Taylor Morrison caps $2.25 billion week, recent deals strong; NII nosedives, Forest falls

By Paul Deckelman and Paul A. Harris

New York, Feb 28 - The week ended quietly in the high-yield market with one dollar-denominated, junk-rated transaction getting done - an upsized quickly shopped $350 million offering of 10-year notes from homebuilder Taylor Morrison Communities Inc.

That closed out a week which saw $2.25 billion of such bonds from domestic issuers price in six tranches, slightly busier than the $2.03 billion that came to market in five tranches the previous week, ended Feb. 21, a week shortened by one session due to the Presidents Day holiday observance. Last week was also the slowest week of any so far in 2014 in which deals have actually priced, after the year started with a three-day initial half-week in which there were no pricings.

The Taylor Morrison deal lifted year-to-date issuance for 2014 to $37.41 billion in 76 tranches, according to data compiled by Prospect News. That was down by just over 30% from the red-hot pace seen a year ago, when $53.67 billion had priced in 120 tranches by this point on the calendar, according to the data, helped by numerous megadeal-sized offerings that came to market during the opening weeks of 2013.

The new Taylor Morrison bonds were quoted slightly higher when they hit the aftermarket.

Meanwhile, the deals that priced earlier in the week - Tuesday's offerings from Regal Entertainment Group and TreeHouse Foods, Inc., Wednesday's deal from Greektown Holdings LLC and Thursday's transaction from Cloud Peak Energy Resources LLC - all remained well above their respective issue prices.

But Friday's real action was away from the new deals in secondary market. NII Holdings Inc.'s bonds were badly battered after the international wireless service provider reported dismal fourth-quarter numbers and issued a warning that its liquidity outlook would come under "significant pressure" going forward.

Forest Oil Corp.'s bonds remained on the slide for yet another day, following its disappointing earnings earlier in the week.

Statistical market performance indicators were ending higher for a third straight session - and were closing higher on the week after having been mixed last week.

Taylor Morrison upsizes

The Friday primary market produced a modicum of news.

In drive-by action, Taylor Morrison Communities priced the day's sole deal, an upsized $350 million issue of non-callable 10-year senior notes (B2/BB-) which it brought at par to yield 5 5/8%.

The deal was increased from $300 million.

The yield printed at the tight end of final yield talk that had been set in the 5¾% area. That talk had tightened from initial guidance of 5¾% to 6%, according to a buyside source.

The transaction played to healthy demand, the source said, spotting the new Taylor Morrison 5 5/8% notes due 2024 quoted at 99 7/8 bid, par ¼ offered, away from the dealer.

JP Morgan, Citigroup, Credit Suisse and Deutsche Bank were the joint bookrunners for the general corporate purposes deal.

Amsted sets call for new deal

Looking to the first week in March, Amsted Industries Inc. plans to participate in an investor conference call scheduled to get underway at 12:30 p.m. ET on Monday during which it will discuss a $500 million offering of eight-year senior notes (expected ratings Ba3/BB).

The deal is set to price later on Monday.

Wells Fargo is the left bookrunner. Morgan Stanley and BofA Merrill Lynch are the joint bookrunners.

The Chicago-based manufacturing company plans to use the proceeds to refinance its 8 1/8% senior notes due 2018.

Niska to begin roadshow

Niska Gas Storage Partners LLC plans to start a roadshow on Monday for a $575 million offering of five-year senior notes (existing ratings B2/B).

Pricing is set for late in the March 3 week or early in the March 10 week.

RBC is the left bookrunner. Barclays, Citigroup and JP Morgan are the joint bookrunners.

As with Amsted, Niska is taking out paper that matures in 2018, in its case the 8 7/8% notes due 2018.

Amsted and Niska are frontrunners in an expected procession of companies that will be looking to refinance eight-year non-call-four paper that priced in 2010 and is now rolling into its first call.

Amsted priced its 8 1/8% notes due 2018 in March 2010. They become callable on March 15 at 104.063.

Niska priced its 8 7/8% notes in February 2010. They become callable on March 15 as well, at a price of 104.438.

At today's market levels, with the high yield index yielding 5.19% late Friday, the interest savings will more than compensate Amsted and Niska, as well as other expected issuers, for paying the call premiums, a buyside source said on Friday.

The dealers will make their fees, the buysider added.

Meanwhile, depending on allocations, investors will simply be rolling out of one expensive piece of paper into another.

Emeco also set for week ahead

Rounding out the calendar for the first week in March is Australia's Emeco Pty Ltd.

On Thursday the mining equipment rental company announced plans to start a roadshow on Monday for a $360 million offering of five-year senior secured notes (/BB-/BB-).

The deal is set to price late in the week ahead via bookrunner Credit Suisse.

Also during the week ahead, watch for a big deal to appear from the health care sector, a trader advised on Friday.

Taylor Morrison firms

In the secondary market, a trader said right after the Taylor Morrison pricing that he had not yet seen any aftermarket activity in the Scottsdale, Ariz.-based homebuilder's existing notes - but he predicted that "I'm sure that it will be up - like everything else" that priced this week.

And a little after that, a trader did, in fact seen the new bonds a little better on the day, quoting them at100¼ bid, 100 5/8 offered, up from their par issue price.

Cloud Peak pop continues

Thursday's $200 million offering from Gillette, Wyo.-based coal operator Cloud Peak Energy Resources continued to gain ground on Friday, the traders said.

"They did really well," one trader said of those 6 3/8% notes due 2024, which were brought to market as a regularly scheduled forward calendar transaction via subsidiaries Cloud Peak Energy Inc. and Cloud Peak Energy Finance Corp. The trader saw the notes at 103½ bid, 103¾ offered, while a second trader pegged the bonds at 103¼ bid, 103¾ offered, calling them up 3/8 point on the session.

