Upsized First Data drive-by leads biggest primary day since June; new Party City jumps

By Paul Deckelman and Paul A. Harris

New York, Aug. 5 – The high-yield new-deal market saw its biggest session in more than a month on Wednesday, as $2.01 billion of new dollar-denominated, fully junk-rated paper from domestic or industrialized country issuers came clattering down the chute, led by a hugely upsized $1.21 billion quick-to-market offering of secured eight-year notes from electronic transaction processing company First Data Corp.

Two other issuers also brought opportunistically timed and quickly shopped deals to market during the session: party goods retailer Party City Holdings Inc.’s $350 million of eight-year notes and oil and natural gas operator RSP Permian Inc.’s upsized $200 million add-on to its existing 2022 notes.

One regularly scheduled forward calendar deal priced – a $250 million issue of 5.5-year notes from Emdeon Inc., a provider of billing and information services to health-care companies.

It was the most new paper seen having come to market since June 24, according to data compiled by Prospect News, and overshadowed the $702 million in two tranches that got done on Tuesday or even the $1,125,000,000 that had priced in a single tranche on Monday, all of those bonds having been drive-by deals.

Only one of Wednesday’s four offerings – the Party City notes – had a significant aftermarket presence, traders said; those new bonds firmed by more than a full point and were among the most actively traded credits in Junkbondland.

There was also a considerable amount of continued activity in the recently priced issues from clinical trial and laboratory services provider Pharmaceutical Product Development Inc. and British telecommunications company Cable & Wireless Communications plc.

Away from the new issues, Avaya Inc.’s bonds – particularly its 2021 notes – fell sharply in heavy trading after the Santa Clara, Calif.-based provider of network communications solutions reported less-than-stellar quarterly numbers.

Statistical measures of junk market performance were mixed for a second consecutive session on Wednesday. They had turned mixed on Tuesday after having been lower across the board on Monday, their first downside performance in a week. The indicators had also been mixed on Thursday and Friday.

First Data massively upsizes

The primary market topped the $2 billion mark on Wednesday for the first day since June 24, as four issuers – three of them bringing drive-bys – raised $2.01 billion with single-tranche deals.

Two of the four were upsized.

Executions gave the appearance of a primary market hitting on all cylinders, with three deals coming tight or rich to talk and the fourth coming in the middle of talk.

First Data priced a massively upsized $1.21 billion issue of first-lien senior secured notes (B1/BB-/BB) at par to yield 5 3/8% in a quick-to-market transaction.

The deal size was increased from $675 million.

The yield printed in the middle of the 5¼% to 5½% yield talk, according to a bond trader, who added that official talk came on top of early guidance.

In the early afternoon, when the upsize was just a rumor, the deal was 2.5-times oversubscribed at the announced $675 million level, sources said.

BofA Merrill Lynch was the left bookrunner. Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, HSBC, PNC, SunTrust and KKR were the joint bookrunners for the debt refinancing deal.

Party City drives by

In other drive-by action, Party City priced a $350 million issue of eight-year senior notes (B3/CCC+) at par to yield 6 1/8%.

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

The deal roared into the secondary market, according to a trader who had the Party City 6 1/8% notes at 101 bid, 101½ offered.

BofA Merrill Lynch, Deutsche Bank, Barclays, Goldman Sachs, J.P. Morgan, Macquarie, Mizuho, Morgan Stanley, MUFG and SMBC were the joint bookrunners for the debt refinancing deal.

Emdeon prices tight

Emdeon completed the only one of Wednesday's deals that was marketed via a brief roadshow.

The Nashville-based provider of billing and information services to the health-care sector price a $250 million issue of 5.5-year senior notes (Caa1/CCC+).

The yield printed at the tight end of the 6% to 6¼% yield talk.

Citigroup, BofA Merrill Lynch, Deutsche Bank, Goldman Sachs, Jefferies, Mizuho and SunTrust were the joint bookrunners for the acquisition financing.

