Downsized Dell, energy names lead $2.4 billion day; General Motors, ADT megadeals on tap

By Paul Deckelman and Paul A. Harris

New York, Sept. 23 - The high-yield primary pricing machine picked up on Monday right where it left off on Friday as another $2.4 billion in new dollar-denominated, fully junk-rated paper came to market, syndicate sources said. Friday saw $2.9 billion.

The big deal of the day was a downsized $1.5 billion offering of seven-year secured notes from computer giant Dell Inc. via a subsidiary.

That deal priced after having been cut from $3.25 billion and restructured into a one-tranche transaction, with the elimination of a second proposed tranche of secured notes. The difference was added to the term loan that is also helping to finance Dell's nearly $25 billion leveraged buyout by chairman and CEO Michael Dell and Silver Lake Management LLC.

Traders saw the new Dell bonds at slightly below their par issue price in initial aftermarket dealings.

The day also saw a trio of smaller, quickly shopped deals out of the energy arena.

Oil and gas exploration and production company Energy XXI Gulf Coast, Inc. did an upsized $500 million of eight-year notes, while another E&P name, Whiting Petroleum Corp., returned to the junk borrowing window just two weeks after having sold $1.9 billion in a two-part deal, bringing a $400 million add-on to its recently priced 7.5-year notes.

Ultrapetrol (Bahamas) Ltd., a shipping company and operator of oil tankers and vessels that bring supplies to offshore oil rigs, also did more of a smallish add-on to its existing 2021 ship mortgage notes.

Besides the continued heavy pace of actual pricings, market participants heard of a number of other prospective new deals being either announced or simply shopped around without much fanfare.

Among those offerings now on the radar screens are two big deals expected to come to market during Tuesday's session - automotive giant General Motors Co.'s three-part benchmark issue, the actual size of which will be determined, and alarm company ADT Corp.'s upcoming $1 billion eight-year transaction.

Overall market activity was described as relatively quiet with a softer tone. Statistical market performance measures were lower across the board.

Dell downsizes

In an extremely news-heavy Monday session in the primary market, four issuers brought single-tranche deals.

Dell launched and priced a downsized $1.5 billion issue of seven-year first-lien notes (Ba2/BB+) at par to yield 5 5/8%.

The deal was downsized from $2 billion, with proceeds shifted to the term loan.

The yield printed in the middle of the 5½% to 5¾% yield talk.

Joint bookrunner Credit Suisse will bill and deliver. Barclays, BofA Merrill Lynch, RBC and UBS were also joint bookrunners.

As reported, the issuer abandoned a proposed $1.25 billion tranche of second-lien notes, shifting those proceeds to its term loan.

Proceeds will be used to fund the acquisition of the company and refinance debt.

Energy XXI upsizes

Energy XXI Gulf Coast priced an upsized $500 million issue of eight-year senior notes (B3/B+) at par to yield 7½%.

The issue was upsized from $300 million.

The yield printed on top of yield talk.

Citigroup and RBS were the joint physical bookrunners. Wells Fargo, Barclays, Credit Suisse and UBS were the joint bookrunners.

The Hamilton, Bermuda-based oil and natural gas exploration and production company plans to used the proceeds, including the additional funds resulting from the upsizing, to refinance its revolver.

Whiting taps 5¾% notes

Whiting Petroleum priced a $400 million add-on to its 5¾% senior notes due March 15, 2021 (Ba2/BB+) at 101.00 to yield 5.58%.

The reoffer price came at the cheap end of the 101 to 101.25 price talk.

Wells Fargo was the left bookrunner for the quick-to-market add-on. J.P. Morgan and BofA Merrill Lynch were the joint bookrunners.

The independent oil and gas company plans to use the proceeds for general corporate purposes.

Ultrapetrol $25 million add-on

Ultrapetrol priced a $25 million add-on to its 8 7/8% first preferred ship mortgage notes due June 15, 2021 (existing ratings B3/B-) at 104.5 to yield 7 7/8%.

BofA Merrill Lynch and Jefferies were the joint bookrunners for the quick-to-market deal.

The Nassau, Bahamas-based shipping company plans to use the proceeds for general corporate purposes.

GM brings benchmark deal

The Monday session saw a phenomenal build-out of the active new issue calendar.

