Upsized Ultra Petroleum, Abengoa deals pace busy session, cap $10.5 billion week

By Paul Deckelman and Paul A. Harris

New York, Dec. 6 - The revived high-yield primary sphere saw a second consecutive session of busy activity on Friday, syndicate sources said, with $1.85 billion of new U.S. dollar-denominated, fully-junk rated paper having priced by the close in five tranches, most of it from overseas-based issuers.

That came on the heels of Thursday's $4.86 billion session, which was the heaviest new-issuance total in some two months.

There were two upsized offerings of $450 million, from domestic energy operator Ultra Petroleum Corp. and Spanish diversified holdings company Abengoa SA, a $350 million deal from Hong Kong-based telecommunications company Pacnet Ltd. and a pair of $300 million transactions - an upsized issue from Irish aircraft leasing firm FLY Leasing Ltd. and the day's lone downsized deal, from Canada-based mining concern Uranium One Inc. The latter was the only deal of the day to price at a discount to par.

Unlike Thursday, which included a fair amount of drive-by deal activity, Friday's transactions were all scheduled offerings coming off the forward calendar.

The day's issuance capped a busy week that saw $10.5 billion of new dollar-denominated junk paper price in 21 tranches, according to data compiled by Prospect News - several times the roughly $2.6 billion that got done in seven tranches during the previous, holiday-shortened week ended Nov. 29.

On a year-to-date basis, total issuance of $316 billion in 681 tranches was running about 2.5% ahead of the pace seen in 2012, which turned out to be a record year for new junk issuance. Some $308.321 billion had priced in 647 tranches by this point on last year's calendar, according to the Prospect News data.

Traders said that the new Pacnet, FLY Leasing and Ultra Petroleum deals traded up when they were freed for secondary market activity.

They also noted some activity - but no overwhelming amount - in the new deals from NBTY, Inc. and NCR Corp., which had priced too late in Thursday's session for any aftermarket dealings. In general, trading in recent deals was seen as light.

There was little real trading seen in non-new-deal issues, the traders said.

Statistical market-performance indicators were unchanged to higher on the session, versus Thursday's mixed session. However, they were mixed on the week versus last Friday's levels, snapping a two-week winning streak which had seen Friday-to-Friday gains.

Abengoa upsizes

New flow remained heavy in the primary market on Friday as five separate issuers raised a total of $1.85 billion in five junk-rated, dollar-denominated tranches.

Tight executions were the rule: three of Friday's five deals were upsized and four of the five printed at the tight end of talk.

Spain's Abengoa Finance SAU priced an upsized $450 million issue of non-callable six-year senior notes (expected ratings B2/B/B+) at par to yield 7¾%.

The issue was increased from $400 million.

The yield printed at the tight end of the 7¾% to 8% yield talk.

Joint bookrunner BofA Merrill Lynch will bill and deliver for the debt refinancing. HSBC, Credit Agricole and Natixis were also joint bookrunners.

Ultra prices five-year deal

Ultra Petroleum priced an upsized $450 million issue of five-year senior notes (B2/BB) at par to yield 5¾%.

The deal was expanded by $50 million from the original $400 million.

The yield printed at the tight end of the 5¾% to 5 7/8% yield talk.

Goldman Sachs, Citigroup, Wells Fargo, JP Morgan and CIBC were the joint bookrunners.

The Houston-based independent exploration and production company plans to use the proceeds to fund a portion of the purchase price of its recently announced Uinta Basin acquisition.

Pacnet sells at tight end

Pacnet Ltd. priced a $350 million issue of five-year senior secured notes (B2//BB) at par to yield 9%.

The yield printed at the tight end of yield talk in the 9 1/8% area.

DBS Bank, Deutsche Bank, Goldman Sachs and Standard Chartered managed the debt refinancing deal.

Fly Leasing upsizes

FLY Leasing priced an upsized $300 million issue of seven-year senior notes (B3/BB) at par to yield 6¾%.

The deal was upsized from $250 million.

The yield printed at the tight end of the 6¾% to 7% yield talk.

Timing on the deal was moved ahead. Previously it was expected to price early in the week ahead.

Jefferies was the bookrunner.

The Dublin-based aircraft lessor plans to use the proceeds for general corporate purposes, including the acquisition of aircraft.

Uranium One: downsized, wide

The sole exception to Friday's crisp executions came from Uranium One, which priced a downsized $300 million issue of 6¼% five-year senior secured notes (expected ratings Ba3/B+/BB-) at 98.947 to yield 6½%.

The deal was reduced from $350 million.

