Angus, Speedway price; busy Friday seen; United Rentals active post-numbers; funds lose $241 million

By Paul Deckelman and Paul A. Harris

New York, Jan. 22 – The high-yield primary arena continued the relatively relaxed pricing pace it has seen since Tuesday’s better than $2 billion-plus session.

Syndicate sources said that new issuance totaled $425 million in two tranches, although that did top the $275 million of new dollar-denominated, fully junk-rated paper that came to market on Wednesday in one tranche.

They said that Angus Chemical Co. priced a $225 million eight-year issue via a special-purpose subsidiary as a regularly scheduled forward-calendar transaction, part of the financing for the manufacturer’s pending buyout.

Race-car track operator Speedway Motorsports Inc. drove by with a $200 million offering of eight-year paper.

The deals priced fairly late in the day, and traders said they saw no aftermarket action in the two credits.

That set the stage for what promises to be a busy Friday, with dollar-denominated offerings expected to price from Platform Specialty Products Corp., TerraForm Power Operating, LLC and Presidio Holdings, Inc.

A euro-denominated issue from Techniplas BV is also expected to come to market.

Away from the new deals, there was brisk trading at moderately higher levels in United Rentals Inc.’s bonds after the equipment renting and leasing company reported better fourth-quarter numbers.

Statistical indicators of junk market performance were better across the board for a second consecutive session on Thursday, after having been mixed for four straight sessions before that.

However, another market measure – high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – posted a $241 million net outflow in the latest reporting week, resuming a recently negative trend in that gauge that had been briefly interrupted by last week’s nearly $880 million inflow.

Angus at the tight end

Two issuers, both coming with single-tranche deals, raised a total of $425 million in Thursday's primary market.

One of the two issuers drove through, while the other came at the conclusion of a roadshow.

A tendency toward tight pricing deals, seen since the beginning of the week, continued on Thursday as both deals yielded at the tight end of talk.

Angus Chemical priced a $225 million issue of eight-year senior notes (Caa1/B) at par to yield 8¾%, at the tight end of the 8¾% to 9% yield talk.

Morgan Stanley, J.P. Morgan and Deutsche Bank were the joint bookrunners for the buyout deal.

Speedway Motorsports drive-by

In quick-to-market action, Speedway Motorsports priced a $200 million issue of eight-year senior notes (Ba2/BB+) at par to yield 5 1/8%.

The yield printed at the tight end of yield talk in the 5¼% area.

BofA Merrill Lynch was the left bookrunner. J.P. Morgan, SunTrust and Wells Fargo were the joint bookrunners for the debt refinancing deal.

Talking the deals

The Friday session will get under way with three dollar-denominated deals and one euro-denominated offering expected to price prior to the weekend.

Talks on three of the four surfaced on Friday.

Platform Specialty Products revised the structure of its planned $920 million-equivalent dual-currency offering of senior notes (B2/BB-/) and also set price talk on Thursday.

The company continues to target tranche sizes of $500 million and €350 million.

The dollar-denominated notes will come with a seven-year maturity, callable after three years at par plus 50% of the coupon, and are talked to yield 6½% to 6¾%.

The euro-denominated notes will come with an eight-year maturity, callable after three years at par plus 75% of the coupon, and are talked to yield 6% to 6¼%.

Prior to revision the deal was announced with two seven-year non-call-three tranches.

Credit Suisse, Barclays, Nomura and UBS are the joint bookrunners.

TerraForm Power talked its $800 million offering of eight-year senior notes (B1/BB-) to yield 6% to 6¼%.

Joint bookrunner Barclays will bill and deliver. BofA Merrill Lynch, Morgan Stanley, Goldman Sachs, Citigroup and Macquarie are also joint bookrunners.

Wisconsin-based Techniplas talked its €135 million offering of five-year senior secured notes (B3/B) with 9¼% to 9½% coupon and a 9¾% to 10% all-in yield.

The final talk comes wide to earlier guidance that had the all-in yield coming in the low to mid 9s.

Physical bookrunner Barclays will bill and deliver. IKB is also a physical bookrunner, and SEB is a bookrunner.

In addition to those, Presidio is expected to price its $400 million offering of eight-year senior notes (Caa1/CCC+) before Friday's close.

On Wednesday, the deal was talked to yield 10¾% to 11%.

Joint bookrunner Barclays will bill and deliver. Credit Suisse, Citigroup, Goldman Sachs and RBC are also joint bookrunners.

Norske Skog roadshow

Norway-based Norske Skog AS disclosed plans to start a roadshow on Monday in the United States for its €250 million offering of senior secured notes due December 2019 (/CCC/).

A European roadshow is scheduled to get underway on Tuesday.

Goldman Sachs and Citigroup are the joint global coordinators.

The newsprint and magazine paper producer plans to use the proceeds to facilitate a debt exchange for all of its existing bonds, which would extend maturities of all but its bonds due in 2033.

Koppers postpones

Finally Koppers Inc., a wholly owned subsidiary of Koppers Holdings Inc., announced in a Thursday press release that it postponed its $400 million senior notes offer “due to perceived unfavorable market conditions.”

At the same time, Koppers said it has terminated its previously announced tender offer for all of its outstanding 7 7/8% senior notes due 2019.

