Harbinger drive-by add-on, Dynagas price; AK Steel, others slate; last week’s new deals active

By Paul Deckelman and Paul A. Harris

New York, Sept. 8 – The high-yield primary realm opened the new week with a pair of smallish deals pricing, syndicate sources said.

They saw diversified holding company Harbinger Group Inc. bring a quickly shopped $200 million addition to its existing 2022 notes to market, while Greek liquefied natural gas operator Dynagas LNG Partners LP did a $250 million five-year issue as a regularly scheduled forward-calendar deal.

While the day’s actual deal volume was modest, the forward calendar continued to build, with new deal announcements from metals producer AK Steel Corp., EnPro Industries, Inc., a manufacturer of engineered products, and Dutch advertising and marketing services provider Vistaprint NV.

In the secondary market, traders said that a modest amount of the new Harbinger bonds traded around the par issue price, although the existing 2022 paper was seen having come in by as much as 2 points from the levels held last week, before the deal was announced.

The traders also say that activity levels remained brisk in some of the new deals that came to market last week, including T-Mobile US, Inc., Clear Channel Communications, Inc., Linn Energy, LLC and Frontier Communications Corp. Those names dominated the day’s most-actives list.

Statistical market performance indicators were mixed for a second straight session Monday, after having turned mixed on Friday and lower across the board on Wednesday and Thursday.

Dynagas prints at 6¼%

Monday's session in the dollar-denominated new issue market saw two single-tranche deals completed, raising an overall total of $450 million.

Both deals priced on top of talk.

Athens-based Dynagas priced a $250 million issue of non-rated, non-callable five-year senior notes at par to yield 6¼%, on Monday.

The yield printed on top of yield talk.

Sterne Agee and DNB were the joint bookrunners.

Proceeds, along with cash on hand, will be used to finance the majority of the purchase price of one of three recently built vessels that the partnership has the option to acquire from Dynagas Holding Ltd., the partnership’s sponsor, together with its respective charter contract.

Harbinger taps 7¾% notes

Harbinger Group priced a $200 million tack-on to its 7¾% senior notes due Jan. 15, 2022 (expected Caa2/confirmed CCC+) at par to yield 7.746%.

The reoffer price came on top of price talk.

Credit Suisse, Deutsche Bank and Jefferies were the joint bookrunners.

The New York-based diversified holding company plans to use the proceeds for working capital and general corporate purposes.

AK Steel roadshow

AK Steel began a roadshow on Monday for a $430 million offering of seven-year senior notes.

The public offer is set to price during the present week.

Credit Suisse, Citigroup and J.P. Morgan are the joint bookrunners.

The West Chester, Ohio-based integrated steel producer plans to use the proceeds to finance the acquisition of the Dearborn integrated steel mill from Severstal North America.

EnPro starts roadshow

EnPro Industries began a roadshow on Monday for a $300 million offering of eight-year senior notes (B1//).

Initial guidance is in the high-5% to 6% yield context, according to a trader.

BofA Merrill Lynch, KeyBanc and Fifth Third Bank are the joint bookrunners.

The Charlotte, N.C.-based manufacturer of engineered products plans to use the proceeds to repay its revolver, including the $74.78 million drawn to fund the tender for its 3.9375% convertible senior debentures due 2015.

Vistaprint’s $250 million

Vistaprint began a roadshow on Monday for a $250 million offering of seven-year senior notes (expected ratings B2/B).

J.P. Morgan, MUFG, SunTrust and Santander are the joint bookrunners for the bank debt refinancing.

Look for JP Morgan to announce a deal a day on Tuesday and Wednesday and possibly Thursday as well, a market source said.

Deal talk

Teine Energy Ltd. talked its $350 million offering of eight-year senior notes (expected B3/confirmed CCC+) to yield in the 6 7/8% area.

Joint bookrunner Barclays will bill and deliver. J.P. Morgan is also a joint bookrunner.

Meanwhile, the massive California Resources Corp. $5 billion high-yield deal (Ba1/expected BB), coming in three bullet tranches, appears headed for a Wednesday or Thursday pricing, a trader said on Monday.

No talk is out there yet.

However, the short-dated 5.5-year tranche is whispered at 4½% to 4¾%, the tranche of notes due 2021 is whispered at 5% to 5¼%, and the long tranche of notes, which matures in 2024, is whispered at 5½% to 5¾%.

Travis Perkins prices bullet

In the European market, Travis Perkins plc priced a £250 million issue of non-callable 4 3/8% seven-year notes (/BB+/) at 99.717 to yield 4.423%.

The yield printed below the mid-point of yield talk in the 4½% area.

Barclays, Lloyds and Royal Bank of Scotland were joint bookrunners for the deal, which was transacted on the investment-grade desk.

The Northampton, England-based home improvement retailer plans to use the proceeds to refinance debt and for general corporate purposes.

Meanwhile, Nyrstar Netherlands (Holdings) BV talked its restructured €350 million offering of five-year senior notes to yield 8¾% to 9% (B3/B-).

That talk represents an increase from earlier guidance in the low 8% context, sources say.

In a structural change, call protection was increased to the life of the notes. Previously the notes were being marketed with two years of call protection.

The deal is expected to price on Tuesday.

The roadshow wrapped up last Friday, and the deal was expected to price the same day, but was held over the weekend, sources say.

Goldman Sachs International is the global coordinator and joint bookrunner. Royal Bank of Scotland is also a joint bookrunner.

Harbinger holds near issue

In the secondary market, a trader saw Harbinger Group’s add-on to its 7 ¾% notes due 2022 trading between par and 100½, after the $200 million issue was freed for aftermarket dealings. He estimated volume in the credit at around $7 million, with most of the notes trading around 100¼, versus their par issue price.

