E*Trade, Brigham price drive-bys; calendar swells with other deals;EchoStar awaits

By Paul Deckelman and Paul A. Harris

New York, May 16 - The high-yield forward calendar saw a dramatic increase in its size on Monday as eight companies announced new deals, including two that came to market later in the session. Online stock broker E*Trade Financial Corp. did a $435 million offering of five-year notes, and oil and gas operator Brigham Exploration Co. brought an upsized $300 million issue of eight-year paper. The latter bonds moved up by around a point in the aftermarket, the E*Trade issue a little less than that.

There was also brisk upside trading in an existing E*Trade issue that is to be redeemed using the bond deal proceeds.

Also unveiling deals on Monday were oilfield services company Forbes Energy Services, Ltd., printer and publisher R.R. Donnelley & Sons Co., paper industry name Xerium Technologies, Inc., gaming operators Eldorado Resorts LLC and Gala Coral Group, Ltd. and sector peers Kindred Healthcare Inc. and Centene Corp.

While most of the other newly introduced offerings were seen hitting the road, the quickly shopped Donnelley and Centene deals were expected to price in Tuesday's session.

Price talk also emerged on several forward calendar deals that are expected to price on Tuesday, including Baker Corp., Longview Fibre Paper & Packaging, Inc. and Australia-based TFS Corp. And there was also talk out on what is expected to be Tuesday's biggest deal: EchoStar Corp., which is coming to market with $1.8 billion of new bonds split into eight- and 10-year tranches.

E*Trade brings bullet deal

Two issuers, each one bringing a single-tranche, dollar-denominated drive-by deal, raised $735 million on Monday.

They left in their wake a $10 billion monster calendar of announced deals set to price before the end of the week.

E*Trade Financial priced a $435 million issue of non-callable five-year senior notes (B2/B-) at par to yield 6¾%, on top of the price talk.

J.P. Morgan Securities LLC ran the books for the quick-to-market debt refinancing deal.

Brigham Exploration upsizes

Brigham Exploration priced an upsized $300 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 6 7/8%, at the tight end of price talk which had been set in the 7% area. The size was raised from $250 million.

Bank of America Merrill Lynch and Credit Suisse Securities (USA) LLC were the joint bookrunners for the quick-to-market deal.

The Austin, Texas-based independent oil and gas exploration, development and production company plans to use the proceeds to fund a portion of its 2011 capital budget and for general corporate purposes.

$3.4 billion Tuesday on tap

Although Monday's issuance came in well below the $1 billion mark, Tuesday figures to be a different story.

Six issuers intend to bring a combined seven tranches totaling $3.4 billion.

Price talk surfaced on most of that business on Monday.

EchoStar set price talk on a $1.8 billion two-part offering.

A $1 billion tranche of eight-year senior secured notes (Ba3/B+) is talked with a yield in the 6 5/8% area. The senior secured notes will be non-callable but will come with a provision allowing the issuer to redeem 10% of the notes annually.

Meanwhile an $800 million tranche of non-callable 10-year senior unsecured notes (B3/B-) is talked with a yield in the 7 7/8% area.

Deutsche Bank Securities Inc. is the bookrunner.

Longview Fibre talked a $450 million offering of five-year senior secured notes (B2/B+) with a yield in the 8¼% area.

Bank of America Merrill Lynch and CIBC World Markets are the joint bookrunners.

Centene talked a $250 million offering of non-callable six-year senior notes (expected ratings Ba2/BB) with a 5¾% to 6% yield.

Barclays Capital Inc., Bank of America Merrill Lynch and Wells Fargo Securities LLC are the joint bookrunners for the public quick-to-market deal.

BakerCorp International, Inc. talked a $240 million offering of eight-year senior notes (Caa1/CCC+) with an 8 ¼% to 8 ½% yield.

Morgan Stanley & Co. Inc. and Deutsche Bank Securities Inc. are the joint bookrunners.

And Australia's TFS talked a $175 million offering of seven-year senior secured notes (B3/B/) in a yield context of 10% to 10¾%.

Global Hunter Securities, Clarkson Capital Markets and Knight Securities are leading that deal.

Meanwhile, R.R. Donnelley & Sons Co. plans to price a $500 million offering of non-callable senior notes due May 15, 2018 (Ba1/BB+) on Tuesday afternoon, via Bank of America Merrill Lynch, Citigroup Global Markets and J.P. Morgan Securities LLC.

At press time there was no price talk on that deal.

