Restructured Samson, upsized Ineos mega-deals close out $15 billion week, busiest in months

By Paul Deckelman and Paul A. Harris

New York, Feb. 3 - Samson Investment Co. came to market on Friday with a $2.25 billion offering of eight-year notes, after the originally planned two-tranche deal was restructured and some of the covenants changed. The privately-held energy operator's new bonds priced too late in the day for aftermarket trading.

Earlier in the session, British chemical manufacturer Ineos Group Ltd. priced a $1.65 billion equivalent two-part offering through a financing subsidiary, a transaction that consisted of dollar- and euro-denominated seven-year secured notes. That deal - nearly doubled in size from what was originally planned - firmed smartly when its bonds reached the aftermarket.

There was also a pricing of $200 million of 10-year notes from healthcare-oriented real estate investment trust Medical Properties Trust, Inc. That quickly shopped, smallish deal was not seen immediately trading around.

The nearly $3.5 billion of new paper put the cap on the busiest week so far in 2012, with over $15 billion priced. In fact, it was not only the busiest week this year, but the most active of any junk week since last May.

From Europe came word that French telecommunications operator Orange Switzerland had priced a big three-part deal denominated in Swiss francs and euros.

Back on the domestic scene, traders saw strong secondary levels in several of the deals which had come to market on Thursday, including Limited Brands, Inc., ServiceMaster Co. and German automotive components maker Schaeffler Finance BV. There was also a fair amount of activity -much of it not from junk players - in Thursday's big new two-part deal from CIT Group Inc.

Traders said Friday's secondary market was firm - but most of the activity was new deal-centric.

Statistical indicators of junk market performance were up for both the session and for the week as a whole.

$15 billion week

The Friday session saw $3.45 billion of dollar-denominated issuance in three tranches.

That brought the curtain down on a gargantuan week which saw $15.37 billion in 24 junk-rated dollar-denominated tranches, the biggest week in the primary market since the week of May 16, 2011 which saw $16.24 billion in 29 tranches.

Counting deals in all currencies, the week's total issuance was the biggest ever, according to one syndicate source. Prospect News data supports that conclusion, the $20.36 billion equivalent (excluding emerging markets) far surpassing the previous record of $15.72 billion in the week of May 8, 2011.

On Friday, Samson Investment priced a restructured $2.25 billion issue of eight-year senior notes (B1/B) at par to yield 9¾%.

The yield printed 12.5 basis points beyond the wide end of price talk set in the 9½% area.

A proposed tranche of 10-year notes was withdrawn, with all of the proceeds shifted into the eight-year notes tranche.

J.P. Morgan, which will bill and deliver, was a joint bookrunner. Bank of America Merrill Lynch, Wells Fargo, BMO, Barclays, Citigroup, Credit Suisse, Mizuho, RBC and Jefferies were the joint bookrunners.

Proceeds will be used to repay an outstanding bridge loan related to the acquisition of the company by Kohlberg Kravis Roberts & Co. LP, Natural Gas Partners, Crestview Partners and Itochu Corp.

Plummeting natural gas prices caused the deal to face headwinds and pushed price talk higher, according to sources on both the buyside and sellside.

Ineos massively upsized

Ineos Finance plc priced a massively upsized $1.65 billion equivalent of seven-year senior secured notes (Ba3/B) in two tranches.

The deal included a €500 million tranche of floating-rate notes which were priced at par to yield three-month Euribor plus 600 basis points with a 1.25% Euribor floor.

The yield printed on top of price talk which was revised downward from original spread talk of 600 to 625 bps.

The trance was originally sized at €250 million minimum.

Joint bookrunner Barclays will bill and deliver. J.P. Morgan, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Lloyds, Morgan Stanley and UBS were joint bookrunners.

In addition Ineos priced $1 billion of fixed-rate notes at par to yield 8 3/8%.

The yield printed on top of price talk which was downwardly revised from earlier talk of 8½% to 8¾%.

Joint bookrunner J.P. Morgan will bill and deliver for the fixed-rate tranche. Barclays, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Lloyds, Morgan Stanley and UBS were joint bookrunners.

The combined two-tranche deal was upsized from $850 million equivalent.

The deal was increased in part because the order book for the dollar-denominated tranche stood at $1.5 billion early Thursday, according to a trader from a high-yield mutual fund based in the United States.

