Wellcare, Lennar unit lead $1.38 billion day to cap $4.8 billion week; Forest, Affinion busy

By Paul Deckelman and Paul A. Harris

New York, Nov. 8 - The high-yield primary sphere ended the first full trading week of November with a flourish on Friday, as five issuers priced a total of $1.38 billion of new U.S dollar-denominated, fully junk-rated paper.

The big deal of the day came from WellCare Health Plans Inc., which did $600 million of seven-year notes. Traders said that the managed-care services provider's new bonds firmed smartly when they were freed for secondary dealings.

There was a pair of $250 million deals, one from Rialto Holdings, LLC - a wholly owned unit of a familiar high-yield issuer, homebuilder Lennar Corp. - and from Brazilian ammunition manufacturer CBC Ammo LLC. Rialto's five-year notes firmed modestly in the aftermarket, while CBC Ammo's priced too late in the day for any trading.

There was also a pair of smallish add-on tranches to existing bonds, from broadcaster Townsquare Radio, LLC, which priced an upsized $145.9 million of 2019 notes, and from energy operator Gastar Exploration USA, Inc., which did a $125 million addition to its 2018 senior secured notes. Neither add-on saw any aftermarket action.

The deals lifted the new-issuance total for the week to just under $4.8 billion in 14 tranches, according to data compiled by Prospect News. That was down from the nearly $7.8 billion of new paper that priced last week, also in 14 tranches.

Year-to-date new issuance totals $284 billion in 615 tranches, according to the data, running about 1.2% behind the pace seen in 2012, which turned out to be a record year for new junk. About $287.5 billion of fresh junk paper had priced in 546 tranches by this time last year.

Away from the new-deal realm, traders saw continued brisk activity in the bonds of Affinion Group Holdings, Inc., in the wake of the marketing company's exchange offer for several issues of those notes.

And there was active trading in Forest Oil Corp.'s bonds, after the energy operator announced plans to tender for some of its bonds.

Statistical measures of market performance were meanwhile mixed for a third consecutive session, and were also mixed for a third consecutive week from their readings the previous Friday.

WellCare prices at tight end

The Friday session was a busy one in the European and North American high-yield primary markets.

In the dollar-denominated market, five issuers priced single-tranche deals, raising a combined total of $1.38 billion.

WellCare Health Plans priced a $600 million issue of seven-year senior notes (Ba2/BB) at par to yield 5¾%.

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

Goldman Sachs, JP Morgan and SunTrust Robinson Humphrey Inc. were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Rialto brings five-year deal

Rialto Holdings, LLC and Rialto Corp. priced a $250 million issue of five-year senior notes (B2/B) at par to yield 7%.

The yield printed at the wide end of the 6¾% to 7% yield talk.

Wells Fargo was the left bookrunner. JP Morgan and Deutsche Bank were the joint bookrunners.

Proceeds will be used to provide working capital to Rialto Mortgage Finance, as well as to repay sums that were advanced by Lennar Corp. to enable Rialto Mortgage to begin originating and securitizing loans, and to make investments in funds or entities managed or advised by Rialto Capital or its subsidiaries.

Townsquare sells at rich end

Townsquare Radio, LLC and Townsquare Radio, Inc. priced an upsized $145.9 million add-on to their 9% senior notes due April 1, 2019 (B3/CCC+) at 106.25 to yield 7.303%.

The deal was increased from $136.8 million.

The reoffer price came at the rich end of the 106 to 106.25 price talk.

RBC was the left bookrunner for the acquisition deal. SunTrust was the joint bookrunner.

Gastar taps 8 5/8% notes

Gastar Exploration priced a $125 million add-on to its 8 5/8% senior secured notes due May 15, 2018 (Caa2/B-) at 97 to yield 9.459%.

The reoffer price came at the cheap end of the 97 to 97.25 price talk.

The deal went well, an informed source said.

Imperial Capital was the physical bookrunner for the acquisition deal. Credit Suisse was the joint bookrunner.

CBC Ammo prices at discount

Lately the high-yield primary markets in Europe and North America have been buzzing with credits from emerging markets ZIP codes that are playing to high-yield crowds.

On Friday Brazil-based CBC Ammo priced a $250 million issue of 7¼% eight-year senior notes (B1/BB-) 98.515 to yield 7½%.

The yield printed 25 basis points beyond the wide end of the 7% to 7¼% yield talk.

Deutsche Bank was the bookrunner for the deal, which was run on the high yield desk.

