LBC, Seminole Hard Rock, BWAY lead blizzard of small bond deals; new GM Financials gain

By Paul Deckelman and Paul A. Harris

New York, May 8 - The high-yield primary sphere had its single busiest session on Wednesday, syndicate sources said - not so much in terms of the total amount of new dollar-denominated, junk rated bonds from domestic or developed-country issuers as the sheer number of deals that came to market. All told, 13 new issues priced during the session - eclipsing the former high for the year of eight tranches, which had been set on three different occasions this year, according to data compiled by Prospect News.

Unlike Tuesday's market - which saw more than $4 billion of new junk come clattering down the chute - Wednesday's volume reached about $2.8 billion, certainly a very respectable total, but nowhere near the biggest volume totals of 2013. Unlike Tuesday, which saw most of the day's issuance come from one very big deal, $2.5 billion from General Motors Financial Co., no single deal stood out. The day's barrage of bond deals contained none bigger than $350 million and several considerably smaller than that.

Chemical storage company LBC Tank Terminal Holdings Netherlands BV and Florida hospitality operator Seminole Hard Rock Entertainment, Inc. each priced $350 of new paper, while steel products producer Commercial Metals Co. did $330 million, CHC Helicopter SA and Cash America International Inc. each had a $300 million issue, and container manufacturer BWAY Intermediate Co. Inc. came to market with an upsized $285 million transaction.

The long list of companies doing smaller deals included Ion Geophysical Corp., Iracore International Holdings, Inc., Northern Oil & Gas Inc., Tops Markets LLC, Toll Brothers Finance Corp. and Brunswick Corp.

Most of the day's new issues did not see any aftermarket dealings, although Seminole Hard Rock, BWAY and Cash America were each seen by traders to have gained more than a point when freed for the secondary market.

Tuesday's big deal from GM Financial, which had come very late in the day on Tuesday, began to trade on Wednesday, with all three tranches quoted as having moved solidly upward.

Traders said that the secondary market continued to be focused on the new deals, with just a relative dearth of any activity not related to the primary sphere.

Statistical market performance measures eked out another day of across the board gains.

LBC Tank upsizes

Dollar-denominated issuers priced $2.79 billion of new bonds in an even dozen tranches during Thursday's high volume session.

Belgium-based LBC Tank Terminals Holding priced a $350 million issue of 10-year senior notes (B3/B/) at par to yield 6 7/8%.

The deal priced on top of talk, which had tightened from 7% to 7¼%.

RBC was the left bookrunner for the debt refinancing deal. BNP, Credit Agricole, DNB and ING were the joint bookrunners.

Seminole Hard Rock prices

Seminole Hard Rock Entertainment, Inc. and Seminole Hard Rock International, LLC priced a $350 million issue of eight-year senior notes (B2/BB-) at par to yield 5 7/8%.

BofA Merrill Lynch and Credit Suisse were the joint bookrunners.

The gaming and lodging properties operator plans to use the proceeds, together with proceeds from a term loan, to refinance its floating-rate senior secured notes due 2014, to make investments and acquisitions, and for general corporate purposes.

Cash America on IG desk

Cash America International launched and priced an upsized $300 million issue of five-year senior notes at par to yield 5¾%.

The deal, which priced on the high-grade desks, came on top of yield talk, according to an informed source, who added that both high grade accounts and junk accounts were on board with the blowout deal.

Jefferies and JMP were the joint bookrunners.

The Fort Worth-based specialty financial services provider plans to use the proceeds to pay down its revolver and for general corporate purposes.

CHC Helicopter drives by

CHC Helicopter priced an upsized $300 million issue of eight-year senior notes (Caa1/B-) at par to yield 9 3/8%.

The yield printed at the tight end of yield talk that was set in the 9½% area.

The deal was increased from $250 million.

Morgan Stanley & Co. LLC, HSBC Securities (USA) Inc., RBC Capital Markets LLC and UBS Securities LLC were the joint bookrunners.

Proceeds will be used to repay bank debt and for other working capital and general corporate purposes, which may include refinancing aircraft leases, the repayment or redemption of other secured debt and capital expenditures.

BWAY upsizes

BOE Intermediate Holding Corp. the indirect parent of BWAY Intermediate Co., Inc., priced an upsized $285 million issue of senior PIK toggle notes at 99 to yield 10.035%.

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

The deal was upsized from $250 million.

The coupons, reoffer price and yield all came in line with price talk.

BofA Merrill Lynch, Goldman Sachs & Co., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the joint bookrunners.

The Atlanta-based manufacturer of metal and plastic containers plans to use the proceeds to fund a special dividend to stockholders, including Platinum Equity.

Northern Oil at the rich end

Northern Oil and Gas priced a $200 million add-on to its 8% senior notes due June 1, 2020 (Caa1/B-) at 105.25 to yield 6.754%.

The reoffer price came at the rich end of the 105 to 105.25 price talk.