Kindred to sell $550 million

Looking beyond Tuesday, the calendar for the remainder of the May 16 week saw a meaningful buildup on Monday.

Kindred Healthcare began a roadshow on Monday for a $550 million offering of eight-year senior notes (expected ratings B3/B-).

J.P. Morgan Securities LLC, Citigroup Global Markets and Morgan Stanley & Co. are the joint bookrunners for the merger-funding deal.

Forbes Energy starts roadshow

Forbes Energy Services began a roadshow on Monday for a $255 million offering of eight-year senior notes.

Jefferies & Co. has the books for the debt refinancing and general corporate purposes deal.

Xerium plans seven-year notes

Xerium Technologies started a roadshow on Monday for a $240 million offering of seven-year senior notes (B3/B-).

Citigroup Global Markets is the left lead bookrunner for the debt refinancing. Jefferies & Co. is the joint bookrunner.

Eldorado offers secured deal

Eldorado Resorts LLC and Eldorado Capital Corp. began a roadshow on Monday for a $180 million offering of eight-year senior secured notes (expected ratings B2/B+).

Bank of America Merrill Lynch has the books for the debt refinancing.

Gala unveils structure, timing

Finally, England's Gala Coral Group, Ltd. announced the structure and timing on a £650 million two-part notes offer on Monday.

The deal will be comprised of a £250 million tranche of seven-year senior secured notes and a £400 million tranche of eight-year senior unsecured notes.

The roadshow stops include London on Tuesday, Amsterdam on Wednesday, and Paris and Frankfurt on Thursday.

Credit Suisse AG and Barclays plc are the global coordinators among a syndicate of banks which includes Deutsche Bank AG, Goldman Sachs International, Morgan Stanley and HSBC.

The Nottingham, England-based gaming and off-track betting company plans to use the proceeds to repay its senior secured bank loans.

New E*Trade advances

When E*Trade's new five-year notes were freed for secondary dealings, a trader saw the issue firm to 100¾ bid, 101¼ offered from the par price at which that paper had come to market.

A second trader also saw the bonds at that same opening level, saying that "a bunch" traded in that neighborhood, before coming off their peak to go home at 100½ bid, 101 offered.

Yet another trader also saw the bonds finishing at that same price.

The New York-based financial services company's outstanding 7 3/8% notes due 2013, meantime, moved up by nearly 1 point on the session to just under the 102 mark. E*Trade said it plans to use the proceeds from the new bond issue to redeem the $415 million of existing 7 3/8s.

More than $11 million of the bonds traded in round lots on Monday, a market source said, making it one of the busier issues of the day in Junkbondland.

Brigham bonds better

A trader late in the day quoted Brigham Exploration's upsized issue of eight-year notes at 101 bid, 102 offered, versus its par pricing a little earlier.

But there really was little activity seen in the Austin, Tex.-based energy operator's new deal, owing to the relative lateness of the hour at which it priced.

Friday standouts still star

Among the deals which came to market on Friday, Ardagh Group's bonds and those of Regent Seven Seas Cruises continued to stand out.

A trader said that Irish glass packaging producer Ardagh's dollar-denominated bonds remained very firm, quoting them at 105 bid, 105½ offered.

The company, through its ARD Finance SA subsidiary, sold $345 million of dollar-denominated 11 1/8% senior secured payment-in-kind notes due 2018, upsized from the originally envisioned $300 million of the notes, which priced at par.

Ardagh also sold €185 million of 11 1/8% secured PIKs, which also priced at par.

Regent Seven Seas meanwhile remained well-bid for, with a trader seeing the Fort Lauderdale, Fla.-based cruise line operator's $200 million of 9 1/8% second-lien senior secured notes due 2019 at 103 bid, 103¼ offered - around the same level to which the bonds had risen on Friday after their pricing earlier at par.

"You didn't want to miss that boat," he quipped.

Another trader saw Regent Seven Seas trading early in the session around 102¾ bid, with no offers, but eventually estimated them at 103¼ bid, 103¾ offered.

CoreLogic continues to lag

Among the other deals which priced during Friday's very hectic session, a trader said that CoreLogic Inc.'s new 7¾% notes due 2021 "just can't seem to get out of their own way."

The Santa Ana, Calif.-based provider of analytical services to business and government priced $400 million of the bonds at par late in Friday's session, upsized from the originally announced $350 million, and they traded up to around 100¼ bid, 100½ offered later Friday.