General Motors set an investor call at 11:30 a.m. ET to discuss its benchmark offering of senior notes (expected ratings Ba1/BB+/BB+) in tranches that mature in five years, 10 years and 30 years.

The notes are expected to be priced on Tuesday.

The five-year notes are guided in the 4% area, according to a market source. The 10-year notes are being guided in the 5¼% area and the 30-year notes are being guided at 6¾% to 7%, the source added.

Joint bookrunner Citigroup will bill and deliver. BofA Merrill Lynch, JP Morgan and Morgan Stanley are also joint bookrunners.

The auto manufacturer plans to use the proceeds for general corporate purposes, including the repurchase of $3 billion of its Series A preferred stock.

ADT $1 billion for Tuesday

ADT plans to price $1 billion of non-callable eight-year senior notes (expected ratings Ba2/BB-) on Tuesday.

Goldman Sachs, Morgan Stanley, Deutsche Bank and Citigroup are the joint bookrunners.

The Boca Raton, Fla.-based provider of security services for homes and businesses plans to use the proceeds to repay revolver debt, repurchase outstanding common stock and for general corporate purposes, including acquisitions.

Titan brings secureds

Titan International plans to price a $400 million offering of seven-year senior secured notes (existing ratings B1/B+) during the latter part of the present week.

A roadshow is set to get under way on Tuesday.

Goldman Sachs and Jefferies LLC are the joint bookrunners.

The Quincy, Ill.-based supplier of wheels, tires, assemblies and undercarriage products for off-highway equipment plans to use the proceeds for general corporate purposes, which may include taking out any remaining 2017 notes and financing potential future acquisitions.

Allegion starts roadshow

Allegion US Holding Co. began a roadshow on Monday for its $300 million offering of eight-year senior notes (expected ratings Ba2/BB+).

Goldman Sachs, JP Morgan, BNP, BofA Merrill Lynch, Citigroup and Credit Suisse are the joint bookrunners.

Proceeds, along with a $1.5 billion credit facility, will be used to pay a special cash distribution to the company prior to the proposed spin-off of its commercial and residential security businesses and for general corporate purposes.

In a change to the planned financing, the company downsized the bond portion to $300 million from $500 million and upsized its term loan by the same amount, to $500 million from $300 million.

Forum Energy eight-year deal

Forum Energy Technologies, Inc. began a roadshow on Monday for its $300 million offering of eight-year senior notes (expected ratings Ba3/BB).

JP Morgan, Wells Fargo, BofA Merrill Lynch, Citigroup and Deutsche Bank are the joint bookrunners for the debt refinancing.

Plastipak starts roadshow

Plastipak Holdings Inc. began a brief roadshow on Monday for its $300 million offering of eight-year senior notes (existing ratings Caa1/B).

JP Morgan, Wells Fargo, RBS, BofA Merrill Lynch and Goldman Sachs are the joint bookrunners.

The Plymouth, Mich.-based manufacturer of plastic packaging containers plans to use the proceeds to fund the tend for its 10 5/8% senior notes due 2019 and for general corporate purposes.

Artesyn seven-year notes

Artesyn Technologies, Inc. began a roadshow on Monday for a $250 million offering of seven-year senior secured notes (/expected B/).

BofA Merrill Lynch and Goldman Sachs are the joint bookrunners.

Proceeds, along with cash equity from Platinum Equity, to fund the acquisition of the majority of the capital stock of Artesyn from Emerson Electric Co.

Clayton Williams roadshow

Clayton Williams Energy, Inc. began a roadshow on Monday for its $250 million offering of seven-year senior notes (existing ratings B3/B-).

RBS Securities, JP Morgan Securities LLC, Mitsubishi UFJ and Wells Fargo Securities Inc. are the joint bookrunners for the debt refinancing deal.

CPG sets yield talk

CPG Merger Sub LLC, which is to be merged with and into CPG International Inc., talked its $315 million offering of eight-year senior notes (Caa2/CCC+) to yield 8% to 8¼%.

Books close at 10 a.m. ET on Tuesday, and pricing is set for midday Tuesday.

J.P. Morgan Securities LLC, Barclays, Deutsche Bank Securities Inc., Citigroup Global Markets Inc., RBS Securities Inc. and UBS Investment Bank are the joint bookrunners.