The yield printed at the wide end of yield talk set in the 6 3/8% area. Initial price talk was 6¼% to 6 3/8%.

Deutsche Bank, SIB (Cyprus) and SG CIB were the joint bookrunners.

Proceeds will be used to repurchase existing convertible debentures and for general corporate purposes.

Salix starts marketing Monday

The week ahead gets underway with a busy calendar.

Over the course of the past week several sources professed the expectation that the Dec. 9 week will prove to be the last hectically busy week of 2013.

But it will be busy, they say.

The list of deals below are all expected to price before next Friday's close.

Salix Pharmaceuticals Ltd. plans to start a roadshow on Monday for a $750 million offering of seven-year senior notes (B2/B).

Jefferies LLC is the bookrunner for the merger deal.

Walter to bring $500 million

Walter Investment Management Corp. plans to start a roadshow on Monday in New York City for a $500 million offering of eight-year senior notes (B3/B).

Barclays, Morgan Stanley, BofA Merrill Lynch, Credit Suisse, RBS and JP Morgan are the joint bookrunners.

The Tampa, Fla.-based asset management company plans to use the proceeds to finance the acquisition of mortgage servicing rights, to repay bank debt, and for general corporate purposes.

CTP plans secured deal

CTP Transportation Products, LLC and CTP Finance Inc. plan to start a roadshow on Monday for a $250 million offering of six-year senior secured notes.

SunTrust is the left bookrunner. Credit Suisse is the joint bookrunner.

The Rule 144A for life notes become callable after three years at par plus 50% of the coupon.

Proceeds will be used to help fund the acquisition of the company by American Industrial Partners from Carlisle Cos. Inc.

Roundy's to start roadshow

Roundy's Supermarkets, Inc. plans to begin a roadshow on Monday for its $200 million offering of seven-year senior secured second lien notes.

Credit Suisse and JP Morgan are the joint bookrunners for the acquisition financing.

PortaVentura plans euro notes

The euro-denominated market also gets underway on Monday with an active deal calendar, with a pair of prospective issuers announcing two-part transactions on Friday.

Both deals will feature fixed- and floating-rate tranches.

PortAventura Entertainment Barcelona BV plans to begin a roadshow on Monday for a €400 million two-part offering of senior secured notes.

The deal includes a tranche of seven-year fixed-rate notes and a tranche of six-year floating-rate notes, with sizes to be determined.

Global coordinator JP Morgan will bill and deliver. KKR is also a global coordinator.

Banca March, BNP Paribas, Caixa, Commerzbank and Nomura are joint bookrunners.

The Salou, Spain-based integrated destination resort plans to use the proceeds to repay debt and fund a shareholder distribution.

Empark to bring refinancing

Empark Funding SA began a roadshow on Friday for a €385 million two part offering of senior secured notes (expected ratings B2/BB).

Madrid-based company plans to sell €235 million of six-year notes in fixed- and floating-rate tranches.

Joint bookrunner JP Morgan will bill and deliver for the debt refinancing. Barclays, Caixa and Espirito Santo are also joint bookrunners.

Pacnet, FLY, Ultra move up

In the secondary market, a trader quoted Pacnet's new 9% senior secured notes due 2018 at 102½ bid, 103 offered, up from the Asian telecom company's par issue price.

He saw aircraft lessor FLY Leasing's 6¾% notes due 2020 at 101¼ bid, 102 offered, up from their par issue price.

And he said that oil and gas E&P operator Ultra Petroleum's 5¾% notes due 2018 had firmed to 101 5/8 bid, 102 1/8 from a par issue price.

A second trader quoted Ultra Petroleum's deal at 101¾ bid, 102 offered.

At Cannacord Genuity, fixed income strategist Mark Pibl said in a research note on Friday that Ultra Petroleum's $400 million deal was tightly priced at 5¾%. He added that "many investors view [energy sector peer] Denbury Resources, Inc. as a superior credit, which at 6% is trading at richer levels than Ultra Petroleum."

Uranium, Abengoa unseen

Traders meantime did not see an immediate aftermarket action in the day's other two late-pricing deals, from Uranium One, a Toronto-based company which mines for the radioactive metal in Kazakhstan and in South Africa, and Abengoa, a Spanish conglomerate with interests in the energy, telecommunications, logistics and environmental industries.

One trader - who also did not see any immediate levels in FLY Leasing, Ultra Petroleum or Pacnet - opined that while new-issue pricings were certainly "the story of the day" on Friday in Junkbondland, the day's new deals "pretty much priced and disappeared. There was no real re-trading."

Thursday late deals appear

Traders saw some levels among the deals which had come to market late in the day on Thursday but which had not initially traded around.