RSP Permian upsizes

RSP Permian priced an upsized $200 million add-on to its 6 5/8% senior notes due Oct. 1, 2022 (B3/B-) at 99.25 to yield 6.757%.

The face amount was increased from $150 million.

The reoffer price came at the rich end of the 99 to 99.25 price talk.

Goldman Sachs was the sole bookrunner.

The Dallas-based oil and gas exploration and production company plans to use the proceeds, together with roughly $157.5 million of proceeds from an equity offering, to fund a portion of the purchase of undeveloped acreage and oil and gas-producing properties and to repay a $50 million draw upon the revolver used to help fund the acquisition. Remaining proceeds will be used for general corporate purposes.

AMAG Pharmaceuticals roadshow

AMAG Pharmaceuticals Inc. began a roadshow on Wednesday for a $450 million offering of eight-year senior notes (B+).

The roadshow wraps up on Aug. 12.

Jefferies is the left bookrunner for the acquisition deal. Barclays is the joint bookrunner.

BUT prices add-on

In an otherwise quiet European market, French electrical home equipment retailer BUT SAS priced a €66 million add-on to its 7 3/8% senior secured notes due Sept. 15, 2019 (B) at 102.5 to yield 6.67%.

The reoffer price came at the rich end of the 102 to 102.5 price talk.

Goldman Sachs ran the books.

The Emerainville, France-based company plans to use the proceeds for general corporate purposes, which may include the purchase of additional stores or store networks.

Modest inflows

The dedicated high-yield funds saw modest inflows on Tuesday, the most recent session for which data was available at press time, a trader said.

High-yield exchange-traded funds saw $85 million of inflows.

Asset managers took in $20 million.

Party hardy with Party City

In the secondary market, the new Party City 6 1/8% notes due 2023 were one of the standout performers of the day.

Investors had a virtual fiesta, with volume in the new issue hitting over $37 million, making it one of the session’s busiest junk bonds.

A trader saw the Elmsford, N.Y.-based party goods retailer’s new issue trading in a 101-to-101½ bid context, almost right out of the box, versus their par issue price.

At another desk, a trader pegged the bonds at 101¼ bid, 101¾ offered.

Yet another market source had the notes going home at 101½ bid.

Traders meanwhile saw no real activity in RSP Permian’s relatively smallish drive-by add-on to its 6 5/8% notes due Oct. 1, 2022.

There was also no immediate aftermarket action seen in the big deal of the day, the late-pricing 5 3/8% secured notes due 2023 from Atlanta-based electronic transaction processing company First Data, or the day’s other late-pricing transaction, Emdeon’s 6% notes due February 2021. Both hit the tape after 6 p.m. [ET], well after market activity had wound down for the day.

HealthSouth trades up

Among the deals that priced on Tuesday, HealthSouth Corp.’s add-on to its 5¾% notes due 2024 was seen having firmed solidly on Wednesday from its issue price, although it ended off its highs for the day.

There was not too much activity seen in the Birmingham, Ala.-based post-acute health-care services provider’s paper.

A trader said the notes had gotten up to a 101¼-to-101¾ bid context early on, only to come back in a little to 101-to-101¼ later on.

The company had priced a quick-to-market $350 million of the notes on Tuesday at 100.5 to yield 5.678%, after the offering was upsized from an originally announced $300 million.

The trader also saw the other Tuesday deal – Anixter Inc.’s 5½% notes due in March of 2023 – trading off its highs for the day.

He said that the bonds had moved around between 100½ and 100¾ bid early in the session, “but then equities sold off and Treasuries were off, so it faded a little bit.”

He saw the notes going home at 100¼ bid, 100½ offered, on not much volume.

The Glenview, Ill.-based distributor of electrical wire and cable and other electronic components had priced its unscheduled $350 million offering at par; the notes had initially traded between 100½ and 101 when they were freed for the secondary market later Tuesday, but then finished in a 100½-to100¾ bid context.

