Jaguar leads drive-by primary parade; new Sprint firms; US Foods again busy on planned sale

By Paul Deckelman and Paul A. Harris

New York, Dec. 10 - The high-yield primary sphere saw another busy day on Tuesday, both in terms of deals that got priced and in terms of others joining the forward calendar or moving toward a pricing.

British luxury carmaker Jaguar Land Rover Automotive plc drove by with an upsized $700 million five-year issue, the largest of the day's four deals that racked up $1.7 billion of new paper.

Automotive components manufacturer Chassix Holdings, Inc. also took the drive-by route, doing an upsized $150 million of five-year PIK toggle notes.

And home security services provider Vivent, Inc.'s corporate parent, APX Group Inc., brought a quickly shopped and upsized $250 million add-on to its existing 2020 notes to market.

The day also saw one pricing of a regularly scheduled deal off the forward calendar - a $610 million offering of eight-year notes from Opal Acquisition Inc., a financing vehicle for the acquisition of One Call Care Management, a provider of cost-containment services to the workers' compensation industry.

Traders offered some quotes on the new Jaguar and Chassix deals, but didn't see much in the way of trading.

Wireless provider Sprint Corp.'s giant-sized offering of 10.5-year bonds that priced late Monday began trading around on Tuesday and were seen at solidly higher levels. There was also brisk activity in some of its existing bonds.

Away from the issues that have already priced, syndicate sources said that offshore oil and gas operator Camac Energy Inc. and energy tanker company Eletson Holdings Inc. would be shopping new deals around the junk market.

And they heard price talk on an upsized offering from race track operator Churchill Downs Inc., which is expected to come to market on Wednesday.

In the non-new-deal secondary realm, US Foods Inc.'s bonds again topped the Junkbondland most-actives list in the wake of Monday's news about the planned acquisition of the company by rival food distributor Sysco Corp., which will assume its nearly $5 billion of debt.

Statistical indicators of market performance were mixed after two sessions of having been higher.

Jaguar, upsized and tight

The high-yield primary market continued to crank hard on Tuesday, with four issuers raising a combined total of $1.7 billion.

Each one brought a single-tranche deal.

Three of the four were upsized.

One priced at the tight end of price talk, and the other three came on top of talk.

Jaguar Land Rover Automotive priced an upsized $700 million issue of non-callable five-year senior notes (expected ratings Ba2/BB) at par to yield 4 1/8%.

The deal was upsized from $500 million.

The yield printed at the tight end of yield talk in the 4¼% area. Earlier guidance came in the 4½% area.

Citigroup, Credit Suisse and J.P. Morgan were the joint physical bookrunners.

BNP Paribas, Royal Bank of Scotland and Standard Chartered were the passive bookrunners. JPMorgan will bill and deliver.

Proceeds will be used for general corporate purposes including the intention to refinance a portion or all of the senior notes due in 2018.

One Call prints mid-talk

Opal Acquisition priced a $610 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 8 7/8%.

The yield printed in the middle of the 8¾% to 9% yield talk.

BofA Merrill Lynch, RBC, Morgan Stanley, Deutsche Bank and Jefferies were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Vivint taps 8¾% notes

APX Group Inc., the parent of Vivint, Inc., priced an upsized $250 million add-on to its 8¾% senior notes due Dec. 1, 2020 (existing ratings Caa1/CCC+) at 101½ to yield 8.373%.

The drive-by deal was upsized from $200 million.

The reoffer price came on top of price talk.

BofA Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley, Credit Suisse, Macquarie, Goldman Sachs and HSBC were the joint bookrunners for the general corporate purposes deal.

Chassix upsizes PIK toggles

Chassix Holdings priced an upsized $150 million issue of five-year senior PIK toggle notes at 98 to yield 10.53%.

The deal was upsized from $125 million, and priced in line with price talk.

BofA Merrill Lynch was the left bookrunner for the quick-to-market dividend deal. BMO was the joint bookrunner.

Camac coming via Arctic

Houston-based Camac Energy plans to bring to market a $300 million offering of senior secured notes due in 2018 via lead bookrunner Arctic Securities.

A roadshow is expected to get underway during the week ahead.

The oil and gas exploration and production company plans to use the proceeds to further develop the Oyo Field located offshore Nigeria in OML Block 120.

The company, which has operations in Nigeria, Kenya, and Gambia, expects that the deal will play to both high-yield and emerging markets accounts (see related story in this issue).

Eletson ship mortgage notes

Eletson Holdings plans to price a $290 million offering of eight-year senior secured first-priority ship mortgage notes on Thursday via joint bookrunners Jefferies and DNB.

Proceeds will be used to refinance debt and for general corporate purposes including the acquisition of future vessels.