One quoted NBTY's new 7¾%/8½% contingent cash-pay notes due Nov. 1, 2017 at 103¼ bid, 104 offered.

The Ronkonkoma, N.Y.-based vitamin and nutrition supplement manufacturer's corporate parent, Alphabet Holding Co., Inc., priced $450 million of the bonds as a quick-to-market add-on to its already existing issue. The additional notes priced at 102.25 for a yield to worst of 6.872802% - a record low print for a PIK toggle note, according to data compiled by Prospect News.

A trader saw both halves of NCR's $1.1 billion two-part offering having moved up from their respective par issue prices when they finally began trading on Friday.

The Duluth, Ga.-based manufacturer of ATM machines, bar code scanners and self-service checkout systems had priced $400 million of 5 7/8% notes due 2021, which moved up to 101 5/8 bid, 102 offered on Friday. It had also priced $700 million of 6 3/8% notes due 2023, which were quoted Friday at 101¼ bid, 102¼ offered. The company restructured that deal before pricing to eliminate a proposed third tranche of 12-year notes.

Elsewhere among the Thursday deals. A trader saw Altice Financing SA's new 6½% senior secured notes due 2022 at 101¼ bid, 101¾ offered, which he called down 5/8 points from the levels seen in Thursday's initial aftermarket dealings. He also saw the company's new 8 1/8% senior unsecured notes due 2024 down ¼ point at 102¾ bid, 103½ offered.

The company - a financing unit of Altice VII Sarl., a Luxembourg-based company that operates wireless and cable networks in Israel, priced $900 million of the secured notes on Thursday at par, along with a euro-denominated mirror tranche of those notes, and priced $700 million of the unsecured notes at par in a scheduled forward calendar deal.

Another trader saw the secured notes Friday at 101¼ bid, 101¾ offered, but did not see the unsecured notes trading around.

A trader said that Thursday's offering from Headwaters Inc. was about unchanged at 102¼ bid, 102¾ offered. The South Jordan, Utah-based construction materials and services provider priced $150 million of 7¼% notes due 2019 at par, with the bonds firming smartly when they were freed to trade later Thursday.

And a trader said that Forest Laboratories, Inc.'s 5% notes due 2021 gained 1/8 point on the day, ending at 100½ bid, 100¾ offered.

The New York-based pharmaceuticals company priced s scheduled forward calendar deal at par after upsizing it to $1.2 billion from an originally announced $1 billion size.

At another desk, a trader said of Thursday's deals that "I tried to get involved in a couple of things - but I couldn't find anybody that wanted to sell bonds."

He suggested that trading in new-deal paper 'is really becoming a controlled market - where the underwriters are telling people that normally would have gone into a transaction, gotten bonds and then traded them away from the underwriters, to sell those bonds back to them, with no penalty, because [the underwriters] can turn around and re-sell them higher to people that want to own the deal.

"So there's a lot of that going on."

Several traders agreed that that apart from the new deals, "nothing much in the secondary market jumped out at you" on Friday, as one put it.

Market signs up on day

Overall, statistical junk-market performance indicators were unchanged to mostly higher on Friday, after having turned mixed on Thursday, their fourth mixed session in the last five.

However, on a week-over-week basis they turned mixed, after having been higher versus the prior Friday in each of the previous two weeks.

The Markit Series 21 CDX North American High Yield Index broke out of its recent rut, posting its first gain after five consecutive losses. It rose by 17/32 point on Friday to end at 107 1/32 bid, 107 3/32 offered, after falling by 7/32 point on Thursday.

But it was down from the 107 1/16 bid, 107 3/16 level at which it had closed out the previous week, on Friday, Nov.29.

The KDP High Yield Daily Index was unchanged at 74.29 after two straight losses, including Thursday's 7 basis point setback.

Its yield was likewise unchanged at 5.66%, after having risen by 3 bps on Thursday.

Those levels compare unfavorably to the previous Friday's 74.44 index reading and 5.62% yield.

But the widely-followed Merrill Lynch High Yield Master II Index notched its second consecutive gain on Friday, improving by 0.048%, on top of Thursday's 0.012% advance. On Wednesday, the index had lost 0.054 - its first downturn after eight consecutive gains.

Friday's gain brought its year-to-date return back up to 6.862%, the latest in a series of new peak levels of 2013. That was up from Thursday's 6.811%, and up as well from Tuesday's 6.855%, its previous zenith for the year.

The index was up by 0.053% for the week, its fourth consecutive weekly gain. It had been up by 0.35% last week, for a year-to-date return at that time of 6.805%.

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