Proceeds will be used to repay debt, help fund the acquisition of Magtech USA and fund a sponsor dividend.

Edcon prints at 13 3/8%

The euro-denominated market is also seeing its share of deals that have emerging markets aspects.

South African non-food retailer Edcon Holdings Ltd. launched and priced an upsized €425 million issue of 5.5-year senior notes (Caa2/CCC) at par to yield 13 3/8% on Friday.

The deal, which was increased from €400 million, played to a mix of high-yield and emerging markets accounts, a syndicate source said.

The yield printed at the tight end of yield talk set in the 13½% area.

Joint global coordinator JPMorgan will bill and deliver for the debt refinancing deal. BofA Merrill Lynch was also a joint global coordinator. Barclays, Goldman Sachs and Morgan Stanley were joint bookrunners.

Global Closure upsizes

In non-emerging markets activity Friday, France's Global Closure Systems priced an upsized €350 million issue of five-year senior secured notes (B2/B) at par to yield 6½%.

The yield printed at the tight end of the 6½% to 6¾% yield talk.

The issue was increased from €335 million. Along with the upsize a concurrent private placement of PIK notes was downsized to €75 million from €90 million.

Physical bookrunner Credit Suisse will bill and deliver for the debt refinancing deal. BNP Paribas, Commerzbank, Goldman Sachs and KKR were the joint bookrunners.

Univeg prices at tight end

Univeg Holding BV priced an upsized €285 million issue of seven-year senior secured notes (B3/CCC+) at par to yield 7 7/8%.

The deal was expanded from the original €265 million.

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

Jefferies, Petercam and KBC were the joint bookrunners.

The Belgium-based vegetable company plans to use the proceeds to repay debt and for general corporate purposes. The $20 million upsize amount will be used to pay down the revolver.

Gateway starts roadshow Tuesday

The Nov. 11 week, shortened in the U.S. bond market by Monday's Veterans Day holiday, will get under way with no dollar-denominated deals scheduled to price before the Friday close.

However there were deal announcements on Friday.

Gateway Casinos & Entertainment Ltd. plans to conduct an investor roadshow beginning on Tuesday in Toronto for an offering of up to C$220 million of seven-year second-priority senior secured notes (expected ratings Caa1/B+/).

TD, BMO, Morgan Stanley and SunTrust are the active joint bookrunners for the debt refinancing and dividend funding deal.

Vivacom plans roadshow

And in yet another deal with an emerging markets aspect, and which will be marketed to high-yield as well as emerging markets accounts, Bulgarian telecom Vivacom plans to conduct a roadshow for a €400 million offering of five-year senior secured notes (expected ratings B1/BB-) during the Nov. 11 week.

Credit Suisse and VTB Capital are the global coordinators for the debt refinancing deal. Barclays and Deutsche Bank are the joint bookrunners.

WellCare does well

In the secondary realm, traders said that the new WellCare Health Plans 5¾% notes due 2020 did well from the get-go.

The Tampa, Fla.-based based provider of managed-care services to government-sponsored health care programs like Medicaid and Medicare priced its notes at par, and a trader saw those bonds later trading at 101¼ bid, 101 5/8 offered. A second trader pegged the new deal at 101½ bid, 102 offered.

Rialto rises a bit

Rialto Holdings' 7% notes due 2018 were seen a little firmer when they hit the aftermarket, with one trader calling the bonds par bid. That was unchanged from the par level at which Rialto - a Miami-based commercial real estate investment, investment management and finance company, wholly owned by Miami builder Lennar, had priced its offering.

A second trader later saw them having moved up a little to 100 3/8 bid, 100¾ offered.

Other deals unseen

There were no reported initial aftermarket dealings in any of the day's other new issues - the $250 million eight-year deal from Brazilian munitions manufacturer CBC Ammo, the 2019 add-on offering from Greenwich, Conn.-based media and entertainment company Townsquare Radio, and the $125 million add-on to Houston-based energy operator Gastar Exploration's 2018 senior secured notes.

Rosetta in retreat

Among the new deals that were priced during Thursday's session, a trader declared that Rosetta Resources Inc.'s 5 7/8% notes due 2022 "stumbled right out of the box," and he saw the Houston-based energy exploration and production company's quick-to-market offering in a 99¼ bid area.

That was down from the par level at which the $600 million deal had priced, after having been upsized from an originally announced $450 million.

A second trader saw the bonds around 99½ bid, which he called a drop of ¾ point on the day.

And at another shop, the bonds were being quoted about 1/8 point down at 99¾ bid, par offered.

