Dole prices to round out $6 billion week, trades up; recent deals firm; market mostly better

By Paul Deckelman and Paul A. Harris

New York, Oct. 25 - Dole Food Co. Inc. came to market on Friday with an upsized $300 million offering of 5.5-year notes, high-yield syndicate sources said. Traders said the fruit and vegetable importer and processor's new bonds firmed when they hit the aftermarket.

That Dole deal was the sole U.S. dollar-denominated, fully junk-rated pricing from a domestic or industrialized-country borrower during the session. It finished off a week of moderately busy primary market action which saw some $6.03 billion of new paper pricing in 14 tranches, according to data compiled by Prospect News. That was up from the $4.20 billion that got done in eight tranches during the Columbus Day holiday-shortened previous week, ended Oct. 18.

The week's deals, in turn lifted total year-to-date issuance to $272.09 billion in 586 tranches, according to the data. That remained slightly ahead of the pace seen a year ago - which turned out to be a record year for new issuance. Some $270.53 million of new junk paper had priced in 560 tranches by this point on the calendar in 2012, according to the data.

Traders saw recent deals mostly continuing to hold their gains, including Thursday's new issues from Sally Beauty Holdings, Inc. and Antero Resources Corp.

Away from the new deals, traders saw generally firm market, underpinned by continuous cash inflows seen over the last few weeks, including the mammoth $2 billion weekly injection reported on Thursday.

However, here and there, names struggled including Energy Future Holding Co. and Linn Energy LLC.

Statistical measures of market performance turned higher on the session, after having been mixed over the prior two sessions. Although higher on Friday, the benchmarks were mixed on the week, after having been higher across the board the previous two weeks.

Dole at tight end

Friday saw a muted session in the primary market. Just one deal priced.

The thin new issue calendar has moved attention to the secondary market, where even recent issues that were languishing two weeks ago against the backdrop of a possible U.S. sovereign default - notably issues from General Motors and Dell - have come roaring back toward their new issue prices, and in some cases beyond, a trader said.

In the Friday primary market, Dole Food priced the only dollar-denominated deal, an upsized $300 million issue of 5.5-year senior secured notes (Caa1/CCC+) that came at par to yield 7¼%.

The offering was increased from $275 million.

The yield printed at the tight end of the 7¼% to 7½% yield talk.

Deutsche Bank, BofA Merrill Lynch and Scotia were the joint bookrunners.

Proceeds will be used to help fund the purchase of the company by chairman and chief executive officer David H. Murdock. Additional proceeds resulting from the upsizing will be used to put cash on the company's balance sheet.

RCS & RDS prices €450 million

In a deal that attracted a high yield audience in addition to its expected following among emerging markets investors, Romania-based telecom RCS & RDS SA priced an upsized €450 million issue of 7½% seven-year notes (B1) at par to yield 7½%.

The debt refinancing deal was increased from €350 million.

The yield printed at the tight end of the 7½% to 7¾% yield talk.

Erste, JPMorgan, SG and UniCredit were the joint bookrunners.

NH Hoteles roadshows

Madrid-based NH Hoteles SA has a roadshow underway for a €225 million offering of six-year senior secured notes.

JPMorgan, Deutshe Bank, Banka, BBVA and Santander are managing the debt refinancing deal.

Indeed, as the October-November crossover week gets underway it will initially be an all-Europe show in the primary market.

London-based Tullow Oil plc has the only dollar-denominated deal on the active calendar.

The company was scheduled to begin a roadshow in London on Friday for a $500 million offering of seven-year senior notes (expected B1//).

A roadshow is set to get underway in the United States during the week ahead.

JP Morgan and Deutsche Bank the global coordinators for the debt refinancing deal. BNP, BofA Merrill Lynch, Barclays, Credit Agricole and Standard Chartered are the joint bookrunners.

Dole does well

In the secondary realm, a trader said that Friday was "a firm but quiet market. All the new issues did pretty well."

He saw the day's only deal - the Dole Food 7¼% senior secured notes due 2019 - trading at around 101 1/8 bid, up from the par level at which the Westlake Village, Calif.-based fruit and vegetable importer and processor's upsized deal priced off the forward calendar.

A second trader saw two-sided markets in the credit at 101 bid, 102 offered, while at another desk, the bonds were being quoted at 101 bid, 101½ offered.

Yet another trader pegged the bonds at 101, but said that he "didn't see that much trading in it."

Thursday deals hold their own

Among the offerings which came to market on Thursday, a trader said that Antero Resources' 5 3/8% notes due 2021 "were a little better, in that 101¼ to 101½ [bid] range."

A second trader said that was around where the Denver-based oil and natural gas exploration and production company's $1 billion drive-by deal had gone home on Thursday, when it had priced at par after being radically upsized from an originally announced $500 million.

A trader saw the Sally Beauty Holdings 5½% notes due 2023 at 101 3/8 bid.

A second trader, who also saw those notes around that level, approximating a yield of 5.29%, opined that the new deal "was pretty active, there was a lot of turnover in that."

