Realogy prices; calendar builds; new Crown Castle busy; DFC Global bonds jump on buyout news

By Paul Deckelman and Paul A. Harris

New York, April 2 - The high-yield primary arena saw one deal worth $450 million price on Wednesday, as Realogy Holdings Corp., a Madison, N.J.-based residential real estate services provider, did a quickly shopped offering of five-year notes via a pair of financing subsidiaries, a deal that got done well after the market had otherwise closed.

That was a little off the activity pace seen on Tuesday, when some $1.35 billion of new junk-rated, U.S. dollar-denominated deals from domestic or industrialized-country borrowers priced in four one-tranche deals during the session.

Even with that relative breather, high-yield syndicate sources said there was ample activity going on behind the scenes on Wednesday.

Deal terms emerged on Cogent Communications Group, Inc.'s $200 million offering of seven-year notes, which had priced late in the session on Tuesday, coming in almost under the radar. Those notes were seen holding around their issue price in Wednesday's dealings.

The junk bond forward calendar - still a little depleted after a nearly $5 billion, nine-deal day a week ago and continued brisk activity since then - continued to regenerate, with British energy exploration and production company Tullow Oil plc heard to be shopping around a $500 million offering of eight-year notes, with pricing expected on Thursday, while Michael Baker Holdings, LLC, a Moon Township, Pa.-based provider of high-end engineering, development, intelligence and technology solutions, began marketing a $125 million offering of five-year senior PIK toggle notes, with an investor call on the deal slated for Thursday.

McDermott International Inc., a Houston-based engineering and construction company serving the offshore energy industry, is meanwhile expected to soon hit the road with a $500 million seven-year secured deal.

Among recently priced issues, Tuesday's offering of eight-year notes from Crown Castle International Corp. proved to be a hit with investors, as over $80 million of the Houston-based communications antenna tower operator's new deal changed hands slightly above their issue price.

Away from the new deals, it was also a hugely busy day for National Money Mart Co.'s 2016 notes, which jumped multiple points in heavy trading on the news that its Berwyn, Pa.-based parent company, financial services company DFC Global Corp., has agreed to be acquired by Lone Star Funds in a $1.3 billion deal, including net debt assumption.

Statistical market-performance measures were higher for a second consecutive session.

Talking the deals

Tullow Oil talked its $500 million offering of eight-year senior notes (B1/BB-) to yield in the 6¼% area.

The debt refinancing deal, via joint global coordinators J.P. Morgan, Barclays, BNP Paribas, BofA Merrill Lynch and Deutsche Bank and joint bookrunners Credit Agricole and Standard Chartered is expected to price on Thursday.

Another English company expected to price dollar-denominated notes by the end of the week is London-based petroleum exploration and production company Enquest plc.

Although the market awaits formal price talk, the deal is whispered in the mid-6% range, according to a buyside source.

JPMorgan, Barclays, BNP, BofA Merrill Lynch, Credit Suisse and Goldman Sachs are the joint bookrunners.

Michael Baker PIK toggles

Michael Baker Holdings and Michael Baker Finance Corp. plan to participate in a conference call with investors beginning at 10 a.m. ET on Thursday to discuss its $125 million offering of five-year senior PIK toggle notes via sole arranger Jefferies.

Proceeds will be used to fund a dividend to DC Capital Partners. Integrated Mission Solutions, LLC, an affiliate of DC Capital, acquired Michael Baker in October 2013.

Meanwhile McDermott International plans to roadshow a $500 million offering of seven-year senior secured second-lien notes (B1//) during the week ahead.

Initial guidance has the deal coming to yield in the high 8% to 9% area context, the source added.

Goldman Sachs will lead the debt refinancing and general corporate purposes deal.

Stonegate upsizes, sets talk

Stonegate Pub Co. Financing plc upsized its two-part offering of five-year senior secured notes (expected ratings B2/B+) to £400 million from £380 million and circulated initial guidance.

An upsized £260 million tranche of fixed-rate notes, which come with two years of call protection, is guided with a yield of 5¾% to 6%. The tranche was upsized from £230 million.

A downsized £140 million tranche of floating-rate notes, which come with one year of call protection, is guided at a 475 to 500 basis points spread to Libor. The tranche was downsized from £150 million.

The roadshow continues on Wednesday and Thursday in London.

The deal is expected to price on Friday.

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

Realogy: Better late than never

On Wednesday evening, well after the day's other market activity had wrapped up, pricing terms began to circulate on Realogy Holdings'$450 million of non-callable five-year senior notes (Caa1/B).

That quickly shopped Rule 144A/Regulation S for life issue priced at par via the Madison, N.J.-based residential real estate services company's Realogy Group LLC and Realogy Co-Issuer Corp. subsidiaries.

J.P. Morgan Securities LLC led the underwriting syndicate for the debt refinancing and general corporate purposes deal.

Other joint book-running managers on the transaction were Goldman Sachs & Co., Barclays, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Credit Agricole CIB and Wells Fargo Securities LLC.

