Upsized Audatex add-on sole dollar pricing in quiet market; Baytex, JBS, Precision deals on tap

By Paul Deckelman and Paul A. Harris

New York, May 28 - The high-yield primary market was mostly quiet for a second consecutive post-Memorial Day session on Wednesday; just one fully junk-rated, dollar-denominated issue was heard to have priced during the session, and that one was just a small, though upsized and quickly shopped, add-on from Audatex North America, Inc. to its existing 2021 bonds.

That deal from the Westlake, Texas-based provider of software and services to the automobile insurance claims processing industry was quoted around its issue price late in the day.

The day's only two other pricings in Junkbondland were euro-denominated offerings from Salt Lake City-based chemical manufacturer Huntsman Corp. via a subsidiary - a relatively rare euro-market borrowing by a U.S.-based issuer - and from Irish packaging maker Smurfit Kappa Group plc.

But if Wednesday's new-deal scene was sedate, Thursday's promises to be lively, with pricings expected from oil and gas operator Baytex Energy Corp., Canadian oilfield services provider Precision Drilling Corp. and the U.S.-based unit of Brazilian global meatpacking giant JBS SA.

Recently priced new deals, including those from Enova International, Inc. and Post Holdings, Inc., were seen "hanging in there," as one trader put it.

For a second straight session, there was fairly busy activity in Pinnacle Foods Inc.'s bonds, although they were essentially unchanged from the levels to which they had plunged on Tuesday on the news that Pilgrim's Pride Corp.'s bid to buy Hillshire Brands Co. could torpedo Hillshire's own efforts to acquire Pinnacle.

Statistical market performance measures were pretty much higher for a second consecutive session on Wednesday after having been mixed over the previous seven sessions before that.

Solera upsizes tap

Audatex North America, Inc. a subsidiary of Solera Holdings, Inc., priced Wednesday's sole dollar-denominated deal, an upsized $150 million add-on to its 6% senior notes due June 15, 2021 (Ba2/BB-) that came at 106.50 to yield 4.897%.

The deal was upsized from $100 million.

The reoffer price came on top of price talk.

Goldman Sachs was the sole bookrunner for the general corporate purposes deal.

Baytex talks two-part deal

Looking ahead, Baytex Energy set yield talk for its $780 million two-part offering of senior notes (Ba3/BB) on Wednesday.

The short-maturity tranche is comprised of seven-year notes talked to yield in the 5¼% area. The long-maturity tranche features 10-year notes talked to yield in the 5¾% area.

A trader said that chatter in the market holds that the deal is going very well.

It is set to price on Thursday afternoon.

Barclays is the lead left bookrunner. BofA Merrill Lynch and RBC are the joint bookrunners.

JBS USA $750 million Thursday

The active calendar of dollar deals grew substantially during the mid-week session.

JBS USA, LLC and JBS USA Finance, Inc. plan to take part in a conference call with investors at 10 a.m. ET on Thursday to discuss their $750 million offering of 10-year senior notes (existing ratings Ba3/BB).

The debt refinancing deal is also set to price on Thursday.

Morgan Stanley and Wells Fargo are the joint bookrunners.

Precision Drilling 10.5-years

Precision Drilling plans to participate in a conference call with investors at 10:30 a.m. ET on Thursday to discuss a $400 million offering of 10.5-year senior notes in a deal also set to price on Thursday.

Credit Suisse, RBC and Morgan Stanley are the joint bookrunners for the general corporate purposes deal.

DFC Global's dual-currency deal

DFC Global Corp. launched $500 million and £150 million offerings of six-year senior secured notes.

Jefferies and Credit Suisse are the joint bookrunners.

The bond deal, backing the merger of DFC Global with DFC Finance Corp., an affiliate of Lone Star Funds, is set to price after a shareholders vote on the merger, scheduled to take place on June 6.

Smurfit Kappa prices tight

In the European high-yield primary Smurfit Kappa priced a €500 million issue of non-callable seven-year senior notes (Ba2/BB+/BB) at par to yield 3¼%.

The yield printed at the tight end of the 3¼% to 3 3/8% yield talk.

Joint global coordinator and joint bookrunner Citigroup will bill and deliver for the debt refinancing deal. JP Morgan was also a joint global coordinator and joint bookrunner.

Credit Agricole, Danske Bank, HSBC and Royal Bank of Scotland were also joint bookrunners.

Huntsman taps 5 1/8% notes

Huntsman International LLC priced an upsized €145 million add-on to its non-callable 5 1/8% senior notes due April 15, 2021 at 103.25 to yield 4.62%.

The deal was upsized from €100 million.

Barclays and HSBC managed the general corporate purposes deal.

Solera stays near issue

In the secondary market, a trader said that he had seen no signs of the new Audatex North America add-on to its 6% notes due 2021 after the subsidiary of auto insurance claims processing software provider Solera Holdings had priced that quick-to-market issue.

However, a market source at another shop pegged the new bonds at 106 5/8 bid, 107 1/8 offered, slightly above its 106.5 pricing level earlier in the session.

