Petrohawk, Tenet drive by, Trilogy prices, retreats; market awaits Borgata; secondary steady

By Paul Deckelman and Paul A. Harris

New York, Aug. 3 - A pair of rapidly appearing drive-by deals coming out of Texas on Tuesday set the high-yield market's primaryside pace, as Houston-based oil and natural gas exploration and production operator Petrohawk Energy Corp. priced $825 million of eight-year bonds, while Dallas-based hospital operator Tenet Healthcare Corp. came to market with a $600 million offering of 10-year notes. Both deals priced at par but only moved up marginally after that.

Also pricing was Trilogy International Partners, LLC/Trilogy International Finance Inc.'s $370 million senior secured notes due 2016. But the Bellevue, Wash.-based overseas telecommunications company's new deal was seen hung up at lower levels after the bonds started trading in the aftermarket.

Meanwhile, Monday's $500 million offering from Arch Coal, Inc. seemed to hold its own.

Price talk emerged on Marina District Finance Co. Inc.'s upsized $800 million two-part secured offering; the owner of the Borgata gaming joint-venture in Atlantic City is expected to price its five-year and eight-year notes on Wednesday.

A pair of new deals showed up on participants' radar screens Tuesday. Both Diamond Resorts Corp. and PHH Corp. are expected to price later this week.

In the secondary arena, trading was a little more active than Monday, though largely featureless, with statistical indicators generally unchanged to a little better. There was not much trading in Ford Motor Co.'s bonds or those of domestic arch-rival General Motors Corp., even though both carmakers released July sales numbers.

Petrohawk five-times oversubscribed

Against a backdrop of weaker stock prices and softness in the high-yield secondary, a trio of junk issuers - each one bringing a single tranche - combined to raise $1.8 billion on Tuesday.

In a deal that was five-times oversubscribed, Petrohawk Energy priced an $825 million issue of eight-year senior unsecured notes (B3/B+) at par to yield 7¼%, on top of price talk.

Barclays Capital, JP Morgan Securities Inc., Wells Fargo Securities, Bank of America Merrill Lynch, BMO Capital Markets, BNP Paribas Securities, Credit Suisse and RBC Capital Markets were the joint bookrunners for the quick-to-market debt refinancing deal.

Credit Agricole CIB and Morgan Stanley were the senior co-managers.

Tenet sells $600 million

In another transaction quarterbacked by Barclays, Tenet Healthcare priced a $600 million issue of 10-year senior unsecured notes (Caa1/CCC+) at par to yield 8%, also on top of the price talk.

In addition to Barclays, Bank of America Merrill Lynch, Goldman Sachs & Co. and Citigroup Global Markets were the joint bookrunners for the quick-to-market debt refinancing deal.

The transaction went very well, according to a syndicate source, who said that the order book was 3.5-times oversubscribed.

Trilogy oversubscribed

Also oversubscribed was Trilogy International Partners LLC and Trilogy International Finance Inc.'s $370 million issue of 10¼% six-year senior secured notes (Caa1/CCC+), an informed source said.

The deal priced at 98.902 to yield 10½%, with the yield printing at the wide end of the 10¼% to 10½% price talk.

Goldman Sachs & Co. was the left lead bookrunner. Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. were the joint bookrunners.

Proceeds will be used to repay the Bellevue, Wash.-based wireless operator's $250 million term loan and to invest in its New Zealand operations.

Trilogy has operations in the Caribbean, Latin America and New Zealand.

The deal broke above issue price, but subsequently fell to 98½ bid, the source said.

Late it the day, however, it straddled the 98.902 issue price, trading in a context of 98¾ bid, 99 offered, the source added.

Pride sells split-rated $1.2 billion

Meanwhile from the crossover space, Pride International, Inc. priced a restructured $1.2 billion notes deal (Ba1/BBB-/BB+).

The Houston-based offshore drilling contractor priced a $900 million tranche of 10-year notes priced at par to yield 6 7/8% - at the tight end of the 7% area price talk.

An added $300 million tranche of 30-year notes priced at par to yield 7 7/8%, again at the tight end of the price talk, which was for a yield in the 8% area.

The deal was initially announced as a single tranche of 10-year notes.

Goldman Sachs & Co., Citigroup Global Markets Inc. and Wells Fargo Securities were the bookrunners.

Proceeds are being used for general corporate purposes, including payments with respect to three drill ships under construction, and for other capital expenditures.

Borgata upsizes, sets talk

Marina District Finance Co. upsized its two-part offering of senior secured notes (B2//) to $800 million from $725 million.

The issuer, a wholly owned subsidiary of Atlantic City's Borgata Hotel Casino & Spa, also set tranche sizes and price talk.

The company talked a $400 million tranche of notes maturing on Oct. 15, 2015 at the 9¾% area. Those notes come with three years of call protection.

Meanwhile Borgata talked its $400 million tranche of notes maturing on Aug. 15, 2018 to yield 25 basis points to 37.5 bps behind the behind the notes due October 2015.

Both tranches of notes are expected to price with original issue discounts of approximately 1 point.