Orange Switzerland upsized

Orange Switzerland priced an upsized, restructured CHF 900 million equivalent of notes in three tranches.

Matterhorn Mobile SA priced an upsized CHF 450 million of senior secured notes due May 15, 2019 (Ba3/BB-) at par to yield 6¾%.

The yield printed on top of price talk that was downwardly revised from earlier talk of 7% to 7¼%. The tranche was upsized from CHF 325 million.

Matterhorn Mobile Holdings SA priced a €225 million tranche of eight-year senior unsecured notes (B3/B-) at par to yield 8¼%.

The yield printed on top of price talk which was downwardly revised from previous talk of 8½% to 8¾%. The sizing of the tranche represented a CHF 50 million increase from the original CHF 225 equivalent size.

In a tranche added late in the marketing of the deal, Matterhorn Mobile priced a €150 million tranche of three-month Euribor plus 525 bps senior secured floating-rate notes (Ba3/BB-) at 99.

The tranche priced on top of price talk which had been downwardly revised from Euribor plus 525 to 550 basis points.

Global coordinator and joint bookrunner Credit Suisse will bill and deliver. Deutsche Bank was also a global coordinator and joint bookrunner.

Citigroup, JPMorgan, Morgan Stanley and UBS were also joint bookrunners.

Proceeds will be used to help fund the €1.6 billion leveraged buyout of Orange Switzerland by Apax Partners from France Telecom and to repay bank debt.

The total deal size was increased from CHF 550 million equivalent.

The addition of the euro tranche, as well as the sizing of the euro tranches in Thursday's deal from Schaeffler Finance BV reflected a recently intensified appetite for euro-denominated junk bonds, according to a senior debt capital markets banker who spoke by telephone on Friday.

Schaeffler's €2.04 billion equivalent deal featured two euro-denominated tranches.

An €800 million issue of non-callable 7¾% five-year notes priced at 98.981 to yield 8%.

The tranche amount grew €50 million beyond the marketed range of €500 million to €750 million.

The deal also featured a €400 million issue of seven-year notes which priced at par to yield 8¾%. The tranche size came within the marketed range of €250 million to €500 million.

Medical Properties drives by

Medical Properties Trust priced a $200 million of 10-year senior notes (Ba2/BB) at par to yield 6 3/8%, on top of price talk.

J.P. Morgan, Bank of America Merrill Lynch, Deutsche Bank and RBC were the joint bookrunners.

The Birmingham, Ala.-based healthcare real estate investment trust plans to use the proceeds, together with proceeds from other financing arrangements, to fund the company's anticipated acquisition of Ernest Health, Inc. and related transactions, and for general corporate purposes, including debt repayment and funding future acquisitions and investments.

Securitas starts roadshow

Sweden's Securitas Direct began a roadshow on Friday in Europe for a €600 million offering of series A senior secured notes due September 2018.

The European roadshow wraps up on Tuesday.

A Feb. 8-10 roadshow is scheduled to take place in the United States.

Global coordinator and joint bookrunner Morgan Stanley will bill and deliver. Goldman Sachs International is also a global coordinator and joint bookrunner. Bank of America Merrill Lynch, HSBC, Nomura and Nordea are also joint bookrunners.

The issuing entity will be special purpose vehicle Verisure Holding AB.

Proceeds will be used to refinance debt used to acquire Securitas Direct by Bain Capital and Hellman & Friedman from EQT.

In addition to Securitas, the forward calendar features two other deals on the road and set to price during the Feb. 6 week.

Endeavour International Corp. is roadshowing a $500 million eight-year senior notes deal (expected ratings Caa1/CCC) via Citigroup.

And M&G Finance Corp. is in the market with a $500 million offering of seven-year senior secured notes (expected B3//BB) via J.P. Morgan.

However because high-yield investors have big piles of cash to put to work, look for new issue activity to ramp right back up on Monday, sources in Europe and the United States advised on Friday.

New deals rule the roost

A secondary market trader said that junk had a mostly firm tone to it, as winning issues far outnumbered losers.

However, he added that "it was predominantly a new deal focus."

A second trader agreed that Friday's market was "pretty much new deal-centric."

A trader said that the new Ineos dollar bonds "traded very well," quoting the $1 billion seven-year secured issue as having zoomed to 103¼ bid, 103½ offered, well up from their par issue price."