A second trader quoted the new issue in a 99 7/8-to-100 3/8 context “away from the [bond offering’s] managers.”

Existing bonds trade off

A market source meantime said that Harbinger’s existing 7¾% notes due 2022 were trading around 101 bid, which he called down a deuce from the levels above 103 at whose bonds had traded last week.

But there was no real volume with just a handful of round lot trades.

Clear Channel issues easier

Clear Channel’s new 9% senior secured priority guarantee notes due 2022 were among the most actively traded credits on Monday, with a market source having seen over $33 million having changed hands.

While the San Antonio, Texas-based diversified media company’s notes had been quoted in a par-to-100½ context on Friday, shortly after that $750 million quick-to-market issue had priced at par, on Monday, that had narrowed to a range of 100 1/8 to 100 3/8, a trader said.

And another said that late in the day, the bonds had dipped below par, in big-block trading, to end at 99 15/16 bid, down about 5/16 of a point on the day.

The radio broadcasting giant and outdoor advertising company’s established 14% notes due 2021 dropped by 1¾ points to end at 98, with over $19 million having traded.

And its 10% notes due 2018 slid to 91 bid, down 1½ points, though on volume of only a few million dollars.

Recent deals remain busy

As had been the case for much of last week, once the primary market shook off its more than two weeks of late-summer inactivity and began churning out new deals, recent issues were well represented in the Junkbondland most-actives list, particularly T-Mobile’s huge new two-part offering

A trader said on Monday that its 6 3/8% notes due 2025 “were the most active issue,” racking up over $45 million traded. He saw the bonds sticking around a 100¼-to-100¾ context.

He also saw its 6 % notes due 2023 trading between 100½ and 101 bid, on volume of over $38 million.

At another desk, the 6 3/8% notes were seen up 3/8 on the day, to 100 5/8 bid, while the 6% paper gained 5/16 of a point, going home at 100 7/8 bid.

On Friday, more than $33 million of each issue had traded – busy enough for a summer Friday, but just a fraction of the more than $200 million of each that had traded on Thursday, when they were freed for secondary market dealings.

The Bellevue, Wash.-based No. 4 U.S. wireless carrier had priced $1.3 billion of the 6% paper and $1.7 billion of the 6 3/8% notes at par late in the session on Wednesday, although terms did not emerge until Wednesday night, well after proceedings had wrapped up.

That $3 billion drive-by deal had been massively upsized from the $2 billion originally announced.

Elsewhere, both halves of Linn Energy’s big new two-part offering were high up on the junk most-actives list on Monday, with the Houston-based oil and natural gas company’s 6½% notes due 2021 edging up marginally to about 99 7/16 bid, on volume of more than $23 million.

Linn had priced $650 million of those notes at 98.619 on Thursday to yield 6.75% as part of a quick-to-market $1.1 billion two-part offering, which it upsized from the originally announced $1 billion. Over $90 million had traded on Friday, easily topping the most-actives list.

That offering also included a $450 million add-on to the company’s existing 6½% notes due 2019, which priced at 102 to yield 6.001%. Those bonds initially firmed by around 1/8 of a point.

On Friday, the bonds gained another 1/16 to finish at 102 3/16, with more than $44 million having changed hands, and in Monday’s dealings, the paper continued to gain slightly, going out at 102¼ bid on volume of over $19 million.

Frontier Communications’ 6¼% notes due 2021 were seen by a trader to have been unchanged Monday, at 100½ bid, on volume of over $15 million. On Friday, more than $45 million had traded.

The 6 7/8% notes due 2025 were lost 3/8 of a point to end at 99 3/8 bid, with over $17 million traded. The bonds had also been on the slide on Friday, when the issue dropped by ¼ of a point, on volume of more than $41 million.

The Stamford, Conn.-based telecommunications company had priced $775 million of each issue at par in a quick-to-market transaction on Wednesday.

Steel Dynamics, Inc.’s 5½% notes due 2024were seen down by 5/16 of a point on Monday, at 100 5/16 bid, on volume of about $10 million. The Fort Wayne, Ind.-based metals processing company had priced $500 million of those notes at par on Thursday as part of a $1.2 billion, two-part drive-by transaction. Over $75 million had changed hands on Friday.

That deal also included $700 million of 5 1/8% notes due 2021 that had priced at par after the tranche was upsized from the originally announced $500 million. The notes were up by ½ of a point on Monday, at 100 5/8 bid, though only $3 million traded around – just a small fraction of the more than $78 million traded on Friday.

Rest of market quiet

Traders agreed that apart from the big numbers rolled up by the recent megadeals, “there was not a lot of activity.”

“The [non-new deal market] was very light,” a source said. “Nothing really stood out.”

Indicators stay mixed

Statistical indicators of junk market performance were mixed for a second consecutive session on Monday. They were mixed on Friday, after having been lower across the board for the two previous days. The six prior sessions before that, indicators were mixed.

The KDP High Yield Daily index managed to break out of its six-session rut on Monday, edging up by 1 basis point to close at 73.64. On Friday, it plunged by 17 bps, nearly doubling Thursday’s 9-bps downturn. Its yield was unchanged at 5.19%, after having risen by 9 bps on Friday, its seventh successive widening.

However, the Markit CDX Series 22 index was off by 5/32 of a point on Monday to 107 5/8 bid, 107 11/16 offered, after having gained 1/16 of a point on Friday, its first advance after two losses.

The widely followed Merrill Lynch High Yield Master II index got back on the winning track on Monday, posting a 0.025% gain – its first after four successive losses, including Friday’s 0.212% downturn.

That raised its year-to-date return to 5.371% from Friday’s 5.345% finish. However, it remained well off from its peak level of the year so far, 5.847%, set last Monday.

© 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.