Downsized Eclipse Resources prices to cap $2.9 billion week; new Hologic, Tribune issues busy

By Paul Deckelman

New York, June 19 – The high-yield primary sphere closed out the week on Friday with a single pricing, as Eclipse Resources Corp. priced a downsized $550 million of eight-year notes. Traders said that the oil and gas company’s new bonds firmed modestly from the deeply discounted levels at which they had come to market.

That deal brought the week’s tally of new junk-rated and dollar-denominated paper to $2.9 billion in four tranches, up from the $1.99 billion that had priced in eight tranches the previous week, ended June 12, according to data compiled by Prospect News.

The week’s new deals, in turn, lifted year-to-date issuance to $177.28 billion in 289 tranches, running about 8% ahead of the pace a year ago, when $162.99 billion had priced in 304 tranches by this point on the calendar.

Traders meantime also saw a considerable amount of trading in some of the bonds that priced earlier in the week.

Hologic, Inc. was the busiest bond of the session; the medical products company’s notes eased slightly from the post-pricing levels they had hit on Thursday, but still held most of their gains.

Wednesday’s issue from Tribune Media Co. was also active, adding to the gains that the television broadcaster and digital media company’s new issue had racked up after pricing.

Away from the deals that had already priced, primaryside players saw several prospective issues joining the forward calendar.

Irish pharmaceutical company Endo International plc was heard getting ready to hit the road to market a $1,435,000,000 bond issue, starting on Monday.

They also saw Globo plc, a British provider of enterprise mobility management, mobile solutions and software, shopping a $180 million issue of five-year senior secured notes around to potential investors.

Statistical measures of market performance were mixed after having been higher across the board on Thursday – the third mixed session in the last four trading days.

The indicators were also mixed on the week versus where they had finished out the previous Friday – the first such mixed week after two straight weeks on the downside.

Downsized Eclipse prices

The day’s sole pricing came from Eclipse Resources, which did $550 million of eight-year senior notes (Caa1/CCC+). However, that regularly scheduled forward calendar offering was first downsized from the $650 million that had originally been announced, and when it did price, it did so at a considerable discount to par.

The notes came to market at 97.903, yielding 9¼%, at the wider end of the 9%-to-9¼% price talk.

The Rule 144A/Regulation S with registration rights deal was brought to market by joint bookrunning managers Deutsche Bank Securities Inc., BMO Capital Markets Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., KeyBanc Capital Markets Inc., Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC.

Barclays Capital Inc., Global Hunter Securities LLC, Johnson Rice & Co. LLC and Scotia Capital (USA) Inc. were co-managers on the transaction.

The State College, Pa.-based oil and natural gas exploration and production company said that it expects to garner net proceeds from the offering after expenses of about $525.5 million; it plans to use most of that to finance the redemption of its outstanding $437.3 million of 12% senior unsecured PIK notes due 2018.

The remaining proceeds from the note issue will go to fund the company’s capital spending plan and for general corporate purposes.

Eclipse moves up

A trader saw some aftermarket activity in the new bonds, though on not a lot of volume.

He saw the bonds initially trading in a 97¾-to-98¼ range, which he said later firmed to a 98-to-98¼ bid context – up from the 97.903 level at which the notes had priced.

Calendar builds

Apart from the Eclipse Resources pricing, traders said there wasn’t a lot happening in the high-yield space, although syndicate sources saw several deals join the junk forward calendar.

The sources said that Endo International plans to offer $1,435,000,000 of senior unsecured notes (expected ratings B1/B), with pricing expected next week.

The Dublin-based pharmaceutical company will offer the new paper via its wholly owned subsidiaries, Endo Ltd., Endo Finance LLC and Endo Finco Inc.

The company did not provide any details as to whether the issue would be one or more tranches, nor was there any indication of the maturity or maturities of the planned notes.

The Rule 144A/Regulation S for life transaction will be brought to market via joint bookrunning managers Barclays, which will handle billing and delivery, Deutsche Bank Securities, Credit Suisse (USA) LLC and Citigroup Global Markets.

Bank of America Merrill Lynch, DnB NOR Markets Inc., Morgan Stanley, RBC Capital Markets and SMBC Nikko Securities America, Inc. will be co-managers on the deal.

The notes will be marketed to potential investors via a roadshow process that will begin on Monday (June 22) in New York with a group lunch. There will be conference calls on Tuesday and Wednesday (June 22-23), with pricing expected thereafter. The deal will also be marketed via NetRoadshow.

