Endeavor, Century Communities drive by, new Endeavor firms; energy rises with oil prices

By Paul A. Harris and Paul Deckelman

New York, April 6 – The high-yield market got back to work on Monday after last week’s holiday-related hiatus, but traders said that volumes were light, with some desk not fully staffed yet.

The primary arena saw two opportunistically timed and quickly shopped offerings come to market.

Oil and natural gas company Endeavor Energy Resources LP, along with a financing subsidiary, priced $300 million of 8.5-year notes, which were seen having firmed smartly when they were freed for aftermarket dealings.

Homebuilder Century Communities, Inc. did an upsized $60 million add-on to its existing 2022 notes.

The forward calendar built during the session, with new offerings expected soon from pharmaceuticals manufacturers Mallinckrodt plc and Concordia Healthcare Corp., energy operator Matador Resources Co. and industrial battery maker EnerSys.

Among recently priced issues, traders saw upside movement in last week’s offerings from Hexion Inc., Interval Leisure Group and McGraw-Hill Global Education Intermediate Holdings, LLC, while Radio One, Inc. held steady at the higher levels at which it traded after pricing.

Away from the new deals, sharply higher crude oil prices pushed up such names as Energy XXI Ltd., Chesapeake Energy Corp., Linn Energy, LLC and Whiting Petroleum Corp.

Statistical indicators of market performance were higher across the board.

Endeavor Energy prices tight

Two issuers priced deals on Monday, raising a combined total of $359 million.

Both came as drive-bys.

One was upsized. One priced at the tight end of talk while the other came on top of talk.

Endeavor Energy Resources, LP and EER Finance, Inc. priced a $300 million issue of senior notes due Sept. 15, 2023 (B3/B) at par to yield 8 1/8%.

The yield printed at the tight end of yield talk that had been set in the 8¼% area.

Credit Suisse and BofA Merrill Lynch were the joint physical bookrunners for the refinancing deal. Wells Fargo, Credit Agricole, MUFG, BMO and U.S. Bancorp were the joint bookrunners.

Century Communities upsizes

Century Communities priced an upsized $60 million add-on to its 6 7/8% senior notes due May 15, 2022 (B3/B) at 98.26.

The deal was increased from $50 million.

The reoffer price printed on top of price talk, set at 98.26.

BofA Merrill Lynch, J.P. Morgan and Deutsche Bank were the joint bookrunners.

The Greenwood Village, Colo.-based homebuilder plans to use the proceeds to pay off its revolver, to fund the acquisition and development of land, and for general corporate purposes.

Mallinckrodt plans $1.2 billion

Mallinckrodt International Finance SA plans to start a roadshow on Tuesday in New York for a $1.2 billion two-part offering of senior notes.

It features $500 million of five-year notes which come with two years of call protection, and $700 million of 10-year notes which come with five years of call protection.

Goldman Sachs is the left bookrunner for the acquisition financing from the financing subsidiary of Mallinckrodt plc. Barclays and Deutsche Bank are the joint bookrunners.

Matador to sell senior notes

Matador Resources plans to price a $350 million offering of eight-year senior notes (expected ratings B3/B-) before the end of the present week.

BofA Merrill Lynch, Wells Fargo, RBC, BMO, Scotia and SunTrust are the joint bookrunners.

The Dallas-based independent energy company plans to use the proceeds to pay down revolver debt assumed in connection with the acquisition of Harvey E. Yates Co. as well as to fund a portion of its future capital expenditures and for other general working capital needs.

EnerSys starts roadshow

EnerSys began a roadshow on Monday in New York for a $300 million offering of non-callable eight-year senior notes (expected ratings Ba2/BB+).

Goldman Sachs is the left bookrunner. BofA Merrill Lynch and Wells Fargo are joint bookrunners.

The Reading, Pa.-based manufacturer, marketer and distributor of industrial batteries plans to use the proceeds to repay its convertible notes in full, as well as to pay down its revolver and/or for general corporate purposes.

Concordia investor call

Concordia Healthcare scheduled an investor conference call for 12:30 p.m. ET Wednesday to roll out a $610 million offering of eight-year senior notes (Caa1/CCC+).

The acquisition deal is set to price early in the Sept. 13 week.

RBC is the left bookrunner. Morgan Stanley and TD Securities are the joint bookrunners.

New Endeavor improves

In the secondary sphere, a trader said that Endeavor Energy’s new 8 1/8% notes due in September 2023 had traded in 101¼ to 102¼ bid context, up from their par pricing level.

