Upsized Laureate prices, trades up; Shale-Inland, Heckmann also, to cap $10.3 billion week

By Paul Deckelman and Paul A. Harris

New York, Oct. 26 - The high-yield primary sphere capped off another busy week on Friday, pricing three deals collectively worth $1.43 billion, according to junk market syndicate sources.

They saw post-secondary education provider Laureate Education, Inc. go to the head of the class with a greatly - and repeatedly - upsized $1.05 billion add-on to its existing 9¼% notes due 2019. Those bonds moved up several points when they were freed for aftermarket dealings, after having priced at a sizable discount to par.

Shale-Inland Holdings LLC, a producer of industrial pipes valves and fittings, and its Shale-Inland Finance Corp. subsidiary priced a $250 million seven-year secured note offering. The new bonds traded right around their slightly discounted issue price.

And Heckmann Corp., a provider of water solutions to the energy industry, priced a $150 million add-on to its existing 9 7/8% notes due 2018 - too late in the session for any kind of an aftermarket.

Those deals completed a week which saw over $10.3 billion of new dollar-denominated, purely junk-rated paper from domestic or developed-country issuers. Issuance remains on a torrid pace, running about 50% ahead of last year's already busy pace by this point on the calendar.

Apart from the transactions that priced Friday, the traders also saw continued strong dealings in the new bonds of Virgin Media Finance plc and United Rentals (North America), Inc., which both priced on Thursday. There was continued active trading in both halves of Plains Exploration & Production Co.'s $3 billion deal that priced on Tuesday.

Secondary market activity away from the new deals was seen as very quiet. Statistical indicators of market performance were both down on the day and down on a week-to-week basis as well.

Laureate sees multiple upsizings

Although Friday's new issue market failed to put up big numbers, the news flow was purposeful.

Three issuers, each bringing a single dollar-denominated tranche, raised $1.43 billion.

After multiple upsizings, Laureate Education priced a deal that grew to $1.05 billion from its original $350 million starting size. The transaction was increased to $575 million, then to $865 million before a final increase took it to its eventual $1.05 billion size.

The add-on to the company's 9¼% senior notes due 2019 (Caa1/CCC) priced at 97.75 to yield 9.699%, toward the low end of yield talk that was set in the 9¾% area.

J.P. Morgan, Barclays and Citigroup were joint bookrunners for the debt refinancing deal.

Shale-Inland sells secureds

Shale-Inland Holdings, LLC and Shale-Inland Finance Co. priced a $250 million issue of 8¾% seven-year senior secured notes (B3/B-) at 99.352 to yield 8 7/8%.

The yield printed in the middle of the 8¾% to 9% yield talk.

UBS was the left lead bookrunner for the bank debt refinancing deal. Barclays, Deutsche Bank and BMO were the joint bookrunners.

Heckmann taps 9 7/8% notes

Heckmann priced a $150 million tack-on to its 9 7/8% senior notes due April 15, 2018 (B3/B) at 100.25 to yield 9.812%.

The reoffer price came in the middle of the 100 to 100.5 price talk.

Jefferies, Wells Fargo and Credit Suisse were the joint bookrunners for the merger deal.

Air Berlin taps 11½% notes

The European high-yield marked saw a slight amount of activity during the final session of the last full week of October.

Air Berlin plc & Co. Luftverkehr KG priced a €50 million add-on to its 11½% notes due Nov. 1, 2014 at 101.

"The orderbook was closed prematurely after the placement had been oversubscribed," the company stated in it Friday press release.

Quirin Bank AG was the lead manager for the general corporate purposes deal.

Vivint plans notes

Looking toward the October-November crossover week, the active forward calendar took aboard two new deals.

313 Group, Inc. plans to start a roadshow on Monday for a $1.305 billion two-part offering of notes.

The deal, to fund the acquisition of Vivint, Inc. by the Blackstone Group, will include a $925 million tranche of seven-year senior secured notes and a $380 million tranche of eight-year senior unsecured notes.

