Upsized Sirius megadeal, upsized Antero, Jaguar Land Rover drive by; market easier

By Paul A. Harris and Paul Deckelman

New York, March 3 – The high-yield primary sphere picked up its pace on Tuesday as a trio of deals collectively worth $2.25 billion priced, in contrast with Monday, when just one $460 million offering came to market.

Satellite broadcaster Sirius XM Radio, Inc. had the big deal of the day, a quickly shopped and upsized $1 billion 10-year offering that came late in the session.

Oil and natural gas operator Antero Resources Corp. also did an upsized, quick-to-market deal, pricing $750 million of eight-year notes that were heavily traded but about unchanged from their issue price when they hit the aftermarket.

Also driving by was British luxury carmaker Jaguar Land Rover Automotive plc, whose bonds also stayed around their issue price in busy trading.

Monday’s offering from E*Trade Financial Corp. was quoted still hanging around its par issue price, while Friday’s two-part offering from Bombardier, Inc. repeated as the day’s most heavily traded bonds, a position it had held on Monday as well.

The Bombardier bonds, which had firmed smartly on Monday in heavy trading, were again the most active junk credits on Tuesday, but unlike Monday’s session, they were off their peak levels, consistent with an overall easier tone in the market.

Statistical indicators of junk market performance turned lower across the board on Tuesday, their first time on the downside in more than a month. They had been mixed on Monday, after having been higher across the board on Friday for a fourth consecutive session.

Sirius XM upsizes to $1 billion

Three issuers brought drive-by dollar-denominated deals in single tranches on Tuesday, raising a combined total of $2.2 billion.

Two of the three deals were upsized.

All three came either in the middle of or on top of yield talk.

And all three deals had J.P. Morgan as left bookrunner. By one market source’s calculation, that underwriter has been left books on 70% of the junk deals that have cleared the market since the conclusion of the J.P. Morgan Global High Yield & Leveraged Finance Conference, which wrapped up on Feb. 25 in Miami.

On Tuesday, SiriusXM priced an upsized $1 billion issue of 10-year senior notes (expected B1/confirmed BB) at par to yield 5 3/8%.

The deal was upsized from $750 million.

The yield printed on top of yield talk.

The early yield guidance was 5¼% to 5½%, according to a trader.

JPMorgan, Barclays, Citigroup, Morgan Stanley, SunTrust and Wells Fargo were the joint bookrunners.

The New York-based radio broadcaster plans to use the proceeds, including those resulting from the $250 million upsizing of the deal, for general corporate purposes, which may include debt repayment, including paying down the revolver, and dividends or loans to SiriusXM, as well as to fund repurchases of SiriusXM common stock.

Antero upsizes

Antero Resources priced an upsized $750 million issue of eight-year senior notes (Ba3/expected BB) at par to yield 5 5/8%.

The debt refinancing deal was upsized from $500 million.

The yield printed in the middle of the 5½% to 5¾% yield talk.

That talk came on top of initial guidance, according to a trader.

JPMorgan, Wells Fargo, MUFG, Credit Agricole and Capital One South Coast were the joint bookrunners.

Jaguar drives by

Jaguar Land Rover Automotive priced a $500 million issue of non-callable five-year senior notes (expected Ba2/confirmed BB) at par to yield 3½%.

The yield printed in the middle of yield talk in the 3 5/8% area.

Early yield guidance was 3¾%, according to a trader.

JPMorgan, BofA Merrill Lynch, Citigroup, Credit Suisse and Morgan Stanley were the joint physical bookrunners for the debt refinancing deal.

ANZ, Barclays, HSBC, Standard Chartered Bank and UBS were the passive bookrunners.

The Whitley, Coventry, England-based automaker plans to use the proceeds to fund the tender offer for its 8 1/8% senior notes due 2018.

Energy XXI sets investor call

Energy XXI Gulf Coast, Inc. plans to take part in an investor conference call scheduled to begin at 11 a.m. ET on Wednesday to discuss a $1.25 billion offering of five-year senior secured second lien notes.

The deal is set to price later this week.

Credit Suisse, Deutsche Bank, Imperial, Wells Fargo, Citigroup, Jefferies, RBS and UBS are the joint bookrunners.

The Houston-based independent exploration and production company plans to use the proceeds to repay its revolver and for general corporate purposes.

GFL five-year deal

GFL Environmental Inc. plans to price a $250 million offering of senior notes due 2020 in the week ahead.

BMO and Credit Suisse are the joint bookrunners.

The Vaughan, Ont.-based environmental services company plans to use the proceeds to repay revolver and unsecured term loan debt, to fund the tender for up to $50 million of its 7½% Canadian-dollar-denominated senior notes and for general corporate purposes, including potential acquisitions.

Campofrio comes inside of talk

In the European high-yield, Spain’s Campofrio Food Group, SA priced a €500 million issue of seven-year senior notes (Ba3/BB-) at par to yield 3 3/8%.