But he said that he had only seen about $7 million of trades in the Midland, Texas-based E&P operator’s quick-to-market new issue.

Traders meantime saw no aftermarket dealings in the new Century Communities 6 7/8% add-on notes due 2022, owing to both the lateness of the hour at which that offering had priced and its relatively small $60 million size.

Thursday deals mostly firmer

Among the issues which had priced last Thursday, traders saw some upside in Hexion’s 10% first-priority senior secured notes due 2020.

One pegged the Columbus, Ohio-based chemical company’s new deal at 101½ bid, 102 offered, calling that up 1 point from the levels around 100½ bid, 101 offered at which the notes had traded on Thursday after the $315 million issue had priced at par as a regularly scheduled deal off the forward calendar.

A second trader said that about $8 million of the notes had traded on Monday in a 101 to 101¾ bid context most of the day, although toward the end of the session, the bonds “looked like they were moving higher,” to around 101 13/16 bid.

He said that including the company’s outstanding issues, “the name was active today,” with about $26 million total changing hands, including its 8 7/8% notes due 2018, its 6 5/8% notes due 2020 and its 9% notes due 2020. Those issues were trading at levels of 87¼ bid, 91½ bid and 70¼ bid, respectively.

Interval Leisure Group’s 5 5/8% notes due 2023 gained ½ point on the day, a trader said, ending at 101 bid, 101½ offered.

However, a second trader said he had seen no dealings in the bonds on Monday. “They traded last week, but today . . . nothing.”

The Miami-based provider of travel- and leisure-related products priced $350 million of the notes at par on Thursday off the forward calendar, after upsizing the offering from $300 million.

Traders said that Radio One’s 7 3/8% senior secured notes due 2022 were trading around the same 100¾ to 101 bid context at which they had traded on Thursday after the Washington, D.C.-based diversified media company had priced its $350 million forward calendar offering at par.

McGraw-Hill Global Education’s $100 million add-on to its existing 8½%/9¼% senior PIK toggle notes due 2019 gained about 3/8 point a trader said, ending at 100 5/8 bid, 101¼ offered.

The New York-based provider of educational materials had priced its quickly shopped add-on deal at 99.01 on Wednesday to yield 8.748%

Energy names catch a bid

Away from the new deals, traders noted mostly light activity volume, with some market players still not back from this past weekend’s Easter/Passover holiday festivities.

A surge in crude oil prices helped many energy sector credits rise solidly on Monday.

U.S. benchmark grade West Texas Intermediate for May delivery jumped by $2.81 per barrel, or 5.72%, to close Monday at $51.95, while European benchmark grade Brent crude zoomed by $2.91 per barrel, or 5.30%, ending at $57.86.

Among them was Energy XXI, whose 11% notes due 2020 were seen having gained 1½ points on the day on volume of over $21 million, ending at 97½ bid. The Houston-based E&P operator had priced $1.45 billion of those notes at 96.313 to yield 12%, back on March 5.

Its existing 8¼% notes due 2018 gained 1¼ points to end at 76½ bid.

Other energy credits firming smartly in active trading included Chesapeake Energy’s 5¾% notes due 2023, which ended up 1 point at 98¼ bid; Linn Energy’s 6¼% notes due 2019, up 2¼ points at 81½ bid; and Whiting Petroleum’s 6¼% notes due 2023, which finished at 102 bid, up 1¼ points. The Denver-based energy company had priced $750 million of the notes at par on March 24.

Indicators stay strong

Statistical indicators of junk market performance, which had strengthened throughout last week, continued that firming trend on Monday, again rising across the board versus their levels from the day before.

The KDP High Yield Daily Index gained 5 basis points on Monday to close at 71.35, its fifth straight advance and its 10th in the last 11 sessions.

The index was not published on Friday due to the early market close for the Good Friday holiday. On Thursday, it had edged up by 1 bp.

Its yield came in by 4 bps on Monday to end at 5.34%, its second consecutive decline. On Thursday, it had gone down by 1 bp.

The Markit Series 24 CDX North American High Yield Index rose by 9/32, finishing at 107 17/32 bid, 107 9/16 offered, after having been little changed over the previous two sessions.

The Merrill Lynch U.S. High Yield Master II Index posted its sixth straight gain on Monday, improving by 0.21%, on top of a 0.058% rise on Thursday. The Index was not published on Friday.

Monday’s rise was its 11th in the last 12 sessions.

The latest gain lifted its year-to-date return to 2.841% from 2.626% on Thursday, although it remained down from its peak 2015 level of 3.125%, which was reached on March 2.

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