Things stay quiet

For a second consecutive session, traders saw not very much going on, as junk participants continued to slowly come back to their offices and get acclimated after the long Memorial Day holiday weekend, which included a quiet and only sparsely populated half-day session on Friday and a full market shutdown on Monday.

A trader used an off-color expression to describe the day's activity as truly terrible.

"It was just a sideways market," he added. "It was pretty uneventful. It really stunk."

A second trader agreed that not much was going on, noting that "flows were pretty light."

He suggested that "people were surprised by what happened with the Treasury market," which rallied, with yields on the 30-year long bond falling to their lowest levels in nearly a year on expectations that European central bankers will introduce stimulus measures following an unexpected jump in unemployment in Germany, the key European economy.

Those kinds of still-sluggish economic indicators have investors reacting a little more cautiously, he continued.

That having been said, he declared that "things hung in pretty well, pretty much unchanged," although he said that he did hear of some offers for bonds "that were a little cheaper than what we've been seeing."

The overall market was "unchanged to maybe a little bit softer, though on very light volume."

The day as a whole was "kind of a non-event."

Interface deal unseen

Several traders said that they had not seen any sign of trading in the new Interface Security Systems, LLC 12½%/14½% senior contingency cash-pay notes due 2018, which priced on Tuesday.

"I really didn't see anything in it - it's such a small deal," one of them said of the $115 million transaction from Interface, an Earth City, Mo.-based provider of physical security and secured managed network services.

Along with its holding company entity co-issuer, Interface Master Holdings, Inc., the company brought that regularly scheduled forward calendar offering to market on Tuesday after upsizing the issue from an originally planned $100 million.

The notes priced at 98 to yield 13.152% and were not seen in Tuesday's aftermarket either.

Enova hangs in

A trader said Friday's offering of 9¾% notes due 2021 from Enova International "did a little bit better," after he saw a 98¾ to 99 market.

"I guess that's at least issue [price] - kind of priced on the bid side."

He said that was "a little better than it had been."

The Chicago-based online financial services firm's $500 million issue had priced on Friday at 98.762 to yield 10% and was seen having gotten as low as a 97¾ bid level in initial aftermarket dealings, although some market participants quoted them at or above the 98 level. They were in that same 98 to 98½ context in Tuesday's dealings.

Elsewhere, St. Louis-based breakfast cereal manufacturer Post Holdings'$630 million of 6% notes due in December of 2022 were being quoted on Wednesday at 100¾ bid, 101¼ offered.

One trader called that unchanged on the day, although a second said that it represented about a ½ point gain on the day.

Another saw them around 101 bid.

Those 8.5-year notes had priced at par on Thursday, had traded a little above issue in the immediate aftermarket and then had gotten as high as a 100¾ to 101 bid range on Friday, firming a little more on Tuesday and then again on Wednesday.

One of the traders said that,at his shop, "we were trying to get involved a little bit" in the new Telecom Italia Capital SA 5.303% notes due 2024.

The Rome-based phone and broadband service provider had priced $1.5 billion of those notes at par on Thursday in a quick-to-market transaction.

"That thing settled in" around the 100 3/8 bid level, he said.

While there was also some brisk dealings in the Italian company's existing bonds, the trader said that "we were just playing in the new one that people were kind of trading into and out of."

The company's outstanding 7.2% bonds due 2036 gained 7/8 point on Wednesday to end the day at 109 1/8 bid.

Numericable still attractive

Going back somewhat further, a trader said that "those Numericable [Group AG] bonds seem to be hanging in there pretty well."

He quoted its 4 7/8% senior secured notes due 2019 in the 101¾ to 102 area, its 6% senior secured notes due 2022 at 103 to 103½ and its 6¼% senior secured notes due 2024 at 103¼ bid, 103¾ offered.

"They're off their highs - but they're still hanging in there pretty well," he opined.

Numericable, a Lille, France-based cable TV, telecom and internet service provider, priced $2.4 billion of the 2019 notes, $4 billion of the 2022 bonds and $1.35 billion of the 2024s, all at par, on April 23. Those bonds were among seven tranches of dollar- and euro-denominated paper totaling a record €12.05 billion equivalent that were brought to market by Numericable and its controlling stockholder, Luxembourg based Altice SA, also a cable, telecom and internet provider.

Indicators stay firm

Statistical junk performance indicators were seen by market sources as steady to mostly stronger for a second consecutive session on Wednesday after having been mixed over the previous seven sessions.

The Markit Series 22 index was essentially unchanged on Wednesday at 108 1/16 bid, 108¼ offered, after having gained 5/32 point on Tuesday.

But the KDP High Yield Daily index edged up by 1 basis point to end at 74.9, its second consecutive improvement. It had risen by 2 bps on Tuesday, its first advance after three straight losses.

Its yield came in by 1 bp to 5.11% after having risen by 1 bp on Tuesday.

And the widely followed Merrill Lynch High Yield Master II index posted a third straight gain on Wednesday, advancing by 0.065%, on top of the 0.056% by which it had firmed on Tuesday.

Wednesday's gain lifted the index's year-to-date return to 4.568%, a second straight new peak level for 2014 so far. That was up from 4.5% on Tuesday, the previous year-to-date peak return.

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