Avaya, IAC, EP Energy, others drive by in $1.9 billion session; market firmer, calendar-focused

By Paul Deckelman and Paul A. Harris

New York, Dec. 18 - The high-yield primary arena saw a stepped-up pace of activity on Tuesday as it appeared that the anticipated year-end lull had not yet set in.

When all was said and done, some $1.9 billion of new dollar-denominated, purely junk-rated paper had come to market in more than a half-dozen deals - well up from the paltry $300 million from just one issuer that had priced on Monday.

Four of the seven issues that priced were same-day drive-by deals, and the other three came onto market players' radar screens with new-deal announcements on Monday.

The biggest transaction of the day - media and internet website company IAC/InterActiveCorp.'s $500 million 10-year offering - was actively traded in the aftermarket a little above the issue price.

The two other deals announced Monday that priced on Tuesday came from restaurant and gaming company Landry's Holdings II, Inc., with an upsized $250 million five-year offering, and oil and gas operator Gulfport Energy Corp., which tacked on a $50 million addition to its existing 2020 bonds.

Out of that same oil and gas sector exploration and production company, EP Energy LLC priced a quick-to-market $350 million issue of PIK toggle notes via its corporate parent, while Oil States International, Inc., an oilfield services provider, did an upsized $400 million of 10-year bonds.

Communications equipment manufacturer Avaya Inc. priced $290 million of secured six-year notes just hours after that deal surfaced in the market, while key and hardware maker Hillman Group, Inc. upsized its opportunistically timed add-on to its 2018 notes to $65 million before pricing.

Besides IAC/InterActiveCorp., the deals from Avaya, EP Energy, Landry's and Oil States were seen by traders to have moved into the aftermarket.

The traders said that the secondary market was firmer, as evidenced by better statistical performance indicators, but the new deals once again absorbed the bulk of investors' attention.

IAC at the tight end

IAC/InterActiveCorp priced a $500 million issue of 10-year senior notes (Ba1/BB+) at par to yield 4¾%, at the tight end of the 4¾% to 5% yield talk.

J.P. Morgan, Goldman Sachs, Bank of America Merrill Lynch and BNP were the joint bookrunners for the quick-to-market general corporate purposes deal.

Oil States upsizes

Oil States International priced an upsized $400 million issue of 10-year senior notes (Ba3/BB+) at par to yield 5 1/8%.

The yield printed on top of yield talk that had been tightened from earlier official talk in the 5¼% area.

RBC ran the books for the quick-to-market issue, which was upsized from $300 million.

The Houston-based oilfield services company plans to use the proceeds to repay revolver debt. Additional proceeds resulting from the upsizing will be used for general corporate purposes.

EP Energy PIK toggle

EPE Holdings LLC and EP Energy BondCo Inc. priced a $350 million issue of five-year senior PIK toggle notes (B3/B) at 99.50.

The notes pay a cash coupon of 8 1/8% and a PIK coupon of 8 7/8%.

The cash yield is 8¼% and the PIK yield is 9%.

The cash and PIK yields priced on top of yield talk. The reoffer price came in line with price talk, which specified a slight discount.

Citigroup was the left bookrunner for the quick-to-market deal.

Deutsche Bank, RBC, Nomura, Morgan Stanley, BMO, Credit Suisse, Goldman Sachs and J.P. Morgan were the joint bookrunners.

The Houston-based oil and natural gas exploration and production company plans to use proceeds to make a return of capital to its equity holders.

Avaya at the tight end

Avaya priced a $290 million issue of senior secured notes due April 1, 2019 (B1/B) at par to yield 9%, at the tight end of the 9% to 9¼% yield talk.

Citigroup was the left bookrunner for the quick-to-market debt refinancing transaction.

Credit Suisse, Deutsche Bank, J.P. Morgan and Morgan Stanley were the joint bookrunners.

Landry's upsizes

Landry's Holdings II priced an upsized $250 million issue of 10¼% five-year senior cash pay notes (Caa1/CCC+) at 99 to yield 10.509%.

The coupon came at the tight end of the 10¼% to 10½% coupon talk. The reoffer price came on top of price talk.

Jefferies ran the books for the quick-to-market deal, which was upsized from $210 million.

Proceeds will be used to fund a distribution to the parent company.

Hillman at the rich end

Hillman Group priced a $65 million add-on to its 10 7/8% senior notes due June 1, 2018 (existing ratings B3/CCC+) at 106.50 to yield 8.649%.

The reoffer price came at the rich end of the 106 to 106.5 price talk. The yield came at the tight end of the 8.649% to 8.813% yield talk.

Barclays ran the books for the quick-to-market deal, which was upsized from $60 million.

Proceeds will be used to fund the acquisition of H. Paulin & Co. Ltd. and for general corporate purposes.

Gulfport taps 7¾% notes

Gulfport Energy priced a $50 million tack-on to its 7¾% senior notes due Nov. 1, 2020 (B3/CCC+) at 101.00 to yield 7.531%.

The reoffer price and yield came on top of talk.

Credit Suisse ran the books.