For the past two sessions, Rosetta's new deal has been among the most actively traded credits in the junk space. A market source said that over $15 million of the bonds had traded on Thursday, getting as good as 100¼ bid; then on Friday another $23 million had changed hands, though with their price sinking to 99½ bid.

Elsewhere a trader saw Alcatel-Lucent USA Inc.'s 6¾% notes due 2020 having moved up to around 100½ bid, 100¾ offered, which he called up ¼ point on the session, but he noted that "volumes were light."

A second trader saw those bonds at 100 7/8 bid, 101 3/8 offered, up ¾ point on the day.

The company - a unit of Paris-based telecommunications network equipment manufacturer Alcatel-Lucent SA - had priced $750 million of the notes at par on Thursday.

The trader also saw Concord, Calif.-based alcoholic beverage retailer Beverages & More, Inc.'s 10% senior secured notes due 2018 up ¾ point at 101¼ bid, 102 offered. It had priced the quickly shopped $180 million note tranche at 98 on Thursday, to yield 10.525%.

A light, nervous market

Away from the new issues, traders saw generally light trading in Junkbondland. One mentioned that activity levels may have been affected by the tendency of some market participants to make to make an early exit on Fridays ahead of a weekend, particularly if it happens to be a three-day weekend, as in this case, with U.S. debt markets scheduled to be shuttered on Monday for the Veterans Day observance.

On top of that, a trader opined, "there was a little nervousness in the market, with people seeing bid-wanted lists from some of the [exchange-traded funds]."

Adding to that unease was the better than expected October jobs-creation data. The Labor Department said that non-farm payrolls rose by 204,000 positions during the month, well above the roughly 100,000 new jobs that analysts were expecting,

"Equities reacted well to the employment data," he asserted, with stock gauges like the Dow Jones Industrial Average hitting new record highs. On the other hand, he continued, "bonds did not do well," with fixed-income investors worried that the signs of a stronger economy may now prompt the Federal Reserve Board to finally begin its long-awaited and much-feared tapering off of its expansive bond buying policies, which have kept interest rates under control - until now. They fear that an end to easing will result in higher interest rates across the board.

Forest firms on tender news

Among specific issues, traders said that Forest Oil's 7½% notes due 2020 gained almost 3 points in busy trading of over $14 million, going home around 101¾ bid, after the Denver-based energy exploration and production company announced plans to tender for some of its outstanding 2020 and 2019 bonds.

However, its 7¼% notes due 2019 sank by 1 11/16 points to end at 99 bid, on volume of over $30 million.

Also on the liability-management front, Affinion Group Holdings bonds remained among the busiest in the junk space, with the news that the Norwalk, Conn.-based marketing company is doing exchange offers for some of those existing bonds in order to lengthen its maturity schedule.

Its 7 7/8% notes due 2015 were seen off by ½ point at 90 bid, with $11 million having traded. On Thursday, the bonds jumped by more than 8½ points to end at 90½ bid, on turnover of more than $50 million.

Some $10 million of its 11½% notes due 2015 changed hands, moving up 2¼ points to 102 bid. On Thursday, the bonds rose nearly 10 points, with over $40 million having traded.

Market signs stay mixed

Overall, statistical junk-market performance indicators were mixed for a third consecutive session Friday - its seventh mixed session out of the last eight. They were also ending the week mixed versus the levels seen last Friday for a third straight week.

The Markit Series 21 CDX North American High Yield Index continued its recent up-and-down choppiness, gaining 13/32 point to end at 106 19/32 bid, 106 23/32 offered. On Thursday, it had lost 11/32 point.

It was also up from its week-ago 106 3/8 bid, 106 7/16 offered level.

The KDP High Yield Daily Index suffered its seventh straight loss Friday, dropping by 4 basis points to 74.41. On Thursday, it had eased by 1 bp.

Its yield rose by 6 bps to 5.71%, after having come in by 3 bps on Thursday.

Those levels compare unfavorably with the week-earlier 74.60 index reading and 5.65% yield.

The widely followed Merrill Lynch High Yield Master II Index meantime posted its first loss after two straight gains, easing by 0.333%, versus Thursday's 0.081%, advance.

The loss lowered its year-to-date return to 6.012%, down from Thursday's 6.367%, its new peak level for 2013, passing the old mark of 6.36%, set on Monday.

On the week the index was down by 0.315%, versus the prior week's 0.258%.

Its week-earlier cumulative return was 6.347%.

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