New issues unseen

Traders said that they did not see any initial aftermarket activity Thursday’s two new issues – Angus Chemical’s 8¾% senior notes due 2023 and Speedway Motorsports’ 5 1/8% notes due 2023 – due to the relative lateness of the hour that the deals priced.

The Angus notes are being issued via Aruba Investments Inc., the special-purpose financing vehicle for the acquisition of the Buffalo Grove, Ill.-based chemical manufacturer by Golden Gate Capital from Dow Chemical Co.

While the new Speedway Motorsports’ bonds were not immediately seen in the aftermarket, a market source saw the Concord, N.H.-based race-car track operator’s existing 6¾% notes due 2019 up 5/8 of a point from recent levels, finishing at 103¾ bid. Volume was over $2 million.

Endo better, Nexstar steady

Among other deals that have come to market so far this week, a trader said that Endo International plc’s new 6% notes due 2025 “were a little better on the day,” moving around between 101 and 101¼ bid.

A second market source saw the Dublin, Ireland-based specialty pharmaceuticals and medical devices maker’s new issue up ¼ of a point on the session, at 101 1/8 bid. Volume was over $18 million – substantial enough to land Endo on the high-yield most-actives list, but still well down from the more than $150 million of the new notes seen trading on Wednesday, when the bonds were freed for secondary market dealings.

Endo had priced its quickly shopped $1.2 billion deal at par on Tuesday via its Endo Ltd., Endo Finance LLC and Endo Finco Inc. subsidiaries, after the offering was upsized from $1 billion originally.

When the bonds began trading Wednesday, they had moved up to around the 101 bid area by the end of the day.

Nexstar Broadcasting Group Inc.’s new 6 1/8% notes due 2022 were trading in a 100 to 100½ context on Thursday, a trader said, while a second trader pegged the Irving, Texas-based diversified media company’s new deal at 100½ bid, 100 5/8 offered.

That was about where those notes had traded on Wednesday after the company priced its $275 million quick-to-market issue at par via its Nexstar Broadcasting, Inc. subsidiary. That deal was upsized from an originally announced $250 million.

Meanwhile, Zayo Group Holdings Inc.’s 6% notes due 2023 continued to struggle.

A trader quoted them at 99 bid, 99½ offered, around the sub-par levels where the notes had been trading on both Tuesday immediately after their pricing and again on Wednesday. That was down from the par issue price at which the Boulder, Colo.-based provider of fiber-based bandwidth infrastructure had priced its quickly shopped $700 million deal via its Zayo Group, LLC and Zayo Capital Inc. subsidiaries.

United Rentals gains

Away from the new deals, a trader said that “there were some earnings stories out there,” notably United Rentals, whose bonds were active at higher levels after the Greenwich Conn.-based construction and heavy equipment rental and leasing company reported better fourth-quarter numbers.

“Some parts of the [capital] structure saw decent volume,” he said.

He saw the company’s 7 5/8% notes due 2022 around 110 to-110½ bid, while tje 5¾% notes due 2024 were around 102½ bid, both on about $16 million of turnover, putting them among the day’s more active credits.

A second trader called the 5¾% notes up ¼ of a point at 102½ bid, while seeing the 7 5/8s up ¾ of a point on the day at 110½.

The notes firmed following the company’s earnings report late Wednesday.

The company posted adjusted earnings of $2.19 per share for the quarter, up from $1.59 per share in the year-ago period. Wall Street had been expecting about $2.06 to $2.07 per share. It also topped estimates of revenue in the $1.5 billion to $1.52 billion range as revenues rose to $1.56 billion from $1.34 billion a year ago.

Market indicators better again

Statistical indicators of junk market performance were higher across the board for a second consecutive session on Thursday. They had turned higher on Wednesday, after having been mixed for the previous four consecutive sessions.

The KDP High Yield Daily index moved up by 7 basis points Thursday to close at 70.77, its second straight gain and fourth such gain in the last five sessions. It had also risen by 10 bps on Wednesday, following a 7 bps loss on Tuesday.

The yield came in by 5 bps to 5.59%, after having atypically risen by 1 bp on Wednesday, despite the higher index reading.

The Markit Series 23 CDX North American High Yield index saw its second straight gain after two straight losses, advancing by 17/32 to finish at 106 bid, 106 1/32 offered. On Wednesday, it had been up by 11/32 point.

And the Merrill Lynch U.S. High Yield Master II index gained 0.178% on Thursday, its fourth successive rise. It had also improved by 0.006% on Wednesday.

The latest gain lifted its year-to-date return to 0.203% from 0.025% on Wednesday.

The Finra/Bloomberg High Yield Bond index volume rose to $4.262 billion, up from $4.23 billion on Wednesday.

Funds lose $241 million

But high-yield mutual funds and exchange-traded funds posted a $241.3 million net outflow in the latest reporting week, market sources said on Thursday.

The resumed a recently negative trend in that market measure that had been briefly interrupted last week, when the funds had gained $879.5 million, snapping a six-week losing streak dating back to early December.

Outflows have now been seen in two weeks of the new year, versus the one week of inflows.

The new outflow raised the funds’ year-to-date net outflow total for the nascent year to $284 million from $42.69 million the week before.

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