A market source at another desk said that the Denton, Texas-based beauty-care products retailer and wholesale distributor's quickly-shopped $200 million deal - brought to market via the company's Sally Holdings LLC and Sally Capital entities - was one of the most actively traded issues in Junkbondland on Friday, seeing over $25 million of the notes having changed hands. He pegged the bonds up ¼ point on the session, at 101 3/8 bid.

Another shop had those bonds at 101¼ bid, 101¾ offered, calling it a 3/8 point gain on the day.

Sally priced the notes at par, and they had been seen late Thursday having gotten as good as 100 7/8 bid, 101 3/8 offered in initial aftermarket dealings.

Exopack Holding Corp.'s 7 7/8% notes due 2019 were also busy.

"We traded a lot of it in the secondary market. We traded bonds as small as $500 [thousand] and as many as $5 million, in and out of accounts."

A second trader located the notes at 100½ bid, 101 offered, although he called that down ¾ point from the heady levels around 101¼ bid where the Chicago-based plastic packaging products maker's deal had traded late Thursday, after the $325 million transaction had priced at par earlier in the session.

There were no fresh dealings seen Friday in Thursday's other two deals, from Blackboard, Inc. and Jack Cooper Transport Co. Inc.

Blackboard, a Washington, D.C.-based company that provides software and services to the education industry, priced $365 million of 7¾% notes due 2019 at par, off the forward calendar. The bonds were quoted going home late Thursday at 101 bid.

Jack Cooper, a Kansas City, Mo.-based vehicle transport company, priced $150 million 9¼% senior secured notes due 2020 as a quick-to-market add-on to its existing notes.

The company's Jack Cooper Finance Co. unit priced the notes at 105.25 to yield 8.059%. There was no aftermarket trading seen in the credit.

Energy Future trades actively

Away from the new deals, a market source said that Energy Future Intermediate Holding Co. LLC's 10% notes due 2020 were among the busiest high yield credits, with over $16 million having changed hands. He pegged the issue down 2 points on the day at 104 bid.

The Dallas-based electric utility operator and merchant power generator - the old TXU Corp. - is believed to be working on a bankruptcy filing, given a hefty Nov. 1 interest payment that it would rather not pay at this time. Negotiations with creditors and senior lenders have been ongoing, but there has yet to be any sort of deal.

A second trader also placed the issue at 104, which he said was "a little lower."

Linn moves lower

Elsewhere, Linn Energy's 7¾% notes due 2021 slid nearly 1¾ points in early dealings on relatively busy round-lot volume of over $7 million, to just under the 102 bid level.

However, after that downside flurry in the morning there was no further activity in the issue, a trader said.

The Houston-based oil and natural gas exploration and production company's Nasdaq-traded shares meantime finished down $1.29, or 4.59%, at $26.84. Volume of 4.1 million shares was over twice the norm.

A trader said that Berry Petroleum Co. said late Thursday in a regulatory filing that its pending $2.12 billion takeover by Linn Energy parent LinnCo LLC - the subject of an inquiry by the Securities and Exchange Commission - won't be completed by the originally expected Oct. 31.

And Denver-based Berry also said in the filing that after that point "either party can walk away from the transaction.

"There can be no assurances as to whether the parties will agree to extend the end date or that the parties will refrain from exercising their rights to terminate the merger agreement," Berry said.

There was no immediate response from Linn.

A trader speculated that "people may have over-reacted" to the language contained in Berry's filing, much of which was standard boilerplate warnings that there could be no assurances that a transaction would be completed.

Market signs turn better

Statistical junk-market performance indicators were higher on Friday, after having been mixed the previous two sessions.

They were mixed on the week, however, after two straight weeks of having been on the upside across the board.

The Markit Series 21 CDX North American High Yield Index rose by 3/32 point on Friday to end at 106 29/32 bid, 106 31/32 offered, after having shown losses the previous two sessions, including Thursday, when it eased by 1/16 point.

But the index was down slightly from the 107 bid, 107 1/16 offered level at which it had ended the previous week on Friday, Oct. 18.

The KDP High Yield Daily Index posted its 11th consecutive gain on Friday, edging up 1 basis point to end at 74.49, after having jumped by 18 bps on Thursday.

Its yield was unchanged at 5.69%, after having declined for the previous 10 sessions, including Thursday, when it came in by 4 bps.

Those levels compared favorably to the 74.11 index reading and the 5.83% yield seen the previous Friday.

And the widely followed Merrill Lynch High Yield Master II Index made it a full one dozen sessions in a row on the upside on Friday as it rose by 0.53%, on top of Thursday's 0.106% gain.

The latest gain lifted its year-to-date return to 6.073%, its fourth straight new high point for 2013 so far. On Thursday, it had firmed to 6.05%, the previous peak level for 2013.Thursday's year-to-date return marked the first time that indicator has been above the psychologically significant 6% marker this year; the index had ended 2012 showing a gain for the year of 15.583%.

The index gained 0.53% for the week, its fourth straight weekly improvement.

It had risen by 0.91% the week before, to end with a year-to-date reading of 5.514%.

Stephanie N. Rotondo contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.