Churchill Downs upsizes

Meanwhile, looking toward the Wednesday session in the dollar-denominated primary market, Churchill Downs upsized its offering of eight-year senior notes (B1/BB) to $300 million from $250 million, and talked them to yield 5½% to 5¾%.

Initial guidance was 6%.

Books close at 2 p.m. ET on Wednesday, and the deal is set to price thereafter.

JPMorgan and Wells Fargo are the joint bookrunners.

CMA CGM, at a discount

In addition to the above-mentioned deal from Jaguar Land Rover, the European market continued to hum on Tuesday.

CMA CGM SA priced a €300 million issue of 8 ¾% five-year senior notes (expected ratings Caa1/CCC+) at 97.552 to yield 9 3/8%.

The yield printed on top of yield talk.

Joint bookrunner BNP Paribas will bill and deliver. Credit Suisse and SG CIB are also joint bookrunners.

The Marseille, France-based maritime shipping company plans to use the proceeds for general corporate purposes. A concurrent new €145 million bank line will be used to fund early repayment of the existing bank loan.

Heidelberger Druckmaschinen adds

In drive-by action, Heidelberger Druckmaschinen Aktiengesellschaft priced a €51 million add-on to its 9¼% senior notes due April 15, 2018 (confirmed Caa1/expected CCC+) at 105¾ to yield 7.659%.

The reoffer price came at the rich end of the 105½ to 105¾ price talk.

Joint bookrunner Deutsche Bank will bill and deliver for the general corporate purposes deal. BNP Paribas, Commerzbank and LLBW were also joint bookrunners.

Huntsman to issue euro notes

Huntsman International LLC commenced a planned two-day roadshow in London on Tuesday for its €200 million offering of non-callable seven-year senior notes.

Joint bookrunner Citigroup will bill and deliver for the debt refinancing. Barclays, BofA Merrill Lynch, Goldman Sachs, JPMorgan, PNC, RBC and Royal Bank of Scotland are also joint bookrunners.

And Empark Funding SA set price talk for its €385 million two-part offering of senior secured notes (B2/BB-) on Tuesday.

The Madrid-based company talked its €235 million of six-year fixed-rate notes with a yield in the 7% area. The fixed-rate notes come with three years of call protection.

Meanwhile Empark talked its €150 million of six-year floating-rate notes to price at 99 with a Euribor spread of 550 to 575 basis points. The floating-rate notes come with one year of call protection.

The deal is set to price on Wednesday.

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

Day's deals little traded

In the secondary arena, traders said they did not see much aftermarket activity in the day's four new dollar-denominated junk deals, owing to the late-afternoon timeframe in which the majority were priced.

A trader heard the new Jaguar Land Rover 4 1/8% notes due 2018 bid at par, in line with the level at which the sharply upsized new drive-by deal from the Whitley, England-based luxury carmaker had priced.

A trader at another shop meantime quoted Chassix Holdings' 10%/10¾% senior PIK toggle notes due 2018 at 99¾ bid, 100¼ offered.

That was up from the 98 level at which the Southfield, Mich.-based automotive chassis component manufacturer's quickly shopped offering had come to market.

A second trader, however, noting the deal's small size - even at an upsized $150 million - said that "you're not going to see them trade around much," suggesting that the bonds had already been parceled out and mostly put away.

Those traders meantime did not see any immediate aftermarket in the new bonds from APX Group, the parent company of Provo, Utah-based home security services firm Vivent, Inc., or from Opal Acquisition, a financing vehicle for Apax Partners, LP and Apax Partners LLP's planned acquisition of One Call Care Management, a New York-based provider of specialized cost containment services to the workers' compensation industry.

New Sprint bonds strengthen

Traders saw the new Sprint Corp. 7 1/8% notes due 2024 trading at solidly higher levels on Tuesday, when they moved into the aftermarket after having priced very late in the day on Monday.

One of them saw the bonds at 101 7/8 bid, 102¼ offered, while two others pegged the megadeal at 101 7/8 bid, 102 1/8 offered, one of them commenting that "they were inside there most of the day."

But despite the deal's great size and liquidity - $2.5 billion, one of the biggest junk deals of the year and certainly the biggest the market has seen in about the last two months - there were indications that those bonds were snapped up and put away.

A trader said that there had been "a fair amount of trading in them in the morning - and then it just stopped. Nobody was doing much of anything" in it after that.

And at another desk, a trader, in the same vein, lamented that "I tried to trade them, but couldn't get it going. I guess a lot of them traded, but I couldn't get involved."

He marveled that with a deal of that size, "you would think that there would be bonds trading all over the place - but not here, unfortunately."

Sprint, the Overland Park, Kans.-based number-three U.S. wireless carrier, had priced its giant-sized quick-to-market deal at par on Monday.