The offering got done way too late in the day for any kind of aftermarket dealings.

New Cogent bonds near issue

Cogent Communications Group's $200 million of 5 5/8% notes due 2021(Caa1/B-) got done too late in Tuesday's session for any kind of secondary dealings , but they began circulating around on Wednesday, traders said, along with terms on the deal.

The Washington, D.C.-based internet backbone services provider priced its deal at par via its Cogent Communications Finance, Inc. subsidiary.

JPMorgan managed the general corporate purposes deal.

A trader said Wednesday that the new notes were trading in a par to 100½ bid context.

Another trader pegged the bonds at par bid, 100¼ offered.

The first trader said that "it was a small, one-off $200 million deal that was taken down by a couple of large players, so there really wasn't much secondary activity in that."

Crown Castle is volume king

It was quite a different story for another deal that had priced earlier in the session on Tuesday, from Crown Castle International.

The Houston-based communications antenna tower operator's new 4 7/8% notes due 2022 were the busiest bonds in the junk space on Wednesday, with a market source estimating that over $80 million of those notes had changed hands by the close.

He saw the bonds finishing around 100¼ bid, up a little from the 99½ level at which that $850 million quick-to-market deal had priced to yield 4.951%. The offering had been upsized from the originally announced $500 million.

A second trader located the bonds at par bid, 100¼ offered, while another saw them at par bid, 100½ offered.

Other deals move up

While Crown Castle's notes held to levels a little above their issue price, other deals that came to market on Tuesday were being quoted solidly higher.

A trader said that Lonestar Resources America, Inc.'s new 8¾% notes due 2019 had moved up to about 102¼ bid, 102½ offered. That was up from the levels around 101½ to 102 at which he had seen the bonds after they priced Tuesday.

However, a second trader, while seeing the notes going home at 102 bid, 102½ offered, called them about unchanged from their initial aftermarket levels.

The Fort Worth-based independent oil and natural gas production and development company's bonds had firmed smartly after it priced its regularly scheduled $220 million forward calendar offering at par. That offering was upsized from an initially shopped $200 million.

A trader said that First Wind Holdings, LLC's 10¼% senior secured notes due 2018 had improved to an offered level of 1081/4, although he did not see a bid side.

The Boston-based wind-power generation company did a $75 million add-on to its existing 2018 notes on Tuesday via its First Wind Capital LLC financing subsidiary, which priced the drive-by deal at 105 to yield 8.406%.

The bonds had come to market too late on Tuesday for any secondary market activity at that time.

A trader said that Monday's big two-part drive-by megadeal from Canadian aircraft and railroad equipment manufacturer Bombardier Inc. "continued to do well."

He saw both tranches of the Montreal-based company's transaction trading between 101¼ and 102¼ bid.

A second trader saw its 6% notes due 2022 at 101½ bid, 102 offered. He did not see its 4¾% notes due 2019.

Bombardier had priced $1.2 billion of the 6% notes and $600 million of the 4¾% paper at par.

DFC bonds better on buyout

Away from the new deals, a trader said that the big news of the day was the pending sale of DFC Global, a Berwyn, Pa.-based company that provides financial services such as unsecured short-term consumer loans, secured pawn loans, check cashing, gold buying, money transfers and reloadable prepaid debit cards, mostly to customers who do not have conventional bank accounts.

It agreed to be acquired by an affiliate of Lone Star Funds in a $9.50 per share transaction valued at roughly $1.3 billion, including the assumption of net debt.

The trader said that DFC's National Money Mart 10 3/8% notes due 2016 "have been very active," with over $80 million traded on the day.

He said the bonds "were all over the place," trading mostly between 104 and 105 bid.

A second trader, who saw the bonds going out at 1051/4, noted that pre-news, the bonds had traded around par, making it a better than 5-point move on the day.

Market indicators gain again

Statistical junk performance indicators moved higher for a second straight session on Wednesday after having been mixed on Monday.

The Markit Series 22 CDX North American High Yield index rose by 1/16 point to end at 107 11/16 bid, 107 13/16 offered, after having gained 3/16 point on Tuesday. It was the index's fourth consecutive gain, including ¼ point rises each on Friday and Monday.

The KDP High Yield Daily index was up by 2 bps points to close at 74.94, its second straight advance. It had gained 3 bps on Tuesday.

Its yield came in by 2 bps to go out at 5.21% after having been unchanged on Tuesday.

And the widely followed Merrill Lynch High Yield Master II index moved up by 0.015% - its fourth straight advance. On Tuesday it had risen by 0.076%.

Wednesday's improvement lifted its year-to-date return to 3.091% - a fourth straight new peak level for the year so far, up from Tuesday's 3.075%, the former peak level for 2014.

Its spread to worst meanwhile narrowed to 384 bps over comparable Treasuries, a new tight level for the year. That was down from the previous tight level, Tuesday's 391 bps.

© 2015 Prospect News.
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