Bank of America, Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, Macquarie and Goldman Sachs are the joint bookrunners.

313 Group will be merged with and into APX Group, Inc., the parent of Vivint, a Provo, Utah-based home securities services provider.

Mattamy dual-currency deal

Mattamy Group Corp. plans to start a roadshow on Monday for a $450 million equivalent eight-year senior notes transaction.

The deal, which will come in dollar-denominated and Canadian dollar-denominated notes, is expected to price late in the week.

Credit Suisse, RBC and Citigroup are the joint bookrunners for the debt refinancing.

Laureate firms smartly

When the new Laureate 9¼% add-on notes were freed for secondary dealings, a trader said that the Baltimore-based post-secondary education provider's new deal was "oversubscribed, even after all the machinations" that saw the issue repeatedly upsized from its originally planned 350 million.

"They took out $800 million in debt and priced $1 billion" - actually, $1.05 billion, after the deal was enlarged several successive times.

Although the offering priced fairly late in the session, he saw the bonds jump to a par to 100½ context from their issue price of 97.75, ending "draped around par."

A second trader had a more conservative view of the gains, pegging the bonds at 99 bid, 99½ offered - still well up on the day.

Shale-Inland little changed

The day's other deal that priced in time to see some aftermarket activity, Shale-Inland's 8¾% senior secured notes due 2019 "didn't do so well" as the Laureate deal did, one of the traders said.

The Schiller Park, Ill.-based manufacturer of industrial piping, valves and fittings priced its $250 million offering at 99.352 to yield 8 7/8%, and the trader said that at his shop, "we traded bonds at 99 7/8 a couple of times, in a general context of 99 5/8 to 99 7/8."

A second trader, earlier in the day saw those bonds at a wide 99 bid, par offered, while at another desk, they were quoted trading between 99 5/8 and par bid.

The day's third pricing, from Coraopolis, Pa.-based Heckmann, a provider of water solutions to the oil and natural gas exploration and production industry, priced too late in the day for any meaningful secondary market activity.

New Lamar disappoints

Going back a day, a trader said that the new Lamar Media Corp. 5% senior subordinated notes due 2023 only saw "so-so trading" in a narrow range between 99¾ and 100 1/8, after having priced at par on Thursday.

"A lot of people, major accounts, were looking for a 5¼% yield - but they came at 5%," he said, in explaining why some investors shunned the Baton Rouge, La.-based outdoor advertising company's quick-to-market $535 million issue, which had actually gotten as good as 100½ bid, 101¼ offered in initial aftermarket dealings.

A second trader on Friday, though, still quoted the issue at 100¼ bid, while a third had the bonds going out at 99 7/8 bid, 100 3/8 offered.

United Rental holds gains

In contrast, one of the traders said that United Rentals' new 6 1/8% notes due 2023 "were doing well," quoting the Greenwich, Conn.-based construction and industrial equipment rental company's $400 million deal at 101¾ bid, 101 7/8 offered.

He noted that the company "recently posted some nice earnings," as it benefitted in the latest quarter from the increased cash flow following its acquisition earlier this year of major rival RSC Holdings Inc., as well as the fledgling signs of a recovery in the homebuilding market, a major customer base for United Rentals.

A second trader saw those bonds Friday at 101½ bid, 102 offered.

On Thursday, the drive-by offering had moved up to around those levels in immediate aftermarket trading, after having priced at par.

Virgin firm too

The traders also saw Virgin Media Finance plc's 4 7/8% notes due 2022 holding onto most of the gains the deal had notched in Thursday's aftermarket after having priced at par.

"They did well, one said, quoting the big new deal at a 101¼ to 101¾ bid context.

"We were definitely involved," another said, seeing the bonds between 101¼ and 1011/2.