Proceeds will be used to repay bank debt, to fund capital expenditures and for general corporate purposes.

The issuer is a Wayzata, Minn.-based independent oil and gas acquisition, exploration, development and production company.

ION brings secured deal

ION Geophysical priced a $175 million issue of five-year senior secured second priority notes (B3/B+) at par to yield 8 1/8%.

The yield printed in the middle of the 8% to 8¼% yield talk.

Citigroup Global Markets was the left bookrunner. Wells Fargo Securities LLC and Pareto Securities were the joint bookrunners.

Proceeds will be used to repay debt and for general corporate purposes, including potential capital contributions to the company's GeoRXT joint venture.

Earlier this year ION Geophysical announced that it planned to acquire a 30% stake in GeoRXT, an ocean-bottom cable data services provider, from Reservoir Exploration Technology.

ION Geophysical is a Houston-based provider of geophysical technology, services and solutions for the oil and gas industry.

Brunswick moves up timing

Brunswick priced a $150 million issue of eight-year senior notes (Ba3/BB) at par to yield 4 5/8%.

The yield printed at the tight end of yield talk that was set in the 4¾% area.

Timing was moved ahead; the deal, which was announced on Wednesday morning, had been expected to remain in the market until Friday.

J.P. Morgan Securities LLC and BofA Merrill Lynch were the joint bookrunners.

The Lake Forest, Ill.-based maker of recreation products plans to use the proceeds, along with cash on hand, to redeem its 11¼% senior secured notes due 2016.

Tops Supermarkets' drive-by

Tops Supermarkets priced an upsized $150 million issue of senior contingent cash pay notes (Caa2/CCC+) at 99 to yield 8.995%.

The notes pay a cash coupon of 8¾% and a PIK coupon of 9½%.

The cash coupon came at the tight end of the 8¾% to 9% coupon talk. The reoffer price came on top of price talk.

BofA Merrill Lynch and Morgan Stanley & Co. were the joint bookrunners.

The Williamsville, N.Y.-based supermarket retailer plans to use the proceeds to fund a dividend.

Iracore is a blowout

Iracore International Holdings, Inc. priced an upsized $125 million issue of five-year senior secured notes (B3/B) at par to yield 9½%.

The deal was upsized from $110 million.

The yield printed at the tight end of the 9½% to 9¾% yield talk.

Jefferies LLC was the sole bookrunner.

Proceeds, together with $125 million in new equity, will be used to fund the acquisition of the company.

Iracore is a Hibbing, Minn.-based developer and manufacturer of elastomeric coating and buffering solutions primarily used in the Canadian oil sands mining sector and other industrial settings.

Toll Brothers taps 4 3/8% notes

Toll Brothers Finance reopened its 4 3/8% senior notes due April 15, 2023 (Ba1/BB+/BBB-) on Wednesday to add $100 million, according to a market source.

Pricing was at 102.983 to yield 4% with a spread of Treasuries plus 223.4 basis points.

Total issuance will be $400 million including $300 million of the notes sold on April 3 at par.

The bonds have a make-whole call at Treasuries plus 50 bps until Jan. 15, 2023, with a par call after that date. The sale features a change-of-control put at 101.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., RBS Securities Inc. and SunTrust Robinson Humphrey Inc. were bookrunners.

There is a guarantee from parent company Toll Brothers Inc.

Proceeds will be used for general corporate purposes, including repayment or repurchase of outstanding debt.

The issuer is a Horsham, Pa.-based homebuilder.

Sisal brings euro deal

In Europe, Italy's Sisal Holding Istituto di Pagamento SpA priced a €275 million offering of senior secured notes due in September 30, 2017 (B1/B) at par to yield 7¼%.

The yield priced on top of final yield talk.

Joint bookrunner Deutsche Bank will bill and deliver. Banca IMI, Credit Agricole CIB, Mizuho, Royal Bank of Scotland and UniCredit are also joint bookrunners.

The Milan, Italy-based gaming and convenience payment services company plans to use the proceeds to refinance debt.

Talking the deals

Looking to the Thursday session, First Quality Enterprises, Inc. talked its $500 million offering of eight-year senior notes (B2/BB-/) with a yield in the 4¾% area.

Books closed at 4 p.m. ET Wednesday and the deal is set to price on Thursday.

Wells Fargo Securities LLC is the left bookrunner for the Rule 144A and Regulation S for life offering.

J.P. Morgan Securities LLC, BofA Merrill Lynch, RBS Securities Inc. and SunTrust Robinson Humphrey Inc. are the joint bookrunners.

And Irish telecommunications services provider eircom talked its €310 million offering of seven-year senior secured notes (/B/) with a yield in the 9½% area.

The books close at 6 a.m. ET on Thursday.

Goldman Sachs and JPMorgan are the joint global coordinators and joint physical bookrunners. Deutsche Bank is also a joint global coordinator as well as a joint bookrunner.

BNP Paribas, BofA Merrill Lynch and Morgan Stanley are also joint bookrunners.