Endo said that it plans to use the net proceeds from the proposed offering, together with the proceeds of new senior secured credit facilities and cash on hand, to fund the purchase price of its previously announced acquisition of Woodcliff, N.J.-based Par Pharmaceutical Holdings, Inc., as well as for repayments of Par’s debt and certain transaction expenses. Endo intends to use any remaining proceeds for general corporate purposes, including acquisitions and debt repayment.

Another company heard to be shopping a deal around to potential investors was Globo Mobile Inc., which began a roadshow on Friday for a planned $180 million issue of five-year senior secured notes (anticipated ratings B2/B3).

The high-yield syndicate sources said that the marketing campaign began in London and would include a breakfast there on Tuesday as well as a luncheon in New York on Thursday.

The expected bond issue, which would be offered for sale under Rule 144A and Regulation S without registration rights, would be brought to market by sole book-running manager Imperial Capital LLC, with ISM Capital LLP as international co-manager.

Globo, a London-based international provider of enterprise mobility management, mobile solutions and software as a service, said that proceeds from its note offering will primarily be used to fund further acquisitions that support the company’s international expansion strategy in its key growth markets.

It also said that proceeds would be used to repay existing debt and for general corporate purposes.

SS&C bond deal not imminent

One deal that has been sitting on the forward calendar since early in the year is SS&C Technologies Holdings Inc.’s planned $500 million senior unsecured note offering.

But even though the company just priced an equity offering that could raise more than $700 million, and is getting set to launch a proposed $2.63 billion bank debt deal this upcoming week, the third leg of its financing triad – the bond deal – will apparently just have to wait.

A high-yield primary market source said Friday that even though the other phases of the company’s financing effort for its pending acquisition of Advent Software Inc. are now coming along, timing on the planned bond deal is still “a couple of weeks out.”

SS&C, a Windsor, Conn.-based provider of financial services software and software-enabled services, disclosed its financing plans in February, when it announced that it would acquire San Francisco-based Advent, a provider of software and services for the investment management industry, for some $2.7 billion in cash, equating to $44.25 per share plus the assumption of Advent’s debt. It plans to also refinance its own existing debt.

The financing plans include the issuance of $500 million of notes, the exact tenor of which has yet to be determined, backed by a commitment for a senior unsecured bridge loan. Morgan Stanley Senior Funding Inc. is to be the left lead bookrunner on the bond deal, with Deutsche Bank Securities also serving as a bookrunner.

Other funding for the Advent deal would come from cash on hand, proceeds raised through the equity transaction and the $2.63 billion senior secured credit facility.

Hologic heads actives

For a second straight session, Hologic’s new 5¼% notes due 2022 were among the volume leaders on Friday.

A trader said that at his shop, “we traded a bunch” of the new notes, mostly in a 101-to-101¼ bid.

A trader at another desk saw over $66 million of the notes trade – but he pegged them down ¼ point at 101 bid, 101¼ off.

The Bedford, Mass.-based developer, manufacturer and supplier of premium diagnostic products, medical imaging systems and surgical products priced a quick-to-market $1 billion of the notes on Thursday at par, and they quickly moved up to around the 101 bid.

Tribune trades higher

The week’s other megadeal – Chicago-based broadcaster and digital media company Tribune Media Corp.’s 5 7/8% notes due 2022 – were seen by a market source having firmed to 101½ bid, a gain of ½ point.

More than $25 million of the notes changed hands.

It had priced $1.1 billion of the notes at par on Wednesday; the new bonds firmed smartly when they hit the aftermarket, and they haven’t looked back.

Indicators turn mixed

Statistical indicators of junk market performance turned mixed on Friday after having been better across the board on Thursday. It was the third mixed session in the last four trading days.

The bonds also ended up mixed versus where their indicators had finished out the previous Friday – the first such mixed week after two consecutive lower weeks before that.

The KDP High Yield Daily index jumped by 12 basis points on Friday to end at 70.71, its third consecutive gain. The index had risen by 4 bps on Thursday and by 5 bps on Monday – its first gain after three consecutive losses.

Its yield came in by 4 bps, ending at 5.62%. It was the third straight narrowing, on top of yield declines of 2 bps on Thursday and1 bp on Wednesday.

However, those levels compared unfavorably with the 70.75 index reading and 5.61% yield seen at the close last Friday, June 12.

The Markit Series 24 CDX North American High Yield index was down by 1/32 point on Friday, to 105 31/32 bid, 106 offered, in contrast with Thursday’s gain of 11/32.

It was down on the week from the previous Friday’s 106 5/32 bid, 106 3/15 offered.

The Merrill Lynch North American Master II High Yield index, though, improved by 0.153% Friday, on top of a 0.102% rise on Thursday.

© 2015 Prospect News.
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