HCA, Newfield, Jeld-Wen deals price; Stillwater is spiked; AES unit's new mega-deal trades up

By Paul Deckelman and Paul A. Harris

New York, Sept. 27 - Hospital operator HCA Inc. - which tapped the junk bond market for a humongous $5 billion issue back in July - made a return visit on Tuesday, coming away with a more modest $500 million from its drive-by offering.

Despite the company's popularity with investors, traders saw the new bonds struggling to stay above their par issue price.

The Nashville-based health-care company was one of three opportunistically timed, quickly shopped deals that came to market on Tuesday to generate total proceeds of just under $1.7 billion.

Energy operator Newfield Exploration Co. did a solidly upsized $750 million offering of 10.25-year notes, which hung around just under par, not far from their slightly discounted issue price.

And Jeld-Wen Escrow Corp. Inc., which launched a newly restructured and downsized senior secured offering on Monday after months of sitting on the forward calendar, priced its $460 million issue, which appeared too late for any aftermarket.

There was plenty of aftermarket action on Tuesday for the new Dolphin Subsidiary II, Inc. offering, which priced late in the session on Monday at par for both tranches but arrived too late to trade. On Tuesday, the AES Corp. unit's $1.25 billion of five- and 10-year paper was quoted by traders as having firmed smartly from the issue price.

But even amid the growing primaryside revival came word that Stillwater Mining Co. decided to postpone its planned $300 million transaction, citing unsettled market conditions.

Away from the new deals, there was action for a second straight session in Eastman Kodak Co. paper, whose levels had fallen sharply on Monday, though on limited trading, on the news the photography and imaging technology company had drawn down most of its credit facility borrowing capacity.

Statistical market performance measures were seen mixed.

HCA drives by

The Tuesday primary market saw issuers raise $948 million by placing two junk-rated dollar-denominated tranches of high-yield notes.

In quick-to-market action, HCA priced a $500 million issue of non-callable seven-year senior notes (B3/B-) at par to yield 8%.

The yield printed at the tight end of the 8% to 8¼% price talk.

Barclays Capital Inc., Deutsche Bank Securities, Inc., Goldman Sachs & Co., Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC were the joint bookrunners.

Proceeds will be used for general corporate purposes including funding a portion of the acquisition of the remaining ownership interest in the HCA-HealthONE LLC joint venture currently owned by the Colorado Health Foundation.

Jeld-Wen returns

After being sidelined by market conditions, Jeld-Wen, Inc. returned to price a downsized and restructured $460 million issue of 12¼% six-year senior secured notes (B3//) at 97.419 to yield 12 7/8% on Tuesday.

Guidance in the high 12% to low 13% range surfaced on Monday.

The issue size was decreased from $575 million, and the tenor was reduced to six years from seven years. There were also covenant changes, sources said.

Bank of America Merrill Lynch, Wells Fargo, Barclays Capital and KeyBanc Capital Markets Inc. were the joint bookrunners.

Proceeds, along with an investment by Onex Corp. and its affiliates, will be used to refinance debt and for general corporate purposes.

Jeld-Wen marketed the original $575 million deal during a roadshow in late July and early August only to see the offering sidelined because of turbulence in the capital markets.

The issuing entity, Jeld-Wen Escrow, will be merged with and into Jeld-Wen, Inc.

Newfield does split-rated deal

In the crossover space, Newfield Exploration launched and priced an upsized $750 million issue of split-rated 5¾% senior notes due Jan. 30, 2022 (Ba1/BBB-/BB+).

The deal was upsized from $500 million.

The non-callable notes were priced at 99.956 to yield 5¾%.

The yield printed at the tight end of the 5 7/8% price talk.

Joint bookrunner J.P. Morgan Securities LLC will bill and deliver. Wells Fargo was also a joint bookrunner.

The Woodlands, Texas-based independent oil and gas exploration and production company plans to use the proceeds to repay bank debt.