A third saw the bonds at 101½ but suggested that with that kind of a coupon, considered relatively low by traditional junk market standards, "this seemed like an I-G [investment grade] deal."

Virgin, a New York-based provider of wireless and landline phone service, cable television and internet access in the United Kingdom, priced its $900 million offering on Thursday as part of a larger $1.54 billion equivalent two-part deal that also included a tranche of sterling-denominated paper. The dollar bonds approached the 102 level in preliminary aftermarket dealings right after they priced.

Thursday's other deal - San Antonio, Texas-based media company Clear Channel Communications Inc.'s issuance of $2 billion of 9% priority guarantee notes due 2019 - was seen continuing to trade in the 91½ area.

That's where the bonds had traded on Thursday after having come down from initial peak levels at 931/4.

Clear Channel issued the bonds to holders of a like principal amount of term loan debt after they tendered that debt to the company in an exchange offer earlier this month.

Plains still popular

Plains Exploration & Production's big new two-part deal remained among the most actively traded junk bonds on Friday, several days after the Houston-based oil and natural gas company's $3 billion behemoth had priced.

A market source at mid-afternoon saw over $25 million of the company's new 6½% notes due 2020 had changed hands, putting it near the top of the most active issues list, with the other half of that deal - Plains' 6 7/8% notes due 2023, not too far behind.

"They both traded around par," a trader said, not really going anywhere, but "they hung in there," not losing any ground, despite the generally softer junk market on Friday.

He saw the 6½% notes trading between par and 100 1/8 bid, while the 6 7/8% notes traded in a 100 3/8 to 100 5/8 context. A second trader saw the 2020s at 100 1/8 bid, 100 3/8 offered, while the 2023s were at 100¼ bid, 100½ offered.

Both of those $1.5 billion tranches had priced at par on Tuesday after the overall deal - originally announced at $2.25 billion - was upsized.

The bonds pretty much were at or near the top of the activity lists all week; on Wednesday volume was over $100 million each. A trader suggested that "it was mostly dealer and [high grade] account-driven - but the bonds are getting put away," although there's still plenty out there to trade.

Another trader likened the continued brisk trading in those Plains bonds to similar activity earlier this year after Chesapeake Energy Corp. priced a big new offering of 6.775% notes - which topped the Trace most actives list for the better part of the next two weeks.

Indicators lower on day, week

Away from the new-deal world, a trader called Friday's session "a nervous market. Everyone is worried about the next batch of numbers."

A second trader saw "very little trading" that did not involve any of the new or recently priced issues, or the existing paper of such companies. He saw Trace volume of just over $1 billion.

Other statistical indicators of junk market performance were lower on Friday after having been mixed on Thursday for a second straight session. They were also lower on the week across the board, after having shed that week-over-week comparison higher last week.

The Markit Group CDX North American Series 19 High Yield Index saw its first loss after having been up on Thursday, retreating by 1/8 point on the session to 99¼ bid, 99 3/8 offered.. On Thursday, the index had been up 3/16 point.

The index was also down from the 100 3/8 bid, 100¾ offered seen at the close of trading the previous Friday, Oct. 19, when it had risen week to week.

The KDP High Yield Daily Index posted its second straight loss, falling by 12 basis points to 74.36 on top of the 9 bps loss on Thursday.

Its yield was up by 3 bps for a second straight session to 6.07%.

Those levels compare unfavorably with the previous Friday's closing levels - an index reading of 74.76, and a yield of 5.94%.

The widely followed Merrill Lynch U.S. High Yield Master II Index remained choppy in posting a 0.136% loss Friday, in contrast with Thursday's gain of 0.02%.

The latest gain cut its year-to-date return to 13.025% from Thursday's 13.178% Those levels also remain down from the previous Thursday's 13.455% - the peak level for the year so far.

For the week, the index lost 0.329% - the first weekly loss after three straight weekly gains.

It had ended the previous Friday up 0.604% on the week, with a year-to-date return of 13.398%.

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