ArcelorMittal megadeal, WellCare, FTS price; CommScope, American Energy – Permian slate

By Paul A. Harris and Paul Deckelman

New York, May 27 – Activity picked up in the high-yield primary sphere on Wednesday, with syndicate sources seeing a trio of deals come to market.

The big deal of the day came from global steelmaker ArcelorMittal SA, which priced a quickly shopped $1 billion two-part offering of five- and 10-year notes.

Both tranches of the new bonds were seen having improved when they hit the aftermarket. The company’s existing bonds, on the other hand, were in retreat.

Medicaid managed-care company WellCare Health Plans, Inc. did a quick-to-market $300 million add-on to its existing 2020 notes. Those notes firmed in active dealings after pricing.

And well-completion services provider FTS International, Inc. came to market with a regularly scheduled $350 million offering of five-year floating-rate notes.

The day’s deals totaled $1.65 billion of new dollar-denominated and fully junk-rated paper from domestic or industrialized-country borrowers – well up from the $100 million of such paper that had priced in one lonely add-on tranche on Tuesday.

Apart from the transactions that actually came to market, Junkbondland primaryside players saw a pair of prospective new deals join the forward calendar: communications infrastructure provider CommScope Holding Co. Inc.’s $2 billion two-part offering and oil and natural gas operator American Energy – Permian Basin LLC’s $295 million of five-year secured paper.

In the non-new-deal secondary market, Frontier Communications Corp.’s bonds were better across the board, taking a cue from the telecommunications company’s shares, which jumped in heavy trading following an analyst’s upgrade.

Statistical market-performance measures were higher all around on Wednesday after two consecutive mixed sessions.

ArcelorMittal $1 billion drive-by

The primary market saw three issuers raise $1.65 billion in four dollar-denominated tranches on Wednesday.

Two of the three issuers came with a.m.-to-p.m. drive-by deals, while the third was in the market overnight.

Three of the four came at the tight end or rich end of price talk.

None of the deals was upsized.

ArcelorMittal priced $1 billion of non-callable senior notes (Ba1/BB/BB+) in two tranches.

The deal included $500 million of five-year notes that priced at par to yield 5 1/8%. The yield printed 12.5 basis points beneath the low end of the 5¼% to 5½% yield talk.

The debt refinancing deal also included a $500 million tranche of 10-year notes that priced at par to yield 6 1/8%. The yield printed at the tight end of yield talk in the 6¼% area.

Global coordinator J.P. Morgan Securities LLC will bill and deliver.

BofA Merrill Lynch, Citigroup and Deutsche Bank Securities Inc. were joint bookrunners.

FTS at a discount

FTS International priced a $350 million issue of Libor plus 750 bps five-year senior secured floating-rate notes (B1/B+) at 99.

The reoffer price and spread came on top of price talk.

Wells Fargo was the sole bookrunner.

The Fort Worth-based oil and gas field services provider plans to use the proceeds to pay off and terminate its revolver and for general corporate purposes.

WellCare at the rich end

WellCare Health Plans priced a $300 million add-on to its 5¾% senior notes due November 15, 2020 (Ba2/BB) at 104.5 to yield 4.803%.

The reoffer price came at the rich end of the 104.25 to 104.5 price talk.

Goldman Sachs was the left bookrunner. JPMorgan, SunTrust and Wells Fargo were the joint bookrunners.

American Energy Permian secured

American Energy – Permian Basin is shopping a $295 million offering of five-year second-lien senior secured notes (B1/CCC+) with preliminary guidance in the low-to-mid 8% yield context, according to a market source.

The debt refinancing deal is expected to price before the end of the week.

Goldman Sachs, Credit Suisse, BofA Merrill Lynch, Morgan Stanley and Wells Fargo are managing the sale.

CommScope launches $2 billion

CommScope Holding launched a $2 billion two-part offering of high-yield notes.

CommScope, Inc. plans to sell $500 million of five-year senior secured notes (expected Ba2/confirmed BB), which come with two years of call protection. Proceeds, along with cash on hand, will be used to repay a portion of the company’s existing term loan.

CommScope Technologies Finance LLC plans to sell $1.5 billion of 10-year senior unsecured notes (expected B2/confirmed B), which come with five years of call protection. Proceeds from the unsecured notes, along with proceeds from a concurrent $1.25 billion term loan, will be used to fund the acquisition of the Broadband Network Solutions business of TE Connectivity, Ltd.