The proceeds, along with funds from a public offering of 9 million shares of common stock, will be used to fund its previously announced pending acquisition of oil and gas assets in the Utica Shale in Ohio and for general corporate purposes, which may include expenditures associated with Gulfport's 2013 drilling programs.

Dispensing for Wednesday

While drive-by action can't be ruled out, only one deal remains on the active forward calendar for the remainder of 2012, market sources say.

Dispensing Dynamics International plans to price a $125 million offering of five-year senior secured notes (B3/B-) on Wednesday.

Price talk is also expected to surface on Wednesday, a market source said.

Jefferies is the bookrunner.

Proceeds will be used to refinance debt and fund a dividend to shareholders.

InterActiveCorp activity

When the new IAC/InterActiveCorp. 4¾% notes were freed for secondary dealings, a trader said that "there was a lot activity" in the new credit.

He saw the bonds trading between 100¼ and 100½ bid after pricing at par.

Later on, he quoted the bonds in a 100 3/8-to100 5/8 bid context, remarking that "the underwriter may have cleared out the sellers."

Oil States, Avaya trade up

A trader saw the new Oil States International 5 1/8% notes trading at 101 bid.

A trader at another desk saw two-sided markets in the oil field service company's bonds at 101 bid, 101½ offered, up from a par pricing level.

Also doing well in the secondary was Avaya's new 9% notes, with a trader pegging the issue in a 101- to- 101½ context.

A second trader quoted the bonds at 101¼ bid, 101¾ offered, up from the communications equipment company's par pricing level.

A market source saw Avaya's already established 9 ¾% notes due 2015 as one of the more active bonds in Junkbondland on Tuesday, with over $12 million having changed hands. He saw those bonds off a quarter-point, ending at 89½ bid.

Elsewhere among the day's deals, one of the traders thought he saw "a bunch" of the new Landry's 10¼% notes trading as high as 100¾ bid, well above the 99 level where the restaurateur's bonds priced.

However, a second trader quoted the bonds going home little changed on the day in a 99-to-par bid context.

EPE Holdings' new PIK notes were quoted by a trader going out at par bid, 100½ offered, up from the 99 level at which the oil and gas exploration and production company's transaction had priced.

Traders saw no immediate aftermarket activity in the two smallish add-on offerings that priced during the day, from Hillman Group and Gulfport Energy.

Still little Ancestry action

Traders were still seeing little activity in Monday's sole pricing, for Ancestry.com Inc.

The Provo, Utah-based online family history search engine priced $300 million of 11% notes due 2020 at par via Global Generations Merger Sub Inc. in connection with Ancestry's pending acquisition.

The bonds were not seen trading in the aftermarket on Monday, while a trader said on Tuesday there had been a 100¼ bid out there for them "early" in the session. A little later on, they were quoted offered at 1021/2.

He said that it would make logical sense that the bonds might be trading in the 100½ bid, 102 offered area, but said, "I never saw a two-sided market. It never got to a real trading point."

Last week's deals quiet

There was little going on in any of the deals that priced last week.

A trader, for instance, saw Rain CII Carbon LLC and Rain CII Carbon Corp.'s 8¼% senior secured notes due 2021 still clinging to a 102¼ bid, 103¼ offered level. That was unchanged on the day, but still well up from the par level at which the Kingwood, Texas-based petroleum coke producer's $400 million issue had priced on Friday, as part of a $675 million-equivalent two-part deal that also included a euro-denominated tranche.

Greek dairy products producer FAGE International SA and FAGE USA Dairy Industry Inc.'s $250 million add-on to its existing 9 7/8% notes due 2020 were unchanged on the day, still hovering around the 107 bid, 1908 offered level. It had priced that deal last Wednesday at 101 to yield 9.618%, and the bonds climbed steadily for the rest of last week.

Going back a little further, there was some trading going on in PVH Corp.'s 4½% notes due 2022. The New York-based apparel company had priced $700 million of the notes at par in a quick-to-market transaction on Dec. 6.

On Tuesday, about $7 million or $8 million were trading, making it one of the more active junk credits on the day. A market source saw the bonds going home at 100 1/8 bid, calling that down a quarter-point. The bonds had been as good as 103¾ bid during the session, up about 2 points on the day, but gave up those gains by the end of the session.

AMC Networks Inc.'s 4¾% notes due 2022 were seen down a point at 100¾ bid. The New York-based cable television network operator had priced $600 million of the bonds at par in a quickly shopped deal on Dec. 10.

The notes moved up in the aftermarket to levels as high as 101½ bid, 102 offered.

Indicators get better

A trader said that away from the new issues, thing were pretty quiet on Tuesday.

"It's been mostly guys filling in blanks [in their portfolio] and waiting for the calendar to come."

Statistical junk market performance indicators continued to show improvement on Tuesday, after having turned mixed on Monday and softer on Friday.

The Markit Series 19 CDX North American High Yield index gained 9/16 of a point on Tuesdays second consecutive advance, to close at 102 bid, 102 1/8 offered. On Monday, it had risen about 5/8 point.

The KDP High Yield Daily Index rose by 9 basis points to end at 75.34, after having lost 5 bps on Monday. Its yield declined for a second straight session, by 1 bp, to 5.69%, on top of the 2-bps narrowing seen on Monday.

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