Stillwater Mining withdraws

Finally, Stillwater Mining announced in a Tuesday press release that it has withdrawn its $300 million offering of five-year senior notes (/B/) due to market conditions.

"We have ample cash liquidity available, in addition to our strong cash flow, to fully fund the approximately $165 million net cash portion of the Peregrine (Metals Ltd.) transaction, provide for our working capital needs and fund near-term capital requirements," Francis R. McAllister, Stillwater Mining's chairman and chief executive officer, said in the release.

The deal, which was being led by bookrunner Deutsche Bank Securities, was talked with a 10% coupon, a price in the 98 area and a yield around 10½% on Monday.

New HCA bonds below issue

When HCA's new seven-year notes were freed for secondary dealings, a trader saw them "trading down slightly" at 99½ bid, 99¾ offered. They priced at par earlier in the session.

"The new deals did not get off to a stellar start," said a second trader, who pegged the HCA drive-by as having gone from par at the pricing to 99½ bid, 100¼ offered in initial dealings. He saw the bonds ending the session at 99 3/8 bid, 99 5/8 offered.

Yet another trader had them going home still lower at 99 1/8 bid, 99 3/8 offered.

The company's recent issue of 8.5- and 10.5-year notes were meantime seen slightly lower.

A market source saw its 6½% senior secured first-lien notes due 2020 easing by a quarter point, to 98¾ bid, on volume of over $31 million, making the credit one of the most actively traded issues in Junkbondland on Tuesday.

Its 7½% notes due 2022 fell by seven-eighths of a point to end at 94 5/8 on volume of over $30 million.

A market source at another desk saw the 6½% notes actually up by one-eighth of a point on the day at 98¾ bid, while the 7½% notes lost seven-eights of a point to close at 94 5/8.

The giant hospital company priced $3 billion of the 6½% notes and $2 billion of the 7½% notes in a quickly shopped transaction on July 26. That deal was radically upsized from the originally announced $1 billion. Both tranches priced at par and initially firmed by a point or more but have recently been on the slide, along with many other junk names.

Newfield not terribly strong

When Newfield Exploration's new 10.25-year issue was freed to trade, a market source pegged the Houston-based oil and gas operator's notes "also trading down" in addition to HCA.

He saw the issue trading between 99 5/8 and 99 7/8 and then going out on the low end of that range. They priced at 99.956.

"They were a little softer, on whatever has happening in the overall market," another trader said.

Jeld-Wen comes too late

There was no aftermarket trading seen in Jeld-Wen, since the Klamath Falls, Ore.-based door and window-maker's $460 million offering hit the market way too late for any dealings to been seen.

Qwest holds around issue

Several traders also were quoting the new 6¾% notes due 2021 priced Tuesday by telecommunications operator Qwest Corp., even though technically the Denver-based company, long a junk mainstay, is now a high-grade credit (Baa3/BBB-/BBB-) since its acquisition some months back by rival CenturyLink, Inc., of Monroe, La.

One trader said the bonds had moved up to 98¼ bid from 98.181, where the $950 million issue had priced to yield 7%, "so they're a tiny bit higher."

A second quoted the bonds offered at 99 after they "priced a little cheaper" but said he "never saw anything trade" after that.

Dolphin bonds do well

Traders saw both tranches of the new Dolphin Subsidiary II bonds firm smartly when they began trading on Tuesday.

One quoted the issuer's 6½% notes due 2016 at 101¾ bid, 102 offered, up from the par level where Dolphin - a unit of Arlington, Va.-based power generation company AES - priced its $450 million issue on Monday. AES did some of the funding for its acquisition of Dayton Power & Light's parent company, DPL Inc., through Dolphin.

He also saw its 7¼% notes due 2021 at 101 bid, 102 offered. The company priced $800 million of those bonds at par in a quick-to-market deal on Monday.

A second trader saw the five-years get as high as 102 bid, 102½ offered and then step back a little to 101½ bid, 101¾ offered. This trader quoted the 10-years at 101 bid, 102 offered.