Little activity in day's deals

In the secondary market, a trader who ran down the list of the day's new issues told Prospect News that he found "precious little" in the way of aftermarket activity in those new issues.

Besides the relative lateness of the hour at which a number of those issues had come to market, he also chalked the lack of activity up to the fact that at least a half-dozen of the day's transactions came in at only $200 million or below, attracting little interest from the big players, and "they probably got put away when they came."

Added to that, two of the deals - Toll Brothers and Northern Oil & Gas - were add-ons to existing issues, which are frequently shunned by many investors.

The only level that he had seen in anything was a 100¾ bid, with no offering, on Iracore International's 9½% senior secured notes due 2018.

The situation was perhaps a little better at another shop, where a trader saw levels on a relative handful of Wednesday's new deals.

Perhaps the best performer, he said, was BWAY Intermediate's 9%/9¾% senior PIK toggle notes.

Those bonds were finishing at around 101½ bid, 102½ offered - well up from the 99 level at which that deal had priced.

Another solid performer was Seminole Hard Rock Entertainment's 5 7/8% notes due 2021.

He saw the Tampa, Fla.-based hotel and entertainment company's deal at 101½ bid, 102 offered, up from its par issue price.

The trader saw Cash America International's 5¾% notes firm to 101 bid, 102 offered, up from the deal's par pricing level.

And he saw Commercial Metals's 4 7/8% notes trading at 100¼ bid, 100½ offered.

That was up from the par level at which the Irving, Texas-based manufacturer and recycler of steel and metal products had priced its deal.

GM Financial bonds firm

Among the deals which came to market on Tuesday, a trader said that the new General Motors Financial bonds were doing well, and "everybody was involved in them."

The Irving, Texas-based financial arm of General Motors Co. priced $2.5 billion of paper in three tranches on Tuesday, upsized from $2 billion initially. It did $1 billion of 2¾% notes due 2016, $750 million of 3¼% notes due 2018 and $750 million of 4¼% notes due 2023, all of which priced at par.

Those bonds came to market too late in the session Tuesday for any dealings, but made up for it on Wednesday, when they were freed for the aftermarket.

The trader saw the three-year paper at 101¾ bid, 102 offered, pegged the five-year notes at 102 bid, 102½ offered and saw the 10-year bonds at 102 3/8 bid, 102 7/8 offered.

iStar improves

Another latecomer from Tuesday's session that began trading around on Wednesday was iStar Financial, Inc.'s 3 7/8% notes due 2016.

A trader saw the New York-based commercial lender and real estate investment trust's quick-to-market issue in a 101 7/8 to 102 bid context.

The $265 million issue had priced at par after having been upsized from an originally announced $250 million.

Secondary relatively still

A trader said that he did not see much going on in the secondary market away from interest in the new deals.

"Not in general," he said, including companies that had earnings out.

"There's still a liquidity issue - it's still a seller's market. There are nothing but buyers [finding few or no sellers], and money on the sideline. People are all playing the new issues."

He said that his relatively small, retail-oriented shop has "tons of buyers - I get lists from our accounts, saying 'I'm a buyer of this or a buyer of that.' But we can't buy what's not out there, not unless you get lucky."

He suggested that holders of existing paper were hanging onto it since so many of the newer deals now coming to market were carrying relative stingy coupons in the 3% to 4% range.

"They might as well just keep clipping the 7%, 8%, 9% 10% [coupons] they've got now.

"So what are you going to do?"

Market indicators rise again

Statistical junk performance indicators were firmer across the board for a fifth consecutive session on Wednesday - though just barely so.

The Markit Series 20 CDX North American High Yield Index edged up marginally on Wednesday, to end at 107 5/8 bid, 107 7/16 offered, its fifth consecutive gain. On Tuesday, the index had risen by 3/16 point.

The KDP High Yield Daily Index, meanwhile improved for a 12th straight session on Wednesday, adding on another 6 basis points to end at 76.77, on top of Tuesday's 4 bps rise.

Its yield came in by 2 bps for a third consecutive session on Wednesday to finish at 4.89%. It was also its 12th straight stronger finish.

And the widely followed Merrill Lynch High Yield Master II index posted its 15th consecutive gain on Wednesday, rising by 0.028%. On Tuesday it had risen by 0.218%.

The latest gain lifted its year-to-date return to 5.8% - its 13th straight new peak level for the year - from Tuesday's 5.7%, the previous peak.

The index's yield to worst also dropped to a new all-time low at 4.988% on Wednesday, versus the prior low point of 5.004% on Tuesday. Wednesday's session was the sixth straight day in which a new low had been reached, and also marked the first time that closely watched figure has dropped below the psychologically potent 5% mark.

Its spread to worst meantime tightened on Wednesday to 428 bps over Treasuries, its sixth consecutive a new tight level for the year, versus the prior tight point of 429 bps recorded on Tuesday.

© 2015 Prospect News.
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