AES, Penske, Teleflex deals drive by; new Goodyear gains in busy dealings; new NRG trades off

By Paul Deckelman and Paul A. Harris

New York, May 11 – The high-yield new-deal market picked up its activity pace on Wednesday. Three issuers priced new deals – all of them quickly shopped 10-year transactions – collectively worth $1.4 billion.

Power generation company AES Corp. brought a $500 million offering to market.

Car and truck dealership operator Penske Automotive Group, Inc. did a $500 million subordinated notes deal.

Medical products and services provider Teleflex Inc. got a $400 million issue done.

Syndicate sources said that the already busy week will wrap up the same way, with new deals expected to price over the next day or so from foodservice distributor Performance Food Group, Inc., metals producer Ryerson Holding Corp. and liquefied natural gas company Cheniere Corpus Christi Holdings, LLC, the latter expected to be a secured mega-deal-sized offering.

Among the issues that have already priced so far this week, traders said that Goodyear Tire & Rubber Co.’s 10-year deal from Tuesday moved higher in heavy trading.

But Monday’s 10-year deal from wholesale power producer NRG Energy, Inc. was heading lower for a second straight session.

Statistical market performance measures turned mixed on Wednesday for the second time in the last three sessions after having turned higher across the board on Tuesday.

AES drives by

In new issue action, three drive-by issuers appeared with single-tranche deals on Wednesday, raising a combined total of $1.4 billion.

None of the three deals was upsized.

One priced at the tight end of talk, while the other two priced in the middle.

AES priced a $500 million issue of 10-year senior notes (Ba3/BB/BB) at par to yield 6%.

The yield printed on top of both yield talk and initial guidance, sources said.

Morgan Stanley & Co. LLC, Barclays, Deutsche Bank Securities, BofA Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners.

The Arlington, Va.-based power company plans to use the proceeds to repay debt, including a portion of its floating-rate notes due 2019.

The market had been anticipating an upsize to the AES deal, with the company using the additional proceeds to take out more, and possibly all, of the floating-rate notes, which are currently callable at par, a trader said.

Ultimately that upsize did not materialize, however.

Penske senior subs

Penske Automotive Group priced a $500 million issue of 10-year senior subordinated notes (B1/B+) at par to yield 5½%.

The yield printed at the tight end of yield talk in the 5 5/8% area. Early guidance had the deal pricing the mid-to-high 5% yield context.

BofA Merrill Lynch was the left bookrunner for the drive-by deal. JPMorgan and Wells Fargo Securities LLC were joint bookrunners.

The Bloomfield Hills, Mich.-based transportation services company plans to use the proceeds to repay amounts currently outstanding under the its U.S. credit agreement and floor plan debt and for general working capital purposes.

Teleflex 10-year deal

Teleflex priced a $400 million issue of 10-year senior notes (Ba3/BB+) at par to yield 4 7/8%.

The yield printed in the middle of the 4¾% to 5% yield talk. Early guidance was in the 5% area.

JPMorgan and BofA Merrill Lynch were the joint bookrunners.

The Limerick, Pa.-based provider of medical products and services plans to use the proceeds to repay about $393 million of debt under its revolver.

Looking to Thursday

Looking ahead to the Thursday session, Performance Food Group talked its $350 million offering of eight-year senior notes (B2/BB-) to yield 5½% to 5¾%.

Official talk comes inside of earlier 5¾% to 6¼% guidance.

Books close at 2:30 p.m. ET on Thursday, and the deal is set to price thereafter.

Elsewhere, Ryerson whispered a $650 million offering of six-year senior secured notes in the low 11% yield context on Wednesday.

The deal, which is coming on a significant amount of reverse inquiry, is expected to price on Thursday.

BofA Merrill Lynch is leading the notes sale.

Also on deck for the latter part of the present week is Cheniere Corpus Christi Holdings with $1 billion of non-callable eight-year senior secured notes.

Early Wednesday the order book was heard to be at deal size.

The market awaits official talk. Early guidance has the deal yielding 7¼% to 7½%.

Volvo Car prices tight

The euro-denominated primary market was also busy on Wednesday. Three issuers priced a combined four tranches, generating a total face amount of €1.42 billion.

Volvo Car AB priced a €500 million issue of non-callable five-year senior notes (Ba3/BB) at par to yield 3¼%.

The yield printed at the tight end of yield talk in the 3 3/8% area.

Global coordinator HSBC will bill and deliver for the general corporate purposes deal. Barclays was also a global coordinator.

ING, Nordea, SG CIB and Swedbank were joint bookrunners.

SMCP two-part deal

BiSoho SAS (SMCP) priced €470 million of senior secured notes (B2/BB-) in two tranches.

The deal included €370 million of seven-year fixed-rate notes that priced at par to yield 5 7/8%. The yield printed 12.5 basis points beneath the low end of the 6% to 6¼% yield talk.

In addition it included €100 million of 6.5-year floating-rate notes that came with a 600 bps spread to Euribor at 99. The spread came at the tight end of the 600 bps to 625 bps spread talk. The reoffer price came on top of price talk.