The order books are closed. The deal is expected to price mid-day on Wednesday.

Bank of America Merrill Lynch, Wells Fargo Securities, J.P. Morgan Securities Inc., Barclays Capital Inc., RBS Securities Inc. and UBS Investment Bank are the joint bookrunners for the debt refinancing and dividend funding deal.

Calendar grows

The forward calendar continued to grow on Tuesday.

Diamond Resorts Corp. expects to price a $425 million issue of eight-year senior secured notes before the end of the week.

Credit Suisse, Bank of America Merrill Lynch and Guggenheim Securities are joint bookrunners.

The Las Vegas-based timeshare and vacation ownership company will use proceeds to refinance bank debt.

Meanwhile, PHH Corp. also plans to price a $250 million offering of 5.5-year senior notes (current ratings Ba2/BB+) before the end of the week.

The company will be meeting with investors in New York on Wednesday. There is also an investor call on Wednesday.

Bank of America Merrill Lynch, Citigroup, JP Morgan and RBS Securities are joint bookrunners for the bank debt refinancing.

Specific timing on both Diamond and PHH hinges upon how long it takes to shout up a buy-side audience, according to a syndicate source, who noted that the traditionally slow month of August is underway.

And although this August is taking shape as anything but slow, people are still taking vacations, the official said.

Gentiva kicks off Wednesday

Meanwhile, Gentiva Health Services Inc. will launch its $305 million offering of eight-year senior unsecured notes on Wednesday.

A roadshow will get underway on Thursday in New York.

The deal is expected to price on Aug. 11.

Barclays Capital Inc., Bank of America Merrill Lynch and SunTrust Robinson Humphrey are joint bookrunners for the acquisition financing.

Calendar pushing $5 billion

In mid-July sources told Prospect News that although the dealers are managing a massive deal pipeline, they meant to bring deals in a "disciplined" fashion, so as not to flood the market with too much supply.

However, at Tuesday's close the Prospect News active deal calendar drew up just short of $5 billion - an impressive amount of business as the market heads into the Dog Days of late summer.

So are the dealers maintaining that "discipline," spoken of less than a month ago?

That question, put to sources on the buy-side and sell-side, generated qualified a "No".

"Issuers know that the market is rallying, and so they want to bring their deals now," a debt capital markets banker said on Tuesday.

If you put that issuer off in the name of not flooding the market, you risk having that issuer walk away in search of another bookrunner who is willing to bring the deal now, the source added.

So, if the discipline spoken of during mid-July is no longer tenable, does the market show signs of becoming flooded?

"Not yet," said an official from one of the syndicates involved in Tuesday's primary market business.

However, this official believes that the deal calendar is unlikely to grow much bigger than it presently is - at least with respect to deals to be marketed via roadshows.

That color notwithstanding, visibility took shape on at least two more of the pipeline deals.

Moody's assigned a Caa1 rating to Multiplan, Inc.'s $675 million of eight-year senior unsecured notes due 2018.

That LBO deal, via Bank of America Merrill Lynch, Barclays Capital and Credit Suisse is expected to be rolled out in the next week or so, an informed source said on Tuesday.

In more or less the same time-frame, Warner Chilcott plc is expected to roll out the high-yield bonds which are part of the $2.25 billion of debt financing to fund a $2.15 billion dividend to shareholders, a debt capital markets banker said.

Bank of America Merrill Lynch is expected to helm the deal from the Ireland-based specialty pharmaceutical company.

Tenet trades near issue

A trader said that the new Tenet Healthcare 8% notes due 2020 "didn't really go anywhere" after they were freed for secondary dealings. He saw the bonds at par bid, 100½ offered, versus their par issue price, "so there's nothing there.

"Tenet went nowhere the whole time."

Several other traders did see the new Tenet bonds end up a little on the session, with one pegging them at 100 3/8 bid, 100 5/8 offered, while a second saw them at 100¼ bid, 100¾ offered.

A trader meantime quoted Tenet's 7 3/8% notes due 2013 - the issue being tendered for using the proceeds from the new deal - at 103½ bid, 105½ offered. At another desk, a market source saw those bonds ending around the 103½ bid level, but said there had only been a couple of small trades, not too far above where the bonds had traded last week, before the news of the tender offer was announced. He said there had been no sizable trades in those bonds for about two weeks.

Tenet's 9¼% notes due 2015 - which are not being tendered for - were seen up ½ point at 106¾ bid.

Petrohawk no high flier

When Petrohawk Energy's new 7 ¼% notes due 2018 were freed for secondary dealings, a trader saw the bonds get as good as 100 5/8 bid, 101 5/8 offered, while another saw them at 100¼ bid, 100½ offered.

The new issue, yet another trader said, ended at par bid, 100½ offered, versus a par issue price, "so really nothing."

He said that the issue "did trade up on the break," getting as high as 101 bid, before coming back down to end where it did.

Still another trader agreed that the bonds had briefly brushed 101¼ bid, before retreating more than a point to around par bid. The new deal, he opined, "was a dud - but it was expensive to begin with."

