Wind megadeal leads $4 billion day; BMC, Vector, Navios unit also price; new BMC bonds busy

By Paul Deckelman and Paul A. Harris

New York, April 8 - The high-yield primary market saw one of its biggest days of the year on Tuesday, as slightly more than $4 billion of new dollar-denominated, junk-rated paper from domestic or industrialized-country borrowers came to market in four tranches, syndicate sources said.

It was the biggest new-issuance day in Junkbondland in nearly two weeks, since just under $5 billion of notes priced in 11 tranches back on March 26, according to data compiled by Prospect News, and it dwarfed Monday's single-tranche, $750 million total.

Most of the issuance came from one deal - Italian phone, wireless and broadband operator Wind Telecomunicazioni SpA's upsized $2.8 billion of seven-year notes, issued through a financing subsidiary as part of a larger dual-currency offering that also included a tranche of seven-year euro-denominated bonds. Traders said both tranches firmed smartly when the deal hit the aftermarket.

BMC Software, Inc. did a quickly shopped and upsized $750 million of senior contingent cash-pay notes, which were seen trading busily around their issue price.

Navios South American Logistics Inc., a unit of the eponymous Greek shipping company, sailed by with an upsized $375 million of eight-year notes, which moved up a little from their issue price.

And Vector Group Ltd., a Miami-based tobacco products company, did a quick-to-market $150 million add-on to its existing 2021 secured notes, which were also quoted higher in the aftermarket.

Traders said that the new deals seemed to be the focus for most investors Tuesday, with little of note going on in the non-new-deal arena.

Statistical market performance indicators turned lower across the board after three consecutive mixed sessions.

Wind completes megadeal

High-yield primary market news volume remained intense on Tuesday, as four issuers priced one dollar-denominated apiece, raising a total of $4.09 billion.

Three of the four tranches were upsized.

Three of the four came quick-to-market.

One tranche came inside of price talk, while the remaining three came on top of talk.

At the completion of its roadshow, Wind Acquisition Finance SA priced €3,779,000,000 equivalent of seven-year notes (Caa1/B/B) in re-sized dollar- and euro-denominated tranches.

A downsized €1.75 billion tranche of notes priced at par to yield 7%. The tranche was decreased from €1.85 billion. The yield printed 12.5 basis points inside of yield talk in the 7¼% area.

An upsized $2.8 billion tranche of notes priced at par to yield 7 3/8%. The dollar-denominated tranche was upsized from $2.6 billion. The yield printed 12.5 bps beneath the low end of the 7½% to 7¾% yield talk.

Joint physical bookrunner Deutsche Bank will bill and deliver. Credit Suisse was also a joint physical bookrunner. BNP Paribas, Credit Agricole CIB and Banca IMI were joint global coordinators. Barclays, ING, SG CIB and UniCredit were joint lead bookrunners. Morgan Stanley and Natixis were joint bookrunners.

The Rome-based telecommunications company plans to use the proceeds to refinance its PIK notes maturing in 2017.

BMC Software upsizes

Boxer Parent Co. Inc., the parent of BMC Software, priced an upsized $750 million issue of senior contingent cash pay notes at 99.5 to yield 9.118%.

The deal was upsized from $500 million.

The reoffer price came on top of price talk. The yield printed toward the wide end of yield talk in the 9% area.

The notes pay a cash coupon of 9% and a PIK coupon of 9¾%.

Credit Suisse, RBC and Barclays were the lead joint bookrunning managers. BofA Merrill Lynch, BMO, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Jefferies, Mizuho, Morgan Stanley and UBS were the joint bookrunning managers.

The Houston-based IT operations management software plans to use the proceeds to fund a shareholder dividend.

Navios South American drive-by

Navios South American Logistics priced an upsized $375 million issue of eight-year senior notes (/B2/) at par to yield 7¼%.

The deal was upsized from $350 million.

The yield printed on top of yield talk.

Morgan Stanley and J.P. Morgan were the joint bookrunners.

The barge and upriver port logistics company, with operations in South America, plans to use the proceeds to refinance its 9¼% senior notes due 2019 and for general corporate purposes.

Vector taps 7¾% notes

Vector Group priced a $150 million tack-on to its 7¾% senior secured notes due Feb. 15, 2021 (Ba3/B+) at 106.75 to yield 6.113%.

The reoffer price came on top of price talk.

Jefferies was the sole bookrunner for the general corporate purposes deal.

Time Inc. starts Wednesday

The Tuesday session also came with a further buildup of the active dollar-denominated calendar.

Time Inc. plans a Wednesday roadshow start on the west coast of the United States for its $500 million offering of eight-year senior notes.

The deal is set to price late this week or early in the week ahead.

Joint bookrunner Barclays will bill and deliver. Joint bookrunner Citigroup is the roadshow coordinator. BNP, BofA Merrill Lynch, JPMorgan, Morgan Stanley and Wells Fargo are also joint bookrunners.

The New York-based publishing company plans to use the proceeds to fund the purchase of Time Warner's publishing operations in the United Kingdom, to fund a special dividend to Time Warner and for general corporate purposes.

EXCO eight-year deal

EXCO Resources, Inc. plans to price a $400 million offering of eight-year senior notes before the end of the week.