PPD paper stays busy

There was continued active trading in Monday’s offering of 6 3/8% notes due 2023 from Pharmaceutical Product Development LLC and its corporate parent, Jaguar Holding Co. II, which made the high-yield Most Actives list for a third consecutive session.

A market source saw more than $18 million of the notes changing hands and going home at 100¼ bid, which he called a 1/8 point loss.

The Wilmington, N.C.-based provider of clinical testing and laboratory services to the pharmaceutical and biotechnology industries had priced its quick-to-market $1,125,000,000 of new junk paper at par.

The notes had originally traded up to 100½ bid late in the day Wednesday, with over $66 million changing hands, and had racked up another $68 million of trades on Wednesday, finishing around 100 3/8 bid.

Cable & Wireless climbs

Cable & Wireless Communications’ 6 7/8% notes due 2022 were seen by a trader to have moved up by 5/8 point on Wednesday, ending at 101 1/8 bid, with over $11 million traded.

A second trader also saw the notes 5/8 point better, at 101 bid, 101½ offered.

The London-based provider of telecommunications services to the United Kingdom had priced $750 million of those notes on Friday as a regularly scheduled forward calendar offering via its Sable International Finance Ltd. subsidiary.

The notes had priced at 98.644 to yield 7 1/8% and had traded as high as a par-to-100¼ bid context during initial aftermarket dealings of over $28 million.

Brisk activity continued on Monday, with over $17 million of the bonds seen moving around between 99¾ and 100 1/8 bid.

They were seen unchanged around 100½ bid on Tuesday, on lesser volume.

Avaya notes knocked lower

Away from the new issues, Avaya’s 10½% notes due 2021 “were the dog of the day,” a trader said, seeing the bonds plunge by 6 points, ending at 73 bid with over $79 million having traded, easily the busiest junk issue of the day.

Those bonds had actually been down as much as 8½ points intraday, bottoming at 70½ bid before coming off their lows but regaining only a small part of their lost ground.

Avaya’s 7% notes due 2019 were down 1 5/8 points, to 94 5/8 bid, on volume of over $15 million.

The Santa Clara, Calif.-based networking technology company’s paper rapidly lost ground from the get-go on Wednesday after having reported disappointing results for the 2015 fiscal third quarter ended June 30.

While quarterly revenue of $999 million was actually up sequentially by $4 million from the previous quarter, it was down $55 million from a year ago.

Adjusted EBITDA fell to $207 million, compared to $223 million a year ago, while adjusted operating profit dropped to $161 million from $180 million in the third quarter of fiscal 2014.

The bonds sold off even as the company said that it was free-cash-flow positive for the quarter, with cash and cash equivalents totaling $328 million, and noted that it had improved its debt profile with a refinancing during the quarter.

Indicators stay mixed

Statistical measures of junk market performance were mixed for a second consecutive session on Wednesday. They had turned mixed on Tuesday after having been lower across the board on Monday, their first downside performance in a week. The indicators had also been mixed on Thursday and Friday.

The KDP High Yield Daily index was down by 6 basis points on Wednesday, ending at 69.29, its third loss in the last four sessions. While it had gained 5 bps on Tuesday, it had also recorded losses on Friday and again on Monday.

Its yield, meanwhile, was unchanged at 5.91%, its second unchanged performance in three sessions. It had come in by 2 bps on Tuesday.

The Markit Series 24 CDX North American High Yield index gained 1/16 point on Wednesday, ending at 106 3/32 bid, 106 1/8 offered. It had been unchanged on Tuesday after having lost 1/8 point on Monday.

The Merrill Lynch North American Master II High Yield index eased by 0.022% on Wednesday, its third straight downturn. The index had also retreated by 0.044% on Tuesday and by 0.095% on Monday, a setback that followed four straight advances.

Wednesday’s loss lowered the index’s year-to-date return to 1.699% from 1.721% on Tuesday. Those levels also remained well down from the 4.062% reading recorded on May 29, the index’s peak level for the year so far.

© 2015 Prospect News.
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