Center Parcs prices; Intelsat mixed after exchange fails; new Hertz up; funds add $521 million

By Colin Hanner and Paul A. Harris

Chicago, June 1 – The high-yield primary market saw no deals price in the United States but Europe saw a large sterling-denominated deal from Center Parcs Corp., a two-part transaction that totaled £730 million.

Activity in the secondary market was livelier on Thursday compared to the first two sessions of the holiday-shortened week, a market source said, with Intelsat SA among the busiest following the termination of its debt exchange offer after a minimal response from bondholders.

Because of the ending of the exchange offer, the satellite telecommunications company expects OneWeb and SoftBank will end their proposed merger with Intelsat.

Bonds of Intelsat’s subsidiaries moved in both directions on the day.

Hertz Corp.’s new $1.25 billion offering of five-year notes fared well in the secondary market following its pricing on Wednesday while the company’s existing issues were mixed after across-the-board gains a day prior.

Recent deals from PBF Energy, Inc. and PetSmart Inc. were among the most-actively traded issues on the day, though their moves were fractional.

Oil and gas exploration and production companies were lifted by a shimmer of good news coming out of the Energy Information Administration on Thursday, with crude prices rising on lower crude output in the United States.

California Resources Corp. and Denbury Resources Inc. were both higher, among others names in the sector.

Following a merger between offshore drillers Atwood Oceanics Inc. and Ensco plc announced on Tuesday, both remained in the mix, though movement, if any, varied for both.

Meanwhile high-yield mutual funds and exchange-traded funds saw $521 million of inflows during the week to Wednesday, according to Lipper US Fund Flows, almost reversing the $568 million outflow the previous week.

Center Parcs prices £730 million

In Thursday’s primary market Center Parcs priced a £730 million two-part offering of class B secured notes (S&P: B/Fitch: B), according to a market source.

A £480 million amount of class B3 notes due Aug. 28, 2022 priced at par to yield 4¼%. The final size came £30 million above the £450 million target size. The yield printed on top of yield talk and tight to earlier talk in the 4 3/8% area.

A £250 million amount of class B4 notes due Aug. 28, 2025 priced at par to yield 4 7/8%. The final size came £30 million lower than the target size of up to £280 million. The yield printed on top of final yield talk and tight to earlier talk in the 5% area.

The notes in both tranches have final maturities in 2047.

Joint global coordinator Barclays will bill and deliver. NatWest Markets was also a joint global coordinator. HSBC and JPMorgan were joint bookrunners.

The issuing entity will be CPUK Finance Ltd., which is also selling £100 million of investment grade-rated 3.588% class A4 fixed-rate secured notes, which have a final maturity in 2042.

The New Ollerton, Newark, England-based vacation park operator plans to use the proceeds to repay its existing class B notes, as well as to fund its Longford Forest development in the Republic of Ireland and to fund a distribution to shareholders.

Virtu downsizes bonds

Virtu Financial Inc. shifted $325 million of proceeds to its 4.5-year senior secured term loan from its concurrent offering of junk bonds, according to a market source.

The loan size increases to $1.15 billion from $825 million.

The notes offer is decreased to $500 million from $825 million.

J.P. Morgan Securities LLC is leading both parts of the financing which the New York-based financial company will use to help acquire KCG Holdings Inc., a transaction expected to close in the third quarter of 2017.

Intelsat off as exchange fails

Intelsat’s exchange offer, which had seen its deadline been pushed back three separate times since mid-April, as well as an amendment to improve the payout, was terminated on Thursday following an extremely low turnout rate.

The exchange ended at 11:59 p.m. ET on May 31 after being extended several times amid response rates of less than 1%.

On the day, Intelsat Jackson Holdings SA’s 7¼% notes due 2020 were up “almost 1 point” to 91 7/8, a market source said.

Intelsat Luxembourg Holdings SA’s 8 1/8% notes due 2022 were down 1 point to 52.