But on Monday, a trader saw the bonds trading at a relatively wide 99¾ bid, 100¼ offered, which he then saw tighten to 99 7/8 bid, 100 1/8 offered.

Other Friday deals hold gains

A trader said that Emergency Medical Services Corp.'s $950 million offering of 8 1/8% notes due 2019 were trading at 101 3/8 bid, 101¾ offered - about in line with the 101½ bid, 101¾ offered level at which the bonds had traded on Friday.

The Greenwood Village, Colo.-based medical transportation services company's deal had come to market at par.

Littleton, Colo.-based miner Thompson Creek Metals Co., Inc.'s $350 million of 7 3/8% notes due 2018 traded on Monday at 100 7/8 bid, 101¼ offered, pretty much the same level at which the issue - upsized from $300 million originally - had traded after pricing at par earlier in the day.

And a trader said that there was "not a lot of action" in Houghton Mifflin Harcourt Publishers Inc.'s downsized $300 million issue of 10½% senior secured notes due 2019, which had priced at par on Friday, too late in the session for any kind of dealings.

On Monday he saw the Boston-based textbook publisher's issue - downsized radically from the originally planned $1.35 billion behemoth - trade at 101½ bid, 102 offered, before they ended up, he said, at 101 bid, with no offered side.

Secondary stays mixed

Away from the new issues, a trader saw the CDX North American Series 16 HY index down ¼ point on the day on Monday, ending at 102 9/16 bid, 102 11/16 offered, after having been unchanged on the session Friday.

The KDP High Yield Daily Index was meantime unchanged on Monday at 76.25, after having lost 5 basis points on Friday. Its yield rose by 2 bps, to 6.41%, after having moved up by 1 bp for a third consecutive session on Friday.

However, the Merrill Lynch High Yield Master II Index continued to gain on Monday, rising by 0.109% - its second consecutive gain - from Friday's 0.021% gain, which represented a rebound after a rare loss the previous session.

That lifted its year-to-date return to 6.048% at the close Monday, a new peak level for 2011. It was up from 5.933% on Friday, and up as well from last Wednesday's close at 5.969%, the previous peak level for the year so far.

NewPage angst continues

Among specific names, a trader said that apart from action in new issues, the main feature in Monday's secondary was "the continuation of the debacle known as NewPage."

He saw the troubled Miamisburg, Ohio-based coated-paper manufacturer's 10% second-lien senior secured notes due 2012 traded down "below 40 for a while," going down as low as 39½ before stabilizing.

After that, he said that "a lot of bonds traded between 40 and 401/2, so they've come back a little bit" off their early lows.

A second trader said that the NewPage 10s closed around 40, "about where they were on Friday."

On Friday, the bonds - which on Thursday had swooned by 10 or 12 points on the session to close down around the 45 level on disappointing quarterly numbers and the balance sheet move of the company's 11 3/8% first-lien senior secured notes nominally due 2014 into the category of short-term debt maturing within a year, continued to lose ground, dipping into the 30s before stabilizing around the 40 level.

Another trader saw the 10s trading between 39 and 41 on Monday.

The 10s have been the most heavily traded junk bond issue for three sessions running, with a market source estimating that over $41 million of the bonds had changed hands on Monday in round-lot trading.

The 11 3/8% notes meantime "were down a little more" on Monday, one of the traders said, pegging the bonds somewhere between 95¾ and 961/2, though he saw "most of the trades" around the 96¼ level. More than $30 million of the 11 3/8s were traded on Monday.

Those bonds had been trading around the 99-par range before last Thursday, and initially only dropped less than a point, into high-98 context, even as the 10s slid on Thursday, but then they fell another 2½ to 3 points on Friday and continued to soften on Monday.

According to the company's 10-K quarterly filing with the Securities and Exchange Commission, the 11 3/8% bonds, nominally maturing in December of 2014, would come due as early as Mar. 31, 2012, should NewPage fail to refinance the 10% notes by the end of next January.

NewPage sector peer Catalyst Paper Corp.'s 7 3/8% notes due 2014 were seen on Monday trading around 60½ to 61. That's about where the Richmond, B.C. -based papermaker's bonds had traded on Friday. The Catalyst notes had been trading around the middle 60s last week, but fell about 2 or 3 points to the mid-62 range on Thursday, pulled down by generalized investor angst about the paper sector in the wake of the NewPage slide - and continued to retreat on Friday, dipping down to the 60 mark before finally coming to rest.

© 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.