Resources megadeals lead $3.5 billion session; energy surges despite crude fall

By Paul Deckelman and Paul A. Harris

New York, Dec. 4 – The traditional year-end rush to get deals done, which began with last week’s amazing $13 billion-plus of new dollar-denominated and junk-rated paper from domestic or industrialized country borrowers having priced, resumed unabated on Monday, with another $3.51 billion of such notes clattering down the chute in four tranches, all of them opportunistically timed and quickly shopped drive-by transactions.

High-yield syndicate sources said that Canadian drugmaker Valeant Pharmaceuticals International Inc. had the big deal of the day – an upsized $1.5 billion issue of eight-year notes, which priced at a discount to par.

Oil and natural gas exploration and production company Continental Resources, Inc. brought an upsized $1 billion of 10-year notes to market.

Out of that same sector, midstream master limited partnership Genesis Energy, LP did a $450 million 8.5-year deal.

And power generating company Calpine Corp. rounded out the day’s action with an upsized $560 million add-on to its existing June 2026 secured notes.

Besides the deals that actually priced, the sources reported a slew of other prospective dollar-denominated issues that were formally announced or were heard to be hitting the road for marketing to would-be investors, from the likes of Quicken Loans Inc., Vantiv, LLC, Jeld-Wen, Inc., Cleveland-Cliffs Inc. and Cooke Omega Investments Inc.

And they reported a busy slate of euro-denominated transactions.

Secondary market traders saw brisk activity in recent new deals such as Friday’s issues from Icahn Enterprises LP, Matthews International Corp., Cleaver-Brooks, Inc. ,Mountain Province Diamonds, Inc. and, going back a day or so, Rexnord Corp.

Away from the new deals, energy E&P credits such as California Resources Corp., Denbury Resources Inc. and EP Energy Corp. were seen having firmed smartly, despite a slide in crude oil prices following two straight upside sessions.

Statistical market performance measures were higher across the board on Monday, their second strong session in the past three trading days, following a mixed session on Friday.

Valeant upsizes

As forecast, the Dec. 4 week got off to a big start in the primary market.

The session featured four drive-by deals, three of which were upsized.

Valeant Pharmaceuticals International, Inc. launched and priced an upsized $1.5 billion issue of 9% senior notes due Dec. 15, 2025 (Caa1/B-) at 98.611 to yield 9¼%.

The drive-by debt refinancing deal was upsized from $1 billion.

Barclays was the sole bookrunner.

Continental Resources upsized

Continental Resources, Inc. priced an upsized $1 billion issue of 10-year senior bullet notes (Ba3/BB+) at par to yield 4 3/8%.

The issue size was increased from $750 million.

BofA Merrill Lynch was the left bookrunner. Citigroup, JP Morgan, Mizuho, MUFG and Wells Fargo were the joint bookrunners.

The Oklahoma City-based oil producer plans to use the proceeds to pay off its $500 million term loan and to pay down its current revolving credit facility.

Calpine upsizes

Calpine Corp. priced an upsized $560 million add-on to its 5¼% senior secured notes due June 1, 2026 (Ba2/BB/BB+) at par.

The issue size was increased from $550 million.

The reoffer price came on top of price talk in the par area.

Morgan Stanley, Barclays, BNP Paribas, BofA Merrill Lynch, Citigroup, Credit Agricole-CIB, Credit Suisse, Deutsche Bank, Goldman Sachs, MUFG, Natixis, RBC and UBS were the joint bookrunners.

The Houston-based electricity generator plans to use the proceeds to refinance a portion of the Calpine Construction Finance Co., LP term loans.

Genesis come atop talk

Genesis Energy, LP priced a $450 million issue of 8.5-year senior notes (B1/BB-) at par to yield 6¼%.

The yield printed in the middle of yield talk in the 6¼% area.

Citigroup, ABN Amro, Capital One, RBC, SMBC, BofA Merrill Lynch, Deutsche Bank, Scotia, Wells Fargo, BMO and DNB Markets were the joint bookrunners.

The Houston-based midstream energy master limited partnership plans to use the proceeds to refinance its 2021 bonds and certain drawings under its revolving credit facility.

Quicken talk 5¼% area

Quicken Loans Inc. talked $1 billion of senior notes due Jan. 15, 2028 to yield in the 5¼% area.

The deal, which was scheduled to be shopped on a Monday investor call, is set to price Tuesday.

Credit Suisseis the lead bookrunner. JP Morgan and BofA Merrill Lynch are the joint bookrunners.

The Detroit-based online lender plans to use the proceeds to fund a distribution to shareholders and for general corporate purposes.