In late February, Intelsat and OneWeb LLC announced that a share-for-share transaction agreement would effectively combine the two companies.

As part of the merger, an exchange offer for Intelsat’s Jackson, Luxembourg and Connect Finance subsidiaries was also announced. That exchange, combined with Softbank’s investment, was “intended to reduce Intelsat's debt by approximately $3.6 billion, assuming the minimum level of participation in the debt exchange offers is achieved,” a news release said.

Now, Intelsat expects that OneWeb and SoftBank will exercise their respective termination rights under the combination agreement, according to a company update on Thursday.

“There were many stakeholders’ interests that needed to be satisfied in this complex transaction,” Intelsat chief executive officer Stephen Spengler said in the company press release. “We are disappointed that our bondholders were unwilling to accept the terms of the exchange offers presented over the course of this process.”

Hertz steadily higher

A rising tide lifted all boats on Wednesday once Hertz’s upsized $1.25 billion issue of five-year second-lien secured notes priced, though that trend ceased on Thursday’s session.

In Thursday trading the new 7 5/8% notes due 2022 were up 7/8 point to 100 5/8, a market source said. They had priced at par.

Existing paper in the Hertz name was mixed.

Its 5 7/8% notes due 2020, Wednesday’s most active issue, were up ¾ to 94¾ on Thursday, followed by the 7 3/8% notes due 2021, which were up ¼ point to 94¾.

The 6¾% notes due 2019 were unchanged at 100 3/8.

Part of the new issue’s proceeds will go toward redeeming those 6¾% notes due 2019, as well as the car rental company’s 4¼% notes due 2019 and other debt.

Recent deals scattered

Recent deals were mixed on Thursday, though did not deviate too far from where they started.

PBF Energy’s 7¼% notes due 2025 were up ¼ point to 100¼.

The Parsippany, N.J.-based operator of oil refineries and related facilities priced $725 million eight-year senior notes at par in a quick-to-market transaction early last week.

Pet supplies retailer PetSmart, which priced $2 billion of notes last Friday, saw less movement on the day, though the new bonds remained in the mix.

The 5 7/8% notes due 2025 were down ¼ point to 100¼ bid, 100 5/8 offered, a market source said, while the 8 7/8% notes due 2025 were unchanged at 98 bid, 98½ offered.

A trader quoted those notes at a 98 3/8 handle.

E&P up with crude reduction

The pendulum of crude oil prices swung in the positive direction on Thursday following the release of weekly figures by the Energy Information Administration, which showed that U.S. crude inventories were lower by 6.43 million barrels for the week of May 21.

E&P companies followed the bright news.

California Resources’ 8% notes due 2022 were quoted at a 75¾ bid, 76¼ offered, a market source said. A trader said the notes were up 1 point to 76.

Canadian oil sands producer MEG Energy Corp.’s 7% notes due 2024 were up ¼ point to 87¼.

Denbury Resources Corp.’s 6 3/8% notes due 2021 were up ½ point to 77¾.

And Houston-based EP Energy Corp.’s 9 3/8% notes due 2020 were up ¾ point to 91¼.

Atwood, Ensco remain active

Following the announcement of a merger between the two oil drilling contractors on Tuesday, Ensco and Atwood Oceanics continued to trade.

For the second-straight session, Atwood’s 6½% notes due 2020 were unchanged at 100¾, a trader said.

And, after a 1-point decline a day prior, Ensco’s 4½% notes due 2024 were up 3/8 point to 82 7/8.

Its 5.20% notes due 2025 mirrored the 3/8-point gain and finished at 85 3/8.

Market indexes trend higher

The KDP High Yield Daily index was higher by 4 basis point to 72.67, its second-straight day of gains following two days of unchanged movement.

Its yield was down 1 bps to 4.88%.

The Markit CDX Series 28 index was up by more than 1/8 point to 107.59 bid, 107.67 offered, its first uptick this week.

It had eased 1/16 point on Wednesday, nearly mirroring Tuesday’s movement, and was marginally lower on Monday.

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