Nielsen, WCI add-ons drive by; Wind slates big dollar/euro deal; Central Garden up on bid news

By Paul Deckelman and Paul A. Harris

New York, June 23 – The high-yield primary arena opened the final full trading week in June on Monday with a pair of quickly shopped add-on offerings and was looking forward to one very large deal that is expected to price on Tuesday.

Syndicate sources said that two financing subsidiaries of New York-based television ratings and consumer information provider Nielsen Co. BV brought an $800 million add-on to their existing 2022 notes. The notes were later seen by several traders at a small premium to the add-on’s issue price.

Homebuilder WCI Communities, Inc. did a $50 million add-on to its existing 2021 notes.

The sources said that Wind Telecomunicazioni SpA, which provides integrated mobile, wireline and internet communications services in Italy, plans to price $1.9 billion of senior secured fixed-rate notes on Tuesday via a financing subsidiary as part of a more than €4 billion three-tranche deal that also includes euro-denominated fixed and floating-rate paper.

That big Wind deal was one of a number of new deals heard to have climbed onto the forward calendar on Monday, including prospective dollar-denominated transactions from energy operators Rose Rock Midstream, LP, Memorial Resource Development Corp. and Ithaca Energy Inc., as well as specialty retailer Conn’s, Inc., while packaging products manufacturer Crown Holdings Inc. and U.K.-based food producer Boporan have euro-denominated transactions coming up.

Traders saw some of the recently priced junk bond deals, such as the offerings from Ardagh Group and Cenveo Corp., trading a little off from the aftermarket levels seen late last week.

Away from the new deals, Central Garden & Pet Co.’s bonds and shares rose in brisk trading as the supplier of lawn & garden products and pet supplies announced that it had received an unsolicited letter from Harbinger Group, Inc., asking that it consider a possible acquisition bid or a bid for its pet products segment by Harbinger, alternatives which Central Garden said it would discuss with its legal and financial advisers.

Statistical market-performance indicators were higher for a third straight session on Monday.

Nielsen taps 5% notes

A news-heavy session saw two issuers show up with drive-by add-on tranches, raising a combined total of $854 million.

One priced at the rich end of talk, while the other came in the middle of talk.

Nielsen Finance LLC and Nielsen Finance Co. priced an $800 million add-on to their 5% senior notes due April 15, 2022 (expected ratings B1/BB) at 100.375 to yield 4.923%.

The reoffer price came in the middle of the 100 to 100.50 price talk.

J.P. Morgan ran the books for the debt refinancing and general corporate purposes deal.

WCI taps 6 7/8% notes

WCI Communities priced a $50 million add-on to its 6 7/8% senior notes due Aug. 15, 2021 (B3/B) at 102.50 to yield 6.295%.

The reoffer price came at the rich end of the 102 to 102.5 price talk.

Citigroup was the bookrunner.

The Bonita Springs, Fla.-based real estate developer and homebuilder plans to use the proceeds for general corporate purposes, including the acquisition and development of land.

Wind talks €4.1 billion equivalent

Wind Acquisition Finance SA plans to price €4,065,000,000 equivalent of senior secured notes (expected Ba3/confirmed BB) on Tuesday.

The deal rolled out Monday morning. Books closed at the close of business on Monday for accounts in the United States. Books close at 5 a.m. ET on Tuesday for European accounts, and the deal is set to price thereafter.

The debt refinancing deal is coming in three tranches, with target sizes as follows: a €500 million tranche of floating-rate notes, non-callable for one year, a €2.15 billion tranche of fixed-rate notes, non-callable for two years, and a $1.9 billion fixed-rate notes, non-callable for two years.

The floating-rate notes are talked to with a 400 to 425 basis points spread to Euribor. The euro-denominated fixed-rate notes are talked to yield 4% to 4¼%. The dollar-denominated fixed-rate notes are talked to yield 4¾% to 5%.

Global coordinator Credit Suisse will bill and deliver for the euro-denominated tranches. Global coordinator Deutsche Bank will bill and deliver and is the physical bookrunner for the dollar denominated tranche.

Banca IMI, Barclays, Citigroup, HSBC and SG CIB are the global coordinators for the dollar-denominated and euro-denominated fixed-rate tranches.

BNP Paribas, Credit Agricole, ING, Natixis, Alfa-Bank and UniCredit are joint bookrunners for the floating-rate tranche.

Rose Rock roadshow

The Monday session was rife with roadshow announcements in the dollar-, euro- and sterling-denominated markets.

All deals in all denominations are expected to price before the end of the week.

Rose Rock Midstream plans to start a roadshow on Tuesday for a $350 million offering of eight-year senior notes.

Deutsche Bank, Barclays and Wells Fargo are the joint bookrunners for the debt refinancing and general corporate purposes deal.

Ithaca Energy starts in London

Ithaca Energy Inc. began an international roadshow today in London for its $300 million offering of five-year senior notes (expected ratings Caa1/CCC+).

Joint bookrunner Barclays will bill and deliver. BNP Paribas, Deutsche Bank and RBC are also joint bookrunners.

The Aberdeen, Scotland-based oil and gas exploration, development and production company plans to use the proceeds to repay bank debt.

Memorial Resource eight-years

Memorial Resource Development began a roadshow on Monday in New York and New Jersey for its $300 million offering of eight-year senior notes (Caa1/B-).

Citigroup, BofA Merrill Lynch, Barclays, BMO, J.P. Morgan, RBC and Wells Fargo are the joint bookrunners for the debt refinancing deal.

Conn's starts roadshow

Conn’s, Inc. began a roadshow on Monday for a $250 million offering of eight-year senior notes (B2/B).