Meanwhile, several of the company's existing issues were seen to have been actively traded.

A market source said that predecessor company Sprint Nextel Corp.'s 6% notes due 2022 were among the most actively traded junk issues on the day, with over $15 million having changed hands. He saw the bonds off by ½ point on the day, ending at 98½ bid.

The company's Sprint Capital Corp. affiliate's 8¾% notes due 2032 gained nearly 1 point on the day to end at 107½ bid, with over $12 million of the bonds having traded.

US Foods continues firming

Away from the new-deal universe, a trader said that "the big active one for a second day" was US Foods' 8½% notes due 2019.

He saw those bonds gain 1/8 point to go home at 109 5/8 bid, 109¾ offered, on volume of over $26 million.

A second trader also called them the most active issue, quoting the notes in the 109½ bid vicinity.

On Monday, those bonds had jumped into the mid-109 neighborhood from prior levels around 105 to 106 bid, with over $55 million traded, making the credit by far and away the busiest seen in the junk market that session, with triple the volume of the next busiest bonds.

The bonds surged on the news that investment-grade sector peer Sysco will acquire Rosemont, Illinois-based US Foods in a transaction valued at some $8.2 million. It will pay the closely held company's owners, including KKR & Co. and Clayton, Dubilier & Rice LLC, a combination of $3 billion in Sysco common shares plus $500 million cash. It will also assume about $4.7 billion of debt.

Central Garden gets clipped

Elsewhere, a trader said that Central Garden & Pet Co.'s 8¼% notes due 2018 retreated after the Walnut Creek Calif.-based manufacturer of lawn-care products and pet supplies reported "lousy earnings."

He said that the bonds were trading at 101¼ bid, down from around the 101¾ to 102 area where they had been before the company reported its earnings for the 2013 fiscal fourth quarter ended Sept. 28.

The company reported net sales of $368.8 million for the quarter, down 7% from the comparable fiscal 2012 period. Sales comparisons were impacted by an extra week in the prior-year quarter and full-year periods.

The company's fourth-quarter operating loss for 2013 was $26.4 million, about three times as wide as the year-ago red ink of $8.5 million.

Its fourth-quarter net loss widened to $22.6 million, or 47 cents per fully diluted share, versus a loss of $10.1 million, or 21 cents per share, in the fourth quarter of 2012.

Also on the earnings front, a trader said that HD Supply Holdings, Inc.'s 7½% notes due 2020 firmed to around a 106¾ to 107 1/8 context from prior levels around 105 7/8 after the Atlanta-based industrial products distributor posted better year-over-year results for the fiscal third quarter ended Nov. 3. "Spreads were tighter by 30 [bps] he said.

Another market source pegged the bonds going home at 107 1/8 bid, calling them up ¼ point on the day.

The company said that it got back into the black during the quarter, posting net income of $51 million, or 26 cents per diluted share, versus year-earlier red ink of $50 million, or 38 cents per share.

"I thought their earnings were pretty good," the first trader said. "I like their story."

During the conference call following the release of the numbers, company executives also said that liquidity stood at nearly $1 billion, and the company had no debt coming due for the next four years. HD Supply also achieved a considerably reduced leverage ratio as a result of a busy schedule of capital markets transactions earlier this year, including a $1 billion initial public stock offering (see related story elsewhere in this issue).

A lackluster session

Away from those names that had some news attached to them, market participants called the day lackluster - the latest in a string of such sessions.

"It was another light-volume day, he said, noting that just over $1.2 billion had traded on the Trace system, considered a relatively sedate number.

"The market sloshed around a little bit," a second said. "It traded off early, then it came back."

Overall, he opined, "I think there's a lot of hand-wringing about this Fed tapering," although he added that "I don't think it means a whole hell of a lot. At the end of the day, I think they're ultimately going to do it - but when, and how much, is what the big debate is."

Market signs turn mixed

Overall, statistical junk-market performance indicators turned mixed on Tuesday after having been higher over the previous two sessions.

The Markit Series 21 CDX North American High Yield index posted its first loss after two straight gains, declining by 3/32 point on Tuesday to end at 107 3/16 bid, 107 5/16 offered. On Monday, it had risen by 5/16 point.

The KDP High Yield Daily index was unchanged at 74.37, after having gained 8 bps on Monday.

Its yield, though, declined for a second consecutive session, coming in by 1 bp to end at 5.63%. That followed Monday's narrowing by 2 bps.

The widely-followed Merrill Lynch High Yield Master II index scored its fourth consecutive gain on Tuesday, improving by 0.075%, on top of Monday's 0.116% advance.

Tuesday's gain raised its year-to-date return to 7.065%, its third consecutive new peak level for 2013 and first time above the 7% marker. That was up from Monday's 6.986%, its previous zenith for the year.

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