Bombardier megadeal, upsized Tenet, downsized Envision issues price; new bonds trade actively

By Paul Deckelman and Paul A. Harris

New York, Nov. 16 – The high-yield primary sphere saw a second consecutive busy session on Wednesday. Some $2.7 billion of new dollar-denominated and fully junk-rated paper came to market in three tranches brought by three domestic or industrialized-country issuers, up from the $1.7 billion of such paper that successfully made its debut on Tuesday.

It was the most new junk paper since Nov. 1, when five issuers priced nearly $3.5 billion in seven tranches, according to data compiled by Prospect News.

Canadian aircraft and railroad equipment manufacturer Bombardier, Inc. had the big deal of the day, a regularly scheduled $1.4 billion offering of five-year notes. They priced at a discount and stayed around that issue price in active aftermarket dealings.

Also off the forward calendar, Envision Healthcare Corp. did a downsized $550 million of eight-year paper, which was seen to have firmed solidly in busy dealings when it was freed to trade.

Hospital operator Tenet Healthcare Corp. drove by with an upsized $750 million of five-year secured notes, which were quoted higher later in the session. Several of the company’s existing issues of unsecured paper meantime traded lower.

Traders said the most active credit in Junkbondland was Tuesday’s quick-to-market offering of 7.25-year notes from Swiss oilfield services company Weatherford International plc, which mostly traded well up from its par issue price.

Away from the deals that have actually priced so far, oil and natural gas operator EP Energy LLC upsized its seven-year secured offering, which is expected to price during Thursday’s session. Its existing bonds were improved, on busy volume.

Statistical market performance measures turned mixed on Wednesday, after having been higher across the board on Tuesday and lower all around on Monday.

Bombardier goes big

Three issuers brought single-tranche deals on Wednesday, raising a combined total of $2.69 billion.

One deal was upsized, one was downsized, and one came at the high end of its expected range.

One of the three issuers came with an a.m.-to-p.m. drive-by.

Of the executions, one came at the tight end of talk, one came on top of talk, and one came at the wide end.

Bombardier priced a $1.4 billion issue of 8¾% five-year bullet notes (B3/B-) at 99.001 to yield 9%.

The yield came at the wide end of the 8¾% to 9% yield talk. That talk came earlier Wednesday, on top of initial guidance.

The deal was announced at benchmark size. However the Valcourt, Quebec-based aerospace and transportation company was considering a range of $750 million to $1.4 billion, sources said.

Bombardier will use the proceeds to address near-term debt maturities, sources said.

BofA Merrill Lynch, BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, National Bank of Canada and UBS Investment Bank were the joint bookrunners.

Tenet upsizes drive-by

In drive-by action, Tenet Healthcare priced an upsized $750 million issue of five-year senior secured second-lien notes (Ba3/B) at par to yield 7½%.

The issue size was increased from $500 million.

The yield printed on top of yield talk.

Barclays was the lead left bookrunner. BofA Merrill Lynch and Citigroup were the joint bookrunners.

The Dallas-based hospital chain plans to use the proceeds to repay ABL revolver borrowings and for general corporate purposes.

Envision prices tight

Envision Healthcare priced a downsized $550 million issue of eight-year senior notes (B3/B) at par to yield 6¼%.

The issue size was decreased from $750 million, as the company shifted $200 million of proceeds to its concurrent term loan, increasing the loan size to $3,495,000,000 from $3,295,000,000.

The yield printed at the tight end of the 6¼% to 6½% yield talk.

Barclays was the lead left bookrunner. JPMorgan, SunTrust and Wells Fargo were the joint bookrunners.

Proceeds, together with proceeds from the concurrent term loan, will be used to pay off Envision Healthcare’s existing term loan and ABL facility, to pay off the Amsurg Corp. 5 5/8% notes due 2020 and the Amsurg credit agreement and for working capital, capital expenditures and other general corporate purposes.

EP Energy upsizes

Looking ahead to the Thursday session, EP Energy expects to price an upsized $500 million offering of seven-year senior secured notes (B3/BB-).

The deal kicked off Wednesday and was upsized from the original $350 million amount later in the day.

The notes are talked to yield 8% to 8¼%, on top of initial guidance.

Goldman Sachs is the left bookrunner. Credit Suisse, JP Morgan, Citigroup and RBC are the joint bookrunners.

The Houston-based oil and natural gas exploration and production company plans to use the proceeds to repay a credit facility and/or for other general corporate purposes.