Vantiv roadshows

Vantiv, LLC plans to start roadshows in London and New York on Tuesday for $1.13 billion of eight-year senior notes to be split between dollar- and sterling-denominated tranches.

The deal is expected to price Thursday.

Morgan Stanley, Credit Suisse, MUFG, BBVA, Citizens, Lloyds, Mediobanca, Mizuho, NatWest, SMBC and UniCredit are the joint bookrunners.

Proceeds will be used to pay debt related to Vantiv’s merger with Worldpay Group plc.

Jeld-Wen starts Tuesday

Jeld-Wen, Inc. plans to start a roadshow on Tuesday in New York for an $800 million two-part offering of senior notes (expected ratings B1/BB-).

The Klamath Falls, Ore.-based door and window manufacturer is selling eight-year notes and 10-year notes. Tranches will be sized at a minimum of $300 million. Final tranche sizes remain to be determined.

Wells Fargo is the left bookrunner. Barclays, BofA Merrill Lynch and JP Morgan are the joint bookrunners.

The company plans to use the proceeds to pay down its term loan B.

Elsewhere Cleveland-Cliffs Inc. announced that it plans to offer $400 million of senior secured notes due 2024. The Cleveland-based independent iron ore mining company plans to use the proceeds, along with proceeds from a concurrent convertible notes offer, to finance a substantial portion of its hot briquetted iron capital project, and for general corporate purposes.

Cooke Omega secured deal

Cooke Omega Investments Inc. plans to price a $330 million offering of eight-year senior secured notes in the latter part of the Dec. 4 week via sole bookrunner BMO.

Proceeds will be used to fund the acquisition of Omega Protein Corp., a Houston-based nutritional product company, by Cooke Inc., a St. John, New Brunswick, Canada-based harvester and producer of fish-based animal and human nutrition products.

WIND Hellas upsizes

The European primary market session also generated a heavy news volume.

Crystal Almond Sarl, the parent company of Greek telecommunications operator WIND Hellas Telecommunications SA, priced an upsized €95 million add-on to its 10% senior secured notes due 2021 at 112.25.

The JP Morgan deal came tighter than initial price thoughts of 111.75 and was increased from a planned €75 million.

Picard brings fixed-rate and FRN

France-based Picard plans to price $1.5 billion of high-yield notes during the Dec. 4 week.

The deal includes €1.19 billion of Picard Groupe SAS senior six-year senior secured floating-rate notes. Credit Suisse is leading the tranche.

Picard Bondco SA is selling €310 million of seven-year senior unsecured fixed-rate notes. JPMorgan is leading the unsecured tranche.

The Fontainebleau, France-based frozen food company plans to use the proceeds to fund a dividend to its shareholders and repay debt.

Schenck Process roadshow

Schenck Process Holding GmbH plans to start a roadshow on Tuesday for a €425 million offering of 5.5-year senior secured notes (B3).

Deutsche Bank, Credit Suisse, Goldman Sachs, RBC, HSBC and UniCredit are the joint bookrunners.

Proceeds will be used to fund the buyout of the Kansas City-based applied measuring technology company by Blackstone from IK Investment Partners.

BMC Software brings euro deal

BMC Software is expected to price €380 of six-year senior notes (Caa2/CCC+) on Wednesday.

Credit Suisse is leading the deal.

The Houston-based software company plans to use the proceeds to refinance debt.

Day’s deals hold around issue price

In the secondary market, traders saw the day’s new deals mostly trading close to their respective issue prices.

One trader saw both the Genesis Energy and Continental Resources new deals trading around par, the level at which both of those transactions had come to market.

A second saw the Genesis 6¼% notes due May of 2026 in a par-to-100 1/8 bid context, while a third located them between par and 100 3/8 bid.

One of the traders meantime was down on Continental Resources’ 4 3/8% notes due 2027, declaring that the issue “was trading like a dog,” quoting them offered at par.

Despite what he also called their “awful” trading level, he saw more than $23 million of the new Continental bonds changing hands.

Another trader agreed that Continental was struggling, pegging them in a 99 5/8-to-99 7/8 bid range.

One of the traders quoted the new Valeant Pharmaceuticals 9% notes due 2025 at 99 bid, up modestly from their 98.611 issue price.

Existing Valeant bonds better

One of the traders noted that “even with Valeant bringing a big new deal today,” – i.e., Monday – the Laval, Que.-based pharmaceuticals manufacturer’s exiting paper all turned higher.

He saw its 6 1/8% notes due 2025 up 1 point, to the mid-87 bid level.

