Primary quieter, with Nexstar sole dollar pricing; Endo heavily traded; Caesars shoots upward

By Paul Deckelman and Paul A. Harris

New York, Jan. 21 – The high-yield primary market was quieter on Wednesday, with just one new dollar-denominated, fully junk-rated deal getting done: Nexstar Broadcasting Group, Inc., which did an upsized, quick-to-market $275 million of seven-year notes via a subsidiary. Those bonds were heard by traders to have firmed when they hit the aftermarket.

Wednesday’s lone dollar deal stood in contrast to Tuesday, when some $2.3 billion of new junk bonds had come to market in three drive-by tranches – the heaviest single-day issuance so far this year.

Traders saw active secondary dealings in all three of those offerings, with Tuesday’s biggest transaction – the upsized 10-year megadeal from Endo International plc – racking up the heaviest trading volume, by far. The pharmaceuticals and medical device manufacturer’s issue gained a point in the aftermarket.

Telecommunications company Zayo Group, LLC’s new bonds were also active as were Tuesday’s third deal – the add-on issue from hospital operator HealthSouth Corp.

But while the HealthSouth bonds remained above their issue price, Zayo’s new notes continued to trade below where they had come to market.

Restructuring gaming giant Caesars Entertainment Corp.’s bonds were better in brisk trading as investors placed their bets on what kind of recovery their bonds might get.

Statistical indicators of junk market performance turned better after having been mixed for four straight sessions before that.

Nexstar, upsized and tight

News volume in the dollar-denominated primary market was low on Wednesday, as one issuer brought a single-tranche drive-by deal that was upsized and priced at the tight end of talk.

Nexstar Broadcasting, Inc. priced an upsized $275 million issue of seven-year senior notes (B3/B+) at par to yield 6 1/8%.

The deal was upsized from $250 million.

The yield printed at the tight end of yield talk in the 6¼% area.

Wells Fargo was the left bookrunner. Deutsche Bank, RBC, Morgan Stanley and SunTrust were the joint bookrunners.

The Irving, Texas-based diversified media company plans to use the proceeds to fund the proposed acquisitions of three television stations. The additional $25 million of proceeds resulting from the upsizing of the deal will be used to pay down the company's revolver.

Talking the deals

Looking to the active calendar of deals on the road, two prospective issuers put out price talk on deals expected to clear before the end of the week.

Angus Chemical Co. talked its $225 million offering of senior notes due 2023 (Caa1/B) to yield 8¾% to 9%.

Books close at 11 a.m. ET Thursday.

Morgan Stanley, J.P. Morgan and Deutsche Bank are the joint bookrunners.

And Presidio talked its $400 million offering of eight-year senior notes (Caa1/CCC+) at a discount to yield 10¾% to 11%.

Books are scheduled to close Thursday, and the deal is set to price Friday.

Joint bookrunner Barclays will bill and deliver. Credit Suisse, Citigroup, Goldman Sachs and RBC are also joint bookrunners.

Ziggo €800 million drive-by

News volume in the European primary market was moderately high on Wednesday.

A week after pricing a pair of unsecured tranches, Ziggo brought an €800 million issue of 10-year senior secured notes (expected ratings Ba3/BB-), which priced at par to yield 3¾%, at the tight end of yield talk in the 3 7/8% area.

Credit Suisse was the left bookrunner for the drive-by deal, which came from issuing entity Ziggo Secured Finance BV.

BofA Merrill Lynch, Deutsche Bank, ING, Morgan Stanley and Nomura were the joint bookrunners.

The Utrecht, the Netherlands-based telecommunications company plans to use the proceeds to finance the contribution of UPC Netherlands to the Ziggo credit pool.

Ziggo's secured deal comes on the heels of last week's €740 million equivalent two-part unsecured notes sale.

In that transaction, also led by Credit Suisse, Ziggo Bond Finance BV priced $400 million of 5 7/8% notes and €400 million of 4 5/8% notes. The notes in both of those tranches mature on Jan. 15, 2025 and were priced at par, at the tight ends of yield talk.

As with Wednesday's secured notes issue, the proceeds from last week's unsecured deal were earmarked to finance the contribution of UPC Netherlands to the Ziggo credit pool.

Eden Springs five-year deal

The remainder of Wednesday's news from the European primary market concerned small deals.

Look for that to change on Thursday and Friday, a London-based sellside source advised, adding that European high-yield issuance is poised for a big ramp-up.

The news of a trio of tight Wednesday executions will not have been lost on the dealers in Europe, who are set to roll out some bigger deals before the end of the week, the sellsider said.

On Wednesday, Hydra Dutch Holdings 2 BV, the Netherlands-based holding company of water and coffee solutions provider Eden Springs, priced a €160 million issue of 8% senior secured notes due April 15, 2019 (B2/expected B) at 97.41 to yield 8¾%.

The yield came at the tight end of talk which specified an 8¾% to 9% yield, including an original issue discount.

Global coordinator Credit Suisse will bill and deliver. Rabobank was the joint bookrunner.

Proceeds will be used to fund the acquisition of Nestle Water Direct businesses and to repay bank debt.