Global coordinator and physical bookrunner JPMorgan will bill and deliver. Commerzbank was the joint bookrunner.

Proceeds will be used to refinance debt and to partially fund the acquisition of France-based apparel retailer SMCP by China’s Shandong Ruyi Group.

WEPA secured deal

WEPA Hygieneprodukte GmbH priced a €450 million issue of eight-year senior secured notes (B1/BB) at par to yield 3¾%.

Joint bookrunner Deutsche Bank will bill and deliver. HSBC is also a joint bookrunner.

The Arnsberg, Germany-based producer and supplier of tissue products plans to use the proceeds to refinance debt and for general corporate purposes.

Mixed flows

The cash flows of the dedicated high-yield bond funds were mixed on Tuesday, the most recent session for which data was available at press time, a trader said.

High-yield exchange-traded funds, which saw big cash outflows last week, have been positive so far in the present week.

The ETFs saw $347 million of inflows on Tuesday and were buyers on Wednesday morning, sources said.

Meanwhile asset managers were flat to negative, with $15 million of outflows on Tuesday.

Dedicated bank loan funds saw $70 million of outflows on Tuesday, the trader said.

Penske, Teleflex seen better

In the secondary market, a trader said that the new Penske Automotive 5½% senior subordinated notes due 2026 had firmed to 100½ bid in initial aftermarket dealings after pricing at par earlier in the session.

He also saw Teleflex’s 4 7/8% senior notes due 2026 at that same 100½ bid level, also up from a par issue price.

At another shop, a trader said that the new Penske notes’ gains were a more modest 1/8 point. He estimated the volume in the new issue at around $26 million.

He said that the Teleflex issue was even busier, with over $63 million having changed hands after the deal priced, firming to around 100 3/8 bid.

Traders did not immediately report any activity in the new AES 6% notes due 2026, which priced fairly late in the session.

The latter’s existing 8% notes due 2020 gained ¼ point, ending at 116¼ bid.

Goodyear up in heavy trading

The most active credit of the day in Junkbondland was Goodyear’s new 5% notes due 2026, ending at 101 1/8 bid, up 5/8 points on the session, a market source said, on volume of more than $63 million.

A second trader who also saw them at that closing level called it a ½-point gain.

And yet another trader pegged the bonds in a 101-to-101½ bid context, which he said was up by ½ point.

The Akron, Ohio-based tire-making giant had priced its quick-to-market $900 million new deal at par on Tuesday, with the bonds having shot up to a range of 100½-to-101 bid when they were freed to trade in very heavy late-day dealings of more than $121 million.

NRG retreat continues

For a second consecutive session, NRG Energy’s new 7¼% notes due 2026 were seen retreating from the gains those bonds had notched after they initially priced.

A trader said that the new deal “has been active in a par to 100¼ area.”

Another trader, though, saw them finishing somewhat below that level, quoting the bonds going home at 99 13/16 bid, calling it a 7/16-point loss on the session. Volume was a brisk $26 million plus.

On Tuesday, more than $92 million of the notes had traded, and they finished off by another 7/16 point, ending at 100 3/16 bid.

NRG, a Princeton, N.J.-based wholesale power generator, priced $1 billion of those notes at par in a quick-to-market offering on Monday after the deal was upsized from an originally announced $700 million.

Traders saw the bonds up around 5/8 point in initial aftermarket dealings, with over $41 million traded.

Cenveo gains on debt moves

Elsewhere, Cenveo Corp.’s 6% notes due 2019 jumped to 82 1/8 bid, a more than 2-point gain from where the bonds had traded earlier in the week.

More than $20 million traded.

The Stamford, Conn.-based printing products company’s bond rose after it announced that it had begun an offer to exchange its outstanding 11½% senior notes due 2017 for newly issued 6% senior notes due 2024 and warrants. (See related story elsewhere in this issue.)

Indicators turn mixed

Statistical market performance measures turned mixed on Wednesday for the second time in the last three sessions after having been higher across the board on Tuesday.

The KDP High Yield Daily index notched its second straight gain, rising by 14 bps to end at 67.29, its fifth advance in the last 10 sessions. On Tuesday, it had snapped a six-session losing streak with an 8-bps gain.

Its yield came in by 6 bps to 6.27%, its second straight tightening and sixth in the last 11 sessions; it had fallen by 2 bps Tuesday after having been unchanged on Monday and after widening out for four consecutive sessions before that.

The Markit Series 26 CDX North American High Yield index, however, saw its first loss after two straight gains on Wednesday, declining by 3/16 point to finish at 102 5/16 bid, 102 11/32 offered. On Tuesday, the index had jumped by nearly ¾ point, on top of Monday’s 7/32 point improvement.

The Merrill Lynch North American High Yield Master II index, though, continued its winning ways for a second straight session, advancing by 0.286%, on the heels of Tuesday’s 0.223% rise, which followed five successive losses.

Wednesday’s upside move raised the index’s year-to-date return to 6.935% from Tuesday’s finish at 6.63%. The cumulative return still remains below last Monday’s close of 7.398%, the peak level for the year so far.

© 2015 Prospect News.
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