Bill Barrett better

A trader saw Denver-based energy exploration and production operator Bill Barrett Corp.'s 7 5/8% notes due 2019 trading slightly above the par level at 100 1/8 to 1001/2, up from the around par bid where the bonds finished up last week and began this one.

The company priced its $400 million issue of the notes, upsized from the original $300 million, as a drive-by deal last Tuesday. After the bonds priced at par - too late that session to allow any aftermarket trading - they moved up the following day to bid levels as high as 101, although they had come off those peaks and traded lower during Thursday's session, back down to around the par level.

Avis still struggling

A trader said that Parsippany, N.J.-based vehicle-rental giant Avis Budget Car Rental LLC's $250 million offering of 9¾% notes due March 2020 "disappeared for a while but then finally showed up" up 98¾ bid.

Early in the day, he said, the bonds traded up, perhaps as far as 99 bid, then were just offered at 991/2. And after that, it was back to the market around 98 bid, 98 3/8 offered.

The bonds priced off the forward calendar at par last Wednesday. They initially were quoted as high as 101 bid on the break but then skidded badly after that, ending their initial trading down around 99 bid. As the week wore on, the bonds got as low as a 97-97½ bid context before coming back up to the 98 level, where they were seen on Friday. On Monday, a trader was seeing them "still" at 97½ bid, 98½ offered.

Junk indicators turn mixed

Junk market statistical performance indicators, which had been mostly lower over the previous several sessions, turned mixed to somewhat higher on Monday.

A market source said that the CDX North American High Yield index ended the day at 89 3/16 bid, 89 5/16 offered, while a second saw it at 89 14/16 bid, 90 offered. Tuesday was the first day of trading for the new series 17 version of the index, which rolls every six months. As such, it is not directly comparable to the series 16, which rose by 1 point on Monday, its last day of trading, to 92½ bid, 92¾ offered.

The KDP High Yield Daily index was up 1 basis point on Tuesday to end at 70.91 after having been off by 9 bps on Monday. Its yield was up by 2 bps on Tuesday, to 8.20%, after having held steady on Monday at 8.18%.

The Merrill Lynch U.S. High Yield Master II index rose by 0.028% on Tuesday, breaking a four-session losing streak that included the 0.213% downturn seen on Monday.

The gain did not lift the index's year-to-date return out of negative territory, into which it fell on Monday with a 0.17% cumulative loss - the first time the index has been in the red on a year-to-date basis in all of 2011 and its first time since Feb. 16, 2010. Tuesday's gain cut that loss to 0.142%. The cumulative loss still stood in stark contrast to the peak level for the year of 6.362%, set on July 26.

Market activity levels, measured by dollar volume, jumped by 32% on Tuesday. They were unchanged on Monday versus the session before.

Kodak remains volatile

Eastman Kodak's debt was still trading on Tuesday following the big slide seen on Monday on the news that the company drew $160 million from its revolving credit facility. That draw increased fears regarding the Rochester, N.Y.-based photography products and digital imaging technology company's cash burn, and investors were concerned that it might not be able to sell its patents soon enough to avoid running out of cash. The news resulted in losses of up to 25 points for the bonds in just one trading session.

On Tuesday, a trader saw the 9¾% notes due 2018 "a couple points lower again" at 71 bid, 72 offered - they had fallen around 10 points on Monday, although in light trading.

The trader also saw the company's 7¼% notes due 2013 "basically unchanged" at 62 bid, 63 offered.

Another trader deemed the 7¼% notes up "about a point" around 63, while a third market source called the notes 1½ points higher at 63 bid. Those bonds were quoted down as much as 23 points on Monday, from prior levels in the mid-80s. However, traders did not see much in the way of actual trading in them on Monday, with only about $1.7 million actually trading hands.

On Tuesday, a market source said that over $15 million of the bonds had traded at those slightly higher levels.

Stephanie N. Rotondo contributed to this report

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.