Wagamama prices £150 million

Wagamama Finance plc priced a £150 million issue of five-year senior secured notes (B2/B-) at par to yield 7 7/8%.

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

Joint bookrunner JPMorgan will bill and deliver. Goldman Sachs International was also a joint bookrunner.

The London-based operator of pan-Asian inspired restaurants plans to use the proceeds to refinance debt.

Elsewhere, Techniplas BV provided preliminary guidance for its €135 million offering of five-year senior secured notes (B3/B) with an all-in yield in the low-to-mid 9s.

Price talk is due out on Thursday morning, United Kingdom time.

An investor update call is scheduled to take place Thursday to discuss additional detail regarding Weidplas; Techniplas acquired the Plastics Technology Automotive and Industrial division of Switzerland-based Weidmann International Corp. last year, and the business was renamed Weidplas.

Physical bookrunner Barclays will bill and deliver. IKB is also a physical bookrunner. SEB is a bookrunner.

Nexstar notes firm

In the secondary realm, traders saw the new Nexstar 6 1/8% notes due 2022 having firmed a little after the upsized $275 million deal priced at par.

A trader saw the bonds at 100 1/8 bid, 100 5/8 offered, while a second pegged the notes at 100 3/8 bid, 100½ offered.

A little later, two other traders saw the bonds get even better, at 100½ bid, 100¾ offered.

“They were actively trading,” one of them said, estimating volume at over $10 million.

Endo trades energetically

A trader said that Tuesday’s offering from Endo International via its Endo Ltd., Endo Finance LLC and Endo Finco Inc. subsidiaries easily topped the Junkbondland Most Actives list.

“They were the high-volume name today,” he said, quoting the Dublin-based pharmaceuticals and medical devices manufacturer’s 6% notes due 2025 at 100¾ bid.

That was up from the par level at which the company priced its quickly shopped $1.2 billion deal, upsized from $1 billion originally.

A second trader said that the bonds “have been 100¾ to 101½ all day.”

Yet another market source saw the bonds at 100 1/8 bid to 100 5/8 offered.

More than $152 million of the new notes changed hands, with a market source quoting the bonds having moved up to 101 bid.

Zayo stays lower

Tuesday’s issue of 6% notes due 2023 from Zayo Group was also among the most active credits on the day – although at nowhere near the volume seen in the Endo International bonds.

A market source said that more than $28 million of the notes had changed hands, finishing the day at 99½ bid – down from the par issue price at which the Boulder, Colo.-based provider of fiber-based bandwidth infrastructure had priced its $700 million deal.

A second trader saw two-sided markets in the credit, locating the notes at 99¼ bid, 99½ offered.

HealthSouth higher

Tuesday’s add-on offering from Birmingham, Ala.-based hospital operator HealthSouth was seen by a trader on Wednesday hovering at 102¾ bid, which he said was about 1/16 up from where they had finished on Tuesday.

A second saw the notes at 102¾ bid on volume of more than $22 million.

A third said they went home at 102¼ bid, 103 offered.

HealthSouth priced $400 million additional 5¾% notes due 2024 on Tuesday at 102 to yield 5¾%, after the offering was upsized from $300 million originally.

Caesars continues climb

Away from the new deals, trader said that Caesars Entertainment Corp.’s 10% senior secured second-lien notes due 2018 had shot up to 22 bid on Wednesday, up from the 19 bid level the bonds held on Tuesday, and up even further from Friday’s finish around 17 bid.

There were “an awful lot of them traded today,” a market source said, estimating that over $30 million had changed hands during the session.

The 21-22 context “gets them up a couple of points on that day,” he said, and then opined that “if Trace states that over $30 million traded, I would bet that a lot more really traded.”

Some of the other old Harrah second-lien notes got as good as 25 bid during the day. Meanwhile, bonds like the Caesars Operating Escrow LLC/Caesars Escrow Corp. 8½% senior secured first-lien notes due 2020 were trading at lofty levels around 78 bid on a round-lot basis – reflecting the sharply disparate recovery valuations that the market puts on the respective categories of notes.

The bonds have been volatile ever since the Las Vegas-based gaming company put its main operating unit, Caesars Entertainment Operating Corp., into Chapter 11 last Thursday (see related story elsewhere in this issue).

Market indicators better on the day

Statistical indicators of junk market performance turned higher on Wednesday after having been mixed for the previous four consecutive sessions.

The KDP High Yield Daily index moved up 10 basis points to close at 70.7 after having lost 7 bps on Tuesday. It was the third such gain in the last four sessions.

However, its yield, which normally moves inversely to the index readings, rose by 1 bp on Wednesday for a second straight session.

The Markit Series 23 CDX North American High Yield index posted its first gain after two straight losses, advancing by 11/32 point to go home at 105 7/16 bid, 105½ offered. It had eased by 1/16 point on Tuesday.

The Merrill Lynch U.S. High Yield Master II index gained 0.006% on Wednesday, its third straight gain. It had also risen by 0.027% on Tuesday, while on Monday – when it was published despite the holiday – the index had added on 0.056%, which followed a 0.087% loss on Friday.

Wednesday’s gain lifted its year-to-date return to 0.025% from Tuesday’s 0.02% gain.

© 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.