Abengoa plans 8 7/8% notes

There was also news on Monday from the euro-denominated junk market, although a senior syndicate official in London does not expect a busy week in the primary market.

Spain's Abengoa Finance SAU began a brief roadshow for a €250 million add-on to its non-callable 8 7/8% senior notes due Feb. 5, 2018 (expected ratings B2/B) on Monday.

Joint physical bookrunner Citigroup will bill and deliver. Morgan Stanley is also a joint physical bookrunner.

Proceeds will be used to repay debt.

Medical Properties deal

Medical Properties Trust, Inc. began a roadshow on Monday for its €200 million offering of seven-year senior notes.

Lead left bookrunner BofA Merrill Lynch will bill & deliver. Deutsche Bank and JPMorgan are joint bookrunners.

Proceeds will be used to finance the acquisition of 11 post acute facilities in Germany from RHM Klinik-und Altenheimbetriebe GmbH & Co. KG, and for general corporate purposes.

Dell trades slightly easier

When Dell International's 5 5/8% first-lien senior notes due 2020 were freed for secondary market activity, a trader saw the Round Rock, Texas-based high-tech giant's new paper just a little below their par issue price, quoting it at 99 ¾ bid, 100 1/8 offered.

A second trader saw the bonds in a 99 5/8to 99 7/8 bid context.

Whiting bonds lower

The news that Denver-based oil and natural gas exploration and production operator Whiting Petroleum was doing a sizable add-on to its existing 5¾% notes due 2021 caused those recently issued bonds and the companion tranche of 5% notes due 2019 to retreat, a market source said.

He quoted the 53/4s at 102 3/8 bid going out, down from last week's levels of as high as 104 bid and Friday's close at 103½ bid. However, volume was restrained, with only around $2 million having changed hands in any sizable amount.

The 5% notes lost 7/16 of a point to end at 101 9/16, down from 102 bid earlier in the session and at the close on Friday. Over $5 million of those notes had traded.

Whiting did a quick-to-market $1.9 billion two-part deal on Sept. 9, upsizing it from an original $1.8 billion.

The company priced $1.1 billion of the 5% notes and $800 million of the 5¾% notes both at par. Those tranches initially stayed just a little bit above issue price before rising over the past week to 10 days.

Friday deals firmer

A trader saw Hilton Worldwide Finance LLC/Hilton Worldwide Finance Corp.'s 5 5/8% notes due 2021 having gained slightly in Monday's dealings, pegging the bonds at 100 1/8 bid, 100 3/8 offered.

A second trader located those bonds at 100 1/8 bid, 100½ offered.

Hilton, a McLean, Va.-based hospitality company, cut its roadshow for the deal short and moved the pricing up to Friday. It restructured and downsized its original $3.25 billion two-part deal into a one-tranche, $1.6 billion issue, shifting the rest of the proposed financing to its term loan. The bonds were priced at par.

Another Friday transaction - Boart Longyiear Management Pty. Ltd.'s 10% senior secured notes due 2018 - firmed a bit to 102¼ bid, 103¾ offered, a trader said, after having zoomed 2 points in initial aftermarket dealings.

The South Jordan, Utah-based maker of drilling and mining equipment brought its quickly shopped $300 million deal - also restructured - to market on Friday at par.

Market indicators turn lower

A trader characterized Monday's session as a "kind of quiet day."

Statistical junk market performance indicators turned lower across the board on Monday, after having been mixed over the previous two sessions and higher all around for four consecutive sessions before that.

The Markit Series 20 CDX North American High Yield index fell for a third straight session on Monday, retreating by 3/32 of a point to end at 106 1/8 bid, 106 3/16 offered. That followed the 7/32 of a point downturn on Friday.

The KDP High Yield Daily index slid by 19 basis points to end at 73.99, its first loss after nine consecutive sessions on the upside, including Friday, when it had jumped by 21 bps. Its yield rose by 5 bps on Monday to end at 5.99%, which was its first widening out after having come in for seven straight sessions, including Friday, when the yield declined by 8 bps.

And even the widely followed Merrill Lynch High Yield Master II index, which had been riding an 11-session winning streak that took the index's year-to-date return up to heights not seen since the end of May, had to give up ground on Monday and take a loss. It declined by 0.072%, after having gained 0.012% on Friday.

The loss dropped its year-to-date return to 4.156%, down from 4.231% on Friday.

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