JPMorgan, Wells Fargo, BofA Merrill Lynch and BMO are the joint bookrunners.

The Dallas-based oil and gas company plans to use the proceeds to repay the $297.8 million term loan and a portion of the revolver used to fund the acquisition of the Chesapeake Properties in July 2013, and for general corporate and working capital purposes.

EDP tight to spread talk

In the European primary market, Energias de Portugal, SA (EDP) launched and priced on Tuesday a €650 million issue of senior notes due April 15, 2019 (Ba1/BB+/BBB-) at a 183 bps spread to mid-swaps in a deal that received a high-grade-style execution.

The spread came at the tight end of the final 185 bps spread talk. The deal was initially guided at 190 bps.

BNP, CaixaBank, CaixaBI, Citigroup, Deutsche Bank, HSBC, ING and Millennium BCP were the joint bookrunners.

HSBC will bill and deliver.

ghd at the tight end

Hair styling appliance-maker ghd Bond plc priced a £165 million issue of six-year senior secured notes (B3/B-) at par to yield 7%, at the tight end of the 7% to 7¼% yield talk.

Joint bookrunner JPMorgan will bill and deliver. Barclays was also a joint bookrunner.

The Keighley, England-based company plans to use the proceeds to repay bank debt and a portion of shareholder loans.

Monier sets price talk

BMBG Bond Finance SCA, a subsidiary of Braas Monier Building Group SA, set price talk for its €415 million offering of senior secured notes due 2020 (B1/B-) in tranches of fixed-rate notes and floating-rate notes.

A €200 million minimum tranche of fixed-rate notes, callable after three years at par plus 50% of the coupon, is talked to yield 6% to 6¼%.

A to-be-determined amount of floating-rate notes, callable after one year at 101, is talked to price at par with a Euribor spread in the 500 bps area.

The deal is expected to price on Wednesday.

Joint global coordinator Goldman Sachs will bill and deliver. Deutsche Bank is also a joint global coordinator. BNP Paribas and JPMorgan are joint bookrunners.

BMC busiest new-deal name

In the secondary market, a trader said that BMC Software's 9%/9¾% senior contingent cash-pay notes due 2019 were clearly the most active issue among the day's new deals.

He said that after having priced at 99.5, the bonds were initially as high as 100¼ to 100½ bid, they fell back from those highs to 99¾ to 100 1/8.

"It's trading a lot, very active," he said.

He later saw the notes at 99¾ to par, "in size."

A second trader quoted the notes initially offered at 1001/2, although he had not seen any bid levels at that point.

Yet another trader pegged the Houston-based company's bonds at 100¼ bid, 101 offered.

Day's deals firmer

Elsewhere among Tuesday's new issues, a trader saw both halves of the big new Wind Acquisition Finance doing well when the bonds were freed to trade.

He saw the dollar-denominated 7 3/8% notes due 2021at 101 bid, 101¼ offered, while the company's euro-denominated 7% notes due 2021 were at 101½ bid, 101¾ offered. Both had priced at par earlier in the session as a regularly scheduled forward calendar deal, following a roadshow.

A second trader saw the dollar bonds at 101¼ bid, 101 5/8 offered, quipping "that one certainly had the wind in its sails."

Also among Tuesday's new issues, a trader saw Navios South American Logistics' 7¼% notes due 2022 at 100¾ bid, 101¼ offered.

That was up from the par level at which the Montevideo, Uruguay, logistics unit of Piraeus, Greece-based shipping concern Navios Maritime Holdings Inc. had priced its upsized offering.

A trader saw Vector Group's add-on to its existing 7¾% senior secured notes due 2021 having moved up to 107¼ bid, 107¾ offered, versus their issue price at 106.75.

Non-new deals a non-event

A market source said not much overall was going on in the junk world, with everybody seemingly sitting in on conference calls and waiting for the new deals to come to market.

Away from those new deals, a trader characterized the day's session as "boring."

"Nobody wants to buy anything because it's all overpriced, but at the same time, nobody wants to sell anything, because then they're sitting on cash - and that's not what they're getting paid for."

"The secondary was quiet," a second trader opined, "very quiet."

Indicators turn south

Statistical junk performance indicators were lower across the board on Tuesday, breaking a string of three consecutive mixed sessions.

The Markit Series 22 CDX North American High Yield index lost 1/32 point on Tuesday, its third consecutive downturn. It ended at 107 1/8 bid, 107 3/16 offered, after having dropped by 5/16 point on Monday.

The KDP High Yield Daily index edged downward by 1 bp Tuesday, its second straight setback, as it finished at an even 75.00. On Monday, it had lost 4 bps.

Its yield meanwhile rose by 1 bps to 5¼%, its second straight increase, after having widened by 3 bps on Monday.

Even the widely followed Merrill Lynch High Yield Master II index finally fell into line with the other losing indicators, snapping a seven-session winning streak. It was down by 0.002%, after having gained 0.004% on Monday.

The downturn dropped its year-to-date return to 3.239%, down slightly from Monday's 3.241%, which had been a seventh straight new peak level for the year so far.

© 2015 Prospect News.
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