A second trader saw them 1 1/8 points better, at 87 5/8 bid, with over $16 million having traded.

Its 5½% notes due 2023 finished up 1½ points on the day, at just under 88½ bid.

Valeant plans to use the new-deal proceeds to fund tender offers for its three issues of senior notes maturing in 2020.

Friday deals trade actively

The traders meantime saw active dealings at better levels in some of the issues that came to market as regularly scheduled forward calendar offerings on Friday.

For instance, the Cleaver-Brooks 7 7/8% senior secured notes due in March 2023 were seen by a trader to have gained as much as 1 point on the session, up to the 103 bid level, with over $13 million traded.

He said that the paper “was tough to find today.”

A second trader saw the bonds finishing at 102¾ bid, calling that up some 7/8 point on the session.

The Thomasville, Ga.-based manufacturer of boiler-room systems and equipment had priced a downsized $375 million of those notes at par; they quickly firmed to just under the 102 bid level in active aftermarket dealings.

The Matthews International 5¼% notes due 2025 edged up by 1/8 point to close at 101¼ bid, a trader said, also with about $13 million of volume.

The Pittsburgh-based diversified manufacturing company had priced its $300 million issue at par; those bonds quickly pushed up to around 101 bid going home.

Mountain Province Diamonds’ 8% senior secured second-lien notes gained ½ point on the session to close around 99 bid, a trader said, estimating volume at around $10 million.

The Toronto-based diamond mining company priced its $330 million deal at 97.992 to yield 8½%; those notes firmed to around 98½ bid in initial aftermarket dealings.

A trader saw the Icahn Enterprises 6 3/8% notes due 2025 up 1/8 point at 100 1/8 bid, with over $15 million traded.

A second trader called both halves of the New York-based diversified holding company’s $1.26 billion deal “relatively unchanged,” also seeing its add-on to its existing $695 million of 6¼% notes due 2022 unchanged at 103 1/8 bid.

Icahn priced $510 million of those 2022s at 103 to yield 5.431%, after upsizing the tranche from $380 million, while its $750 million of the 6 3/8% notes priced at par after upsizing from $500 million.

Going back another day, Thursday’s regularly scheduled forward calendar offering from Rexnord gained 1/8 point Monday to end at 101 bid, on around $10 million of volume.

The Milwaukee-based industrial manufacturer had priced $500 million of those 4 7/8% notes due 2025 at par.

Energy improves despite crude fall

In the energy sphere, oil and gas names shrugged off a sizable drop in crude oil prices Monday, continuing their recent upside momentum.

California Resources’ 8% notes due 2022 shot up by 1¼ points to end at 77½ bid, with over $22 million having traded.

That gain followed Friday’s 1 7/8 points surge.

Elsewhere in that sector, Denbury Resources’ 6 3/8% notes due 2021 jumped by more than 2 points, to 76½ bid. Its 4 5/8% notes due 2023 likewise firmed to 66¾ bid, on volume of over $12 million

EP Energy Corp.’s 9 3/8% notes due 2020 rose by 1¾ points, to 76¾ bid, also on over $12 million of volume.

The sector improved across the board despite crude oil suffering its first fall after two straight higher sessions.

January-delivery West Texas Intermediate crude fell by 89 cents a barrel in New York Mercantile Exchange trading, ending at $57.47, wiping out most of Friday’s 96-cent gain, while the February North Sea Brent crude contract fell by $1.28 per barrel to $62.45, more than offsetting Friday’s $1.10 rise.

Indicators move up

Statistical market performance measures were higher across the board on Monday, their second strong session in the past three trading days, following a mixed session on Friday.

The KDP High Yield Daily Index was up by 6 basis points on Monday to close at 71.92, after having also gained 3 bps on Friday and finishing unchanged on the session Thursday.

Its yield came in by 4 bps to 5.27%, after having also narrowed by 1 bp on Friday, following a 1 bps rise on Thursday.

The Markit CDX Series 29 index edged upward by more than 1/32 point Monday to end at 107 7/8 bid, 107 29 32 offered. On Friday, it had eased by 1/16 point, after having moved up by almost 1/8 point on Thursday.

And the Merrill Lynch North American High Yield Master II Index advanced by 0.124% on Monday, its fourth successive gain; it had also improved by 0.012% on Friday and by 0.041% on Thursday.

Monday’s upturn raised the index’s year-to date return to 7.317% from Friday’s close at 7.184%. The year-to-date return still remains well down from the 7.636% posted on Oct. 24 – the peak cumulative return for 2017 so far.

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