"Ineos got out of the box really hot," a second trader said, also seeing the mega-deal trade above the 103 bid mark

A third pegged the bonds at 103¼ bid, 103 5/8 offered.

Neither Samson Investment's $2.25 billion of new eight-year notes nor Medical Properties Trust's $200 million 10-year drive-by deal came to market in time to beat the usual Friday afternoon rush for the exits.

Thursday late deals gain

Among the deals which were in that position on Thursday, traders saw good upside activity in both ServiceMaster and in Limited Brands' new paper.

A trader said that Memphis-based lawn care and pest-control provider ServiceMaster's 8% notes due 2020 "traded after the employment number and moved up," referring to the January jobless rate's fall to 8.3% with the addition of 243,000 jobs, numbers which gave risk markets like equities and junk a boost.

He saw the $500 million bond issue - upsized from the originally planned $400 million - get as good as 102½ bid, 102¾ offered versus the par issue price for the notes, "so they did well."

"Yeah, ServiceMaster traded very well," a second trader agreed, seeing the debt go up to 102¾ bid, 103 offered.

The other deal that came in too late in the day Thursday for any real aftermarket at that time, Limited Brands' 5 5/8% notes due 2022, had pushed up to 102 bid, 102½ offered, after having priced at par.

The Columbus, Ohio-based operator of the famed Victoria's Secret women's apparel stores and several other chains, had upsized its same-day drive-by deal from an originally announced $750 million to its final $1 billion size, meanwhile jettisoning a planned 12-year tranche to make the transaction an all-10-year, one-part affair.

A second trader, meanwhile, quoted the bonds at 102¼ bid, 102¾ offered.

"I didn't pay too much attention to Limited," he said, declaring that "it's kind of almost in high-grade land, with a 5 5/8% coupon," considered relatively small by the usual standards of the junk bond market.

He said there was "a lot of, lot of trades in that issue," with at least a good portion of that thought to be attributable to high-grade investors reaching down into the higher end of the junk precincts - Limited has a BB+ rating - to pick up some yield as a crossover play.

CIT trades up

The second trader saw pretty much the same thing happening with CIT Group's $3.25 billion two-part offer, both halves of which priced at par on Thursday and traded up marginally.

On Friday, he saw the New York-based commercial lender and bank operator's two tranches having reached the 101 bid level, although he said: "I'd assume it was mostly high-grade guys" due to the relative paucity of the coupons. On Thursday, the company had priced a quickly shopped $1.5 billion of 4¾% notes due 2015, as well as a $1.75 billion tranche of 5½% notes due 2019.

Both pieces of the deal are series C second-priority senior secured notes, and after pricing at par Thursday, they were both heard to have firmed a little to 100¼ bid, 100 3/8 offered.

Schaeffler stays strong

The big star of Thursday's secondary market - the two tranches of dollar-denominated bonds issued by Schaeffler Finance BV, the funding unit for the eponymous German automotive systems manufacturer - continued to show strength Friday, traders said.

"Schaeffler traded up some more," a trader said, "just continuing to move up."

He saw its $500 million of 8½% senior secured notes due 2019 having risen to 104¾ bid, 105 offered.

The bonds had priced at par on Thursday, and then had jumped to the 104 bid level after they were freed to trade.

He did not see the other half of the deal - the $600 million of 7¾% senior secured notes due 2017.

Those bonds had priced at 98.981 on Thursday to yield 8%, and then had pushed up to around the 103 bid level.

Indicators up on day, week

Away from the new deals, statistical measures of junk market performance were strong for a second consecutive session on Friday, and were better on the week as a whole as well.

A trader saw the CDX North American Series 17 High Yield index jump by nearly 1 whole point on Friday - 15/16, to be exact - to end at 98 5/16 bid, 98 7/16 offered, after it gained 5/16 point on Thursday. It was also up from the 97 7/16 bid, 97 11/16 offered level at which it had closed out the previous week, on Friday Jan. 27.

The KDP High Yield Daily Index gained 20 basis points on Friday to finish at 74.13, after having closed about unchanged on Thursday. Its yield came in by 9 bps to 6.70%, after having declined by 1 bp on Thursday.

Those levels compare with an index reading of 73.80 and a yield of 6.86% a week earlier.

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