One of the traders meantime saw Petrohawk's 9 1/8% notes due 2013, which are being taken out using the new deal proceeds, off slightly to end at just a shade under 105 bid, while a second called the bonds 104½ bid, 105¼ offered.

Trilogy trades down

When Trilogy International's issue of 10¼% senior secured notes due 2016 were freed for secondary dealings, a trader saw them at 99 bid, 99½ offered, up slightly from 98.902 at the pricing.

But those slight gains did not last very long. A trader a little later saw those bonds well down from their issue price at 97½ bid, 98¼ offered.

"The new Trilogys went nowhere as well," another trader said. "They're actually offered below issue price." He quoted them bid at 971/2.

Looking at the day's three deals as a whole, he suggested that "today was the kind of day where it seemed like the investment banks started to get a little too greedy in pricing," pricing the bonds of the three companies at very tight levels which left little or no room for much aftermarket upside, "and you're starting to see a little bit of pushback at least in the secondary on these new issues."

He said that this was "important to recognize, because you still have a very massive calendar for the rest of this week and even the rest of this month," when primary activity traditionally dwindles.

"It will be interesting to see whether these guys [issuers and underwriters] get a little bit more accommodating to pricing requests."

Arch Coal mostly holds gains

A trader saw Arch Coal Inc.'s new 7¼% notes due 2020 "doing well," trading at around 102 bid. "That one continues to gain a little bit so that one is trading well."

A second trader saw the new Arch bonds at 101 7/8 bid, 102 3/8 offered.

Arch, a St. Louis-based coal producer, priced $500 million of the notes on Monday at par, and the new bonds were seen having moved right up to a closing level later that session around 101½ bid, 102 offered.

Market indicators mostly running in place

Away from the new-deal sector, a trader saw the CDX North American HY Series 14 index unchanged on Tuesday at 98½ bid, 98¾ offered, after having gained ¾ point on Monday.

The KDP High Yield Daily index meantime edged downward by 1 basis point on Tuesday to 72.46, after having risen by 18 bps on Monday. Its yield was unchanged at 8.06%, after having tightened by 6 bps on Monday.

However, the Merrill Lynch High Yield Master II index continued to hit new highs for the year on Tuesday, showing a year-to-date gain of 8.686% - a new peak level for the year, eclipsing the previous mark of 8.488% seen on Monday.

Advancing issues led decliners for a 22nd consecutive session on Tuesday, while their winning margin widened to around eight to five from Monday's seven-to-five advantage.

Overall activity, represented by dollar-volume levels, climbed by 43% on Tuesday after having risen by 20% on Monday.

Even so, a trader said he was "starting to see the summer blahs. It's a little boring - but it is what it is."

A second trader noted the general lack of movement in the statistical indexes and some well-known selected issues, pronouncing that "everything was unchanged."

Another trader, though, saw "a firm tone."

Autos little moved on July data

A trader said that Ford Motor Co.'s 7.45% bonds due 2031 were trading between 97 bid and 98 bid, "with most of the trades taking place at 98, which makes them pretty much unchanged."

He meantime saw Ford domestic archrival General Motors' benchmark 8 3/8% bonds due 2033 essentially unchanged around 35 in "decent volume trading."

He said that neither company's bonds were much affected by the July auto-sales data which came out, showing both GM and Ford eking out around a 5% gain versus a year ago, Ford up to 166,092 cars, pickup trucks and sport utility vehicles sold in the U.S. and GM up to 199,692 such vehicles.

"They [investors] didn't care," he said. "It's already in [the bonds' price]."

Auto analysts said the weak July sales gains should come as no surprise, since the comps from a year ago were artificially boosted by the government's "Cash for Clunkers" car trade-in program, which was in full swing just a year ago.

Another trader saw the Ford long bonds unchanged at 97½ bid, 98 offered, while GM's benchmarks were actually off by 5/8 point at 34½ bid, 35 offered.

Ford Motor Credit Co.'s recently priced 6 5/8% notes due 2017 were seen unchanged at 100 1/8 bid, 100 3/8 offered. The carmaker's auto-loan unit priced its $1.25 billion mega-deal last Wednesday at 98.485 to yield 6.90%.

ATP shows improvement

Elsewhere, a trader said that ATP Oil & Gas Corp.'s 11 7/8% bonds due 2015 were "up a couple" of points on Tuesday to 78 bid. He said the bonds had started out around 76 bid, 77 offered, which itself was up a couple of points from the lower 70s, where the Houston-based E&P operator's bonds had begun the week.

They were seen improving as investor angst over the Gulf of Mexico oil blowout seemed to be subsiding with the news that BP plc was finally capping the well which ruptured back in mid-April.

The trader meantime said that he had not seen much activity in BP's bonds, or those of Transocean Co., the owner of the Deepwater Horizon drilling rig whose fiery demise kicked off the well blowout.

He did see BP's 25% partner in the ruptured well, Anadarko Petroleum Corp.'s bonds "moving up a little." The Woodlands, Tex.-based energy operator's 5.95% notes due 2016 gained ½ point to end at 97 bid, 97½ offered.

-Stephanie N. Rotondo contributed to this report

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