EP Energy boarded a calendar that includes at least three other deals expected to clear before the weekend.

Hilton Grand Vacations is selling $300 million eight-year notes (Ba3/BB) with early guidance in the mid 6% area.

Genesys Telecommunications Laboratories, Inc. is in the market with $700 million of eight-year senior notes (Caa2/CCC), which are in the market with early guidance in the low 9% area.

And Conduent Inc. plans to sell $750 million of eight-year notes.

Bombardier busy

In the secondary realm, Bombardier’s big new offering of 8¾% notes due 2021 were seen trading actively, though not much removed from their discounted 99.001 issue price.

One trader pegged the Montreal-based transportation equipment company’s offering in a 98¾-to-99 1/8 bid range, while a second pegged the bonds going home at 99¼ bid, with over $25 million changing hands.

Yet a third trader saw the bonds get as good as 99½ bid.

Bombardier’s existing paper was meantime seen mixed on the session, with a market source quoting its 6% notes due 2022 at 88¾ bid, down ½ point on the day, with over $14 million traded.

Its 6 1/8% notes due 2023 finished down 1 point, at 88 bid.

But its 7½% notes due 2025 finished at 90¾ bid, up 1/8 point, with over $12 million traded.

Bombardier’s 7¾% notes due 2020 gained 1 full point on the day, going out at 103½ bid.

Envision active in aftermarket

Envision’s new 6¼% notes due 2024 were seen improving from their par issue price, with a trader first locating the new issue trading between 100¼ and 101¼ bid. Later on in the session, he said that had tightened to a range of 101 to 101¼ bid.

A second trader saw them in a 101-to-101½ bid context.

Another saw the Nashville and Greenwood Village, Colo.-based health-care company’s new deal finishing at 101 bid, with over $25 million traded.

New Tenet up, existing off

Also out of the health-care sector, a trader quoted the new Tenet 7½% senior secured second-lien notes due January 2022 as having gotten as a good as a 103-to-103¾ bid context, well up from the deal’s par issue price, but he did not see much initial volume in the new credit.

The company’s existing unsecured bonds – junior in the capital structure to the new deal – were meantime in retreat.

A trader said that “other parts of their structure were down 1 point or so,” with their 8 1/8% notes due 2022 down 1 point at 94 bid, with over $26 million traded.

A market source saw Tenet’s 6¾% notes due 2023 down more than ½ point on the day, finishing at just under 88 bid, on $23 million of volume.

Weatherford tops Most Actives

Apart from the day’s new deals, a trader said that Weatherford International’s 9 7/8% notes due February 2024 were easily the busiest junk issue of the session, seeing them at 101¾ bid, which he called up 1/8 point on the day, with over $198 million traded.

Another trader said the bonds, which had priced at par on Tuesday, traded between 101½ and 102 bid late Tuesday, then fell “below 99” in early Wednesday trading but bounced back to end at a 101-to-101¾ bid context on Wednesday.

EP Energy improves

With EP Energy bringing a new deal, a trader saw its existing 9 3/8% notes due 2020 up 2¼ points, at 79¼ bid, on volume of over $37 million.

Indicators turn mixed

Statistical market performance measures turned mixed on Wednesday, after having been higher across the board on Tuesday and lower all around on Monday. It was the indicators’ third such mixed session in the last seven trading days.

The KDP High Yield index edged up by 1 basis point, ending at 69.89, its second straight gain after three straight losses. On Tuesday, it had jumped by 22 bps, which followed a 65 bps nosedive on Monday.

The index’s yield, though, atypically rose by 1 bp on Wednesday, to 5.92%, after having come in by 6 bps on Tuesday, even though the yield usually moves inversely to the index reading, generally falling as the index rises and vice versa. On Monday, the yield had ballooned out by 24 bps, its third consecutive widening.

The Markit Series 27 CDX index retreated by 7/32 point on Wednesday to close at 103 5/8 bid, 103 11/16 offered, after having shot up by 7/8 point on Tuesday. It was the second loss in the last three sessions, including Monday’s 19/32 point drop.

The Merrill Lynch High Yield index was up by 0.045% on Wednesday, its second straight gain; on Tuesday, it had rebounded by 0.526%, after having plummeted by nearly a full point on Monday, retreating by 0.934%. Wednesday was its third gain over the last four days.

That lifted its year-to-date return to 14.255% from Tuesday’s close at 14.204% and Monday’s dip to 13.606%.

However, those levels remain well below its peak level for this year of 16.768%, established on Oct. 25.

© 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.