The yield printed inside of the 3½% to 3¾% yield talk.

The timing of the debt refinancing deal was accelerated, as the roadshow had been expected to run until Wednesday.

BBVA, Barclays, BNP Paribas, JPMorgan, Morgan Stanley and Santander were the joint bookrunners.

ETFs see slight outflow

For the first time since mid-to-late January, when the European Central Bank announced that it would undertake what has been characterized as an aggressive asset purchase program, there was negative fund flows news on Tuesday, with respect to the dedicated high-yield funds.

High-yield ETFs saw $16 million of outflows on Monday, according to a trader who tracks them closely, and who forecasted that the ETFs will almost certainly put up negative daily flows for Tuesday as well, when those numbers surface.

ETFs were buying short-dated paper on Tuesday and selling some bonds with longer maturities, the source added.

Meanwhile, flows to actively managed funds remained positive, with those funds seeing $235 million of daily inflows on Monday.

For the week to date, aggregate flows, which combine both ETFs and actively managed funds, are positive – $784 million – the trader added.

Sirus a latecomer

In the secondary realm, traders said the big deal from Sirius XM came to market too late for any real aftermarket activity, although one estimated that the bonds would likely move in a par-to-101 bid context, after having priced at par.

Antero, Jaguar hold issue price

Among the day’s other two transactions, which priced earlier in the session, a trader said that Antero Resources’ 5 5/8% notes due 2023 were among the day’s most active issues, with at least $50 million having changed hands in the relatively short time between their pricing and the market close. He saw the bonds about unchanged from their issue price at par bid.

A second trader also pegged the Denver-based oil and gas exploration and production company’s deal “wrapped around par.”

Jaguar Land Rover’s 3½% notes due 2020 were also “wrapped around par” bid, unchanged from their issue price, a trader said.

Another quoted them in a 99 7/8-to-100 1/8 bid context, with a busy $19 million seen having traded.

E*Trade little moved

A trader said that E*Trade Financial’s 4 5/8% notes due September 2023 were last trading in a par-to-101 bid context.

He did not see a lot of volume in the New York-based discount online brokerage’s quickly shopped $460 million issue, which had priced at par on Monday and which had then been quoted around a 100 3/8-to-100 5/8 bid context.

Busy Bombardier a little easier

However, that was not the case with Bombardier’s two-part issue, which a trader called “still the two biggest volume guys.”

He saw the Montreal-based aircraft and railroad equipment manufacturer’s 7½% notes due 2025 at 102 bid, while its 5½% notes due in September of 2018 were 101 bid, 101¼ offered.

Another market source saw the 2025 notes down 1/8 point on the day, at 101 7/8 bid, on volume of more than $51 million.

He saw its 2018 notes down ¼ point on the day at 101¼, with over $43 million of the bonds having changed hands.

Bombardier had priced $750 million of the 3.5-year notes and $1.5 billion of the 10-year paper, both at par, in a quick-to-market issue on Friday, the total size of which was raised to $2.25 billion from an originally announced $1.5 billion.

The bonds initially traded only a little above their respective issue prices, but had moved up solidly in Monday’s dealings, with the 10-years going home above the 102 bid level and the shorter bonds moving up to 101 ½ bid.

New deals dominate

A trader said that outside of the three new deals, “things were pretty quiet. With these three deals announced in the morning and coming today, a lot of accounts were just sitting around, waiting for them to come and were not doing much else.”

“This was where the business was to be had today.”

There was a little activity in the energy sphere, with oil prices higher. The trader saw California Resources Corp.’s paper up ¼ to ½ point, with the benchmark 6% notes due 2024 ending at 89½ bid.

Indicators turn lower

Statistical indicators of junk market performance turned lower across the board on Tuesday, their first time on the downside in more than a month. They had been mixed on Monday after having been higher across the board on Friday for a fourth consecutive session.

The KDP High Yield Daily index dropped by 12 basis points on Tuesday to close at 71.94, its second consecutive loss. On Monday, it had eased by 1 bp – its first loss after seven straight gains, and after having risen in 10 out of the previous 11 sessions and, on a longer-term basis, in 16 out of the previous 18 sessions.

Its yield, meanwhile, moved up by 1 bp to 5.12%, after having risen by 4 bps on Monday, snapping a five-session winning streak.

The Markit Series 23 CDX North American High Yield index fell by 3/16 point to finish at 107½ bid, 107 17/32 offered – its first loss after having gone up for five straight sessions and for six out of the previous seven, including Monday, when it had risen by 3/32 point.

And even the Merrill Lynch U.S. High Yield Master II index – which had rolled on, seemingly unstoppable, over the previous 31 sessions, a winning streak dating back more than a month to Jan. 19 – finally faltered on Tuesday, losing 0.106%, versus Monday’s 0.032% rise.

Tuesday’s loss left its year-to-date return at 3.016%, down from to 3.125% on Monday, which had been its 27th straight new peak level for 2015.

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