Yet another trader, quoting them at 103½ bid, 104 offered, said that was a ¾ point improvement on the day.

Cloud Peak priced its deal at par, and the bonds were seen having jumped to the 102¾ bid, 103¼ offered level in initial aftermarket dealings on Thursday.

Greektown going great

Detroit-based casino operator Greektown Holdings' 8 7/8% senior secured notes due 2019 continued to gain on Friday, with a trader quoting the bonds at 103½ bid, 104 offered, which he called a ¼ point gain.

At another desk, the bonds were seen unchanged at 103 bid, 104 offered, while yet a third trader put them at 103¼ bid, 103½ offered.

Greektown Holdings, along with its Greektown Mothership Corp. subsidiary, priced $425 million of the notes at par on Wednesday in a regularly scheduled forward calendar deal. When they hit the aftermarket later Wednesday, they got as high as 102¾ bid, 103 offered. The bonds continued to firm on Thursday, spiking past the 103 bid level, and pushing upward again on Friday.

A trader noted that in the current low interest rate atmosphere, "anything with that kind of coupon is going to do well."

Regal, TreeHouse stay strong

Going back a little further, Regal Entertainment Group's 5¾% notes due 2022 gained ½ point on Friday to 102½ bid, 103 offered, a traders said, although two other traders put the bonds at 102¼ bid, 102½ offered.

Unlike earlier in the week, when volume in the new issue was brisk, one of the traders said on Friday that "there were not a lot of them trading."

A trader said the bonds continued to do "really well," adding that "everything [among the new deals] was so well received. There's a scarcity of merchandise."

He continued: "You talk to the accounts, and on some of this new stuff, people are going to try to peal out. But everybody's just got too much cash.

"That's the problem - we wanted to buy so many things today, but you couldn't buy them," because nothing was for sale.

The Knoxville, Tenn.-based movie theater operator priced a massively upsized $775 million drive-by offering of those bonds at par on Tuesday, after more than doubling the deal's size from an originally announced $350 million.

The bonds moved up to above 101 bid in initial aftermarket dealings - over $80 million changed hands - and then continued to firm in Wednesday's action on volume of more than $30 million, moving up to a little bit under the 102 bid level. They continued to rise on Thursday, improving by about ¾ point.

TreeHouse Foods' 4 7/8% notes due 2022 were seen by a trader Friday having gained 1/8 point to 101½ bid, 101¾ offered.

A second trader located the bonds at 101¾ bid, 102 offered - but he lamented that here again, "people wanted to buy these things, but the underwriters aren't giving the small accounts anything."

A second trader said he saw "not a lot of volume" - again, in contrast to heavy trading in the new issue that he saw earlier in the week - but said "the bonds hung in there" around 101½ bid, 102 offered.

Oak Brook, Ill.-based TreeHouse - which claims to be the largest manufacturer of pickles and non-dairy powdered creamer in the United States and the largest manufacturer of private label salad dressings, powdered drink mixes and instant hot cereals in the United States and Canada, based on sales volume - priced $400 million of the notes at par in a quickly shopped deal, after upsizing the transaction from an originally announced $380 million. Those bonds came to market too late on Tuesday for any kind of real aftermarket dealings at that time.

The bonds were freed to trade on Wednesday and pushed up above the 101 bid level, on brisk volume of over $41 million, and continued to firm on Thursday as well.

NII knocked lower

A trader said that the big story of the day in Junkbondland was the steep slide in NII Holdings' bonds, after the Reston, Va.-based provider of wireless phone service in Mexico and South America reported poor fourth-quarter numbers and warned that it faces severe liquidity challenges going forward.

"Most of the activity in the market was in NII," he said, estimating that its thee busiest issues turned in over $200 million of trades on the day.

He saw its 10% notes due 2016 nosediving by 12½ points to end at 44 bid, on volume of over $83 million.

He said its 7 5/8% notes due 2021 lost 5 points to close at 37 bid, with over $63 million traded.

And its 8 7/8% notes due 2019 dropped 7 points to go home at 42 ½ bid, with over $45 million changing hands.

He noted that "this stuff isn't just trading down - it's gapping down," falling by multiple points in heavy trading.

He said the same was true of Momentive Performance Materials Inc.'s bonds, which earlier in the week were exhibiting a similar worrisome patter as they moved lower.

"They aren't just trading down," he reiterated, " it's cratering, on huge volume."

Forest Oil still struggling

"Forest Oil continued to be weaker," a trader said, quoting the Denver-based oil and gas exploration and production company's 7¼% notes due 2019 having fallen a point or so to 86¼ bid, 86½ offered.

Those bonds, and Forest's 7½% notes due 2020, have slid down into the mid-80s from prior levels near par following its report of disappointing quarterly numbers earlier in the week.

"Investors are afraid they're going to breach their covenants," the trader opined.

Indicators steady to higher

Statistical junk-market performance indicators were steady to higher on Friday, their third consecutive positive session.

They were also up across the board from where they had finished the previous Friday, Feb. 21.

The Markit Series 21 CDX North American High Yield Index was about unchanged on the day at 108 bid, 108 1/8 offered. On Thursday, the index had gained 9/32 point.

It was ending the week up from the previous Friday's 107 9/16 bid, 107 5/8 offered.

The KDP High Yield Daily Index notched its 16th consecutive gain on Friday, advancing by 5 basis points to close at 75.38, on top of Thursday's 10 bps rise.

Its yield, meanwhile, came in - also for a 16th consecutive session - declining by 2 bps to close at 5.16%. On Thursday, it had been down 4 bps for a second straight day.

Friday's levels compared favorably with the 75.07 index reading and 5.31% yield seen the previous Friday.

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