The deal is expected to price Thursday.

JPMorgan, BofA Merrill Lynch, Deutsche Bank, Wells Fargo, Barclays and Jefferies are the joint bookrunners.

Europcar at the tight end

In the European market, Europcar Groupe SA priced a €475 million issue of 5¾% seven-year notes at 99.289 to yield 5 7/8%.

The yield printed at the tight end of yield talk in the 6% area.

Joint global coordinator and physical bookrunner Deutsche Bank will bill and deliver. Credit Agricole CIB is also a joint global coordinator and physical bookrunner. BNP Paribas is a joint global coordinator and joint bookrunner.

Goldman Sachs, HSBC, Lloyds, Royal Bank of Scotland and SG CIB are joint bookrunners.

The Paris-based car rental arm of Volkswagen plans to use the proceeds from the Rule 144A and Regulation S offering to refinance the €400 million of its existing senior subordinated notes and for general corporate purposes.

New ArcelorMittal moves up

In the secondary ream, the new ArcelorMittal 6 1/8% notes due 2025 were the day’s busiest junk bond credit, with over $47 million having changed hands by the close.

A market source quoted the Luxembourg-based steel giant’s new issue at 100 5/8 bid, versus their par issue price.

A second market source pegged the bonds a little better than that, at 100 7/8 bid.

At yet another shop, a trader saw two-sided markets in a 100½-to-101 bid complex.

The other half of Arcelor’s new deal, its 5 1/8% notes due 2020, were quoted by the trader in that same 100½-to-101 area.

A market participant elsewhere estimated those bonds at 100¾ bid.

Existing Arcelors easier

ArcelorMittal’s existing notes, on the other hand, were seen on the downside.

“Some of their structure traded off by about ¾ point to 1 point,” a trader said.

He saw other bonds down ½ point.

For instance, the 9.85% notes due 2019 had “prints all over the place” before ending around the 121 bid level.

Arcelor’s 6¼% notes due 2021 dropped ¾ point on the day to 104¾ bid on volume of more than $14 million.

WellCare does well

WellCare Health Plans’ add-on to its 5¾% notes due 2020 was seen by traders having moved up after pricing at 104.5.

One quoted the Tampa, Fla.-based Medicaid managed-care provider’s deal having firmed to 105 bid, 105¾ offered.

Another located the notes at 105¼ point, on volume of more than $27 million.

Frontier bonds better

Away from the new deals, a trader pointed out that Frontier Communications’ bonds “were pretty active at higher levels,” seeing its 6 7/8% notes due 2025 up 1 point, “or maybe 1½ points,” at 91½ bid.

A second market source called the bonds up a deuce on the day, also at 91½, with over $27 million having changed hands.

Frontier’s 8½% notes due 2020 were seen having improved to 107 bid, with over $12 million traded.

The first trader saw its 6¼% notes due 2021 gain 1¼ points to end at 96 bid, with over $7 million traded.

He suggested that “all of this takeover talk in telecom,” with Charter Communications Inc. agreeing to acquire TimeWarner Cable Inc. and the Altice SA purchase of Suddenlink, was making the bonds look potentially attractive.

He also noted that the Stamford, Conn.-based telecom service provider’s New York Stock Exchange-traded shares jumped by 36 cents, or 7.32%, ending at $5.28, after Morgan Stanley raised its assessment on the shares by two notches to overweight. Volume of 39.3 million shares was over 3½ times the norm.

Indicators turn higher

Statistical market performance indicators improved across the board on Wednesday after two consecutive mixed sessions before that.

The KDP High Yield Daily index edged up by 1 bp to 71.41, its first gain after one loss. On Tuesday, it had dipped by 3 bps after having been unchanged on Friday. The index did not publish on Monday due to the Memorial Day holiday break.

The Markit Series 24 CDX North American High Yield index was up by 3/16 point on Wednesday, its first gain after three consecutive losses, including Tuesday, when it eased by 1/32 point, which was also its sixth downturn in the previous seven sessions.

The Merrill Lynch North American Master II High Yield index registered its fourth consecutive gain on Wednesday, firming by 0.046%, on top of Tuesday’s 0.071% advance.

Wednesday’s gain lifted the index’s year-to-date return to 4.019%, a new peak level for 2015, and its first time this year over the psychologically significant 4% mark. It was up from 3.971% on Tuesday, its former peak level for the year.

© 2015 Prospect News.
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