BofA Merrill Lynch, Canaccord, Mitsubishi, Piper Jaffrey, Regions and Stifel Nicholas are the joint bookrunners for the debt refinancing.

Boparan £800 million equivalent

Boporan Finance plc plans to start a European roadshow on Tuesday for an £800 million equivalent three-part offering of senior notes (B1/B+).

The Rule 144A and Regulation S deal is coming in the form of a sterling-denominated tranche of five-year notes, and euro-denominated and sterling-denominated tranches of seven-year notes.

Global coordinator Goldman Sachs will bill and deliver. JP Morgan is also a global coordinator.

Barclays, BNP Paribas, HSBC and Royal Bank of Scotland are the joint bookrunners.

Proceeds will be used to repay the company's existing notes due 2019, for working capital and for general corporate purposes.

Crown start Tuesday

Crown European Holdings SA, a subsidiary of Crown Holdings, plans to begin a European roadshow on Tuesday in London for its €500 million offering of non-callable eight-year senior notes (expected ratings Ba1/BB-).

Joint physical bookrunner BNP Paribas will bill and deliver. Royal Bank of Scotland is also a joint physical bookrunner.

BofA Merrill Lynch, Barclays, Credit Agricole, Deutsche Bank, Santander and Wells Fargo are joint bookrunners for the debt refinancing deal.

Nielsen notes higher

In the secondary market, traders saw Nielsen Finance LLC and Nielsen Finance Co.’s 5% notes due 2022 moving higher after the companies did their $800 million add-on issue.

One trader pegged the bonds in a 100¾ to 100 7/8 bid context, up from their 100.375 issue price.

A second quoted them trading between 100 7/8 and 101, while yet another trader saw them even better than that. He had the notes going home after having gotten as good as 101 to 101½.

WCI add-on improves

One of the traders said that it was unlikely he would see any dealings in WCI Communities’ 6 7/8% notes due 2021, given that the homebuilder’s add-on was just $50 million.;

However, a second trader quoted the notes at 102¾ bid, 103¼ offered, after the add-on priced at 102.5

Ardagh bonds off

Several traders saw lower levels on Monday for the new Ardagh Packaging Finance plc/Ardagh Holdings USA Inc. notes that priced on Friday and then moved up in initial aftermarket dealings.

One said that its senior secured floating-rate notes due in December 2019 were at 100¼ bid, 100½ offered, which he called down¾ point on the session, while a second quoted those bonds at 100 3/8 bid, 100½ offered.

Those levels were well down from 101 to 101½ bid context at which the notes had traded on Friday after the issuer companies – financing units of Dublin, Ireland-based glass and metal packaging products maker Ardagh Group – had priced that $1.11 billion tranche of the notes at par to yield 300 basis points of Libor. The tranche had been massively upsized from an originally shopped $430 million.

While the floaters were seen having come off their initial aftermarket gains, traders saw the issuers’ new 6% senior unsecured notes due 2021 around the same levels at which they had traded on Friday, with one seeing them unchanged at 100½ bid, 101 offered. A second located them at 100 5/8 to 101.

Ardagh had priced $440 million of those notes at par, with no upsizing.

Besides the dollar-denominated bonds, Ardagh had also priced €1.16 billion of 4¼% senior secured notes due in January of 2022, at par.

Cenveo seen easier

Among the deals priced earlier last week, traders saw somewhat easier levels on both tranches of Thursday’s $790 million two-part offering from Cenveo Corp.

A market source said that the Stamford, Conn.-based commercial printer and communications services provider’s new 6% senior-priority notes due 2019 were at 100¼ bid, 100¾ offered on Monday, which he called down¼ point on the day, while a second trader saw the bonds at 100¼ bid, 100½ offered.

Those levels were a bit off from the 100½ context at which the notes had been seen going home on Friday.

Cenveo had priced $540 million of those notes at par to yield 6.002% on Thursday, and the bonds got as good as 100 5/8 bid, 101 1/8 offered in initial aftermarket dealings, traders said.

The other half of that deal, the $250 million of new 8½% junior-priority notes due in September of 2022, was quoted on Monday at 99 3/8 bid, 99 5/8 offered. At another desk, one of the traders called those bonds down 5/8 points on the day at 99 3/8 bid, 99 7/8 offered.

That was down from the par level at which they had priced to yield 8.504%.

Recent deals little seen

Beyond that, one of the traders said that there was not much activity in other deals, which had recently come to market.

He opined that on some of the names: “If it trades, it will trade the first five to 10 minutes, and then it’s just packed away.”

New deal rush ahead?

Some market participants were mixed on what would lie ahead for the junk market.

One school of thought suggested that with the end of the month, the calendar second quarter and the first half upcoming, “we’re going to expect a big week. I see the underwriters trying to jam those deals in this week and Monday and Tuesday of next week, trying to get them all done.”

After that, he predicted, “it’s going to be pretty dead” leading up to next Friday’s July 4th market holiday and for some time after that.

Another trader sounded a more cautious note.

He pointed out that prospective issuer Evertec, Inc., a San Juan, Puerto Rico-based transaction processing business serving Latin America, had withdrawn its planned $400 million offering of eight-year senior secured notes on Friday, with the company saying that the cost of capital it would have faced was not attractive.

“With interest rates at their all-time lows, they were saying that the cost of capital was too expensive,” he marveled, adding that, “That’s not a good sign for that company.”

Looking at the broader junk market, he noted that high-yield mutual funds and exchange traded funds, considered a reliable barometer of overall liquidity trends in Junkbondland, had shown a $239 million outflow in the week ended last Wednesday, the first such cash loss seen after six straight weeks of inflows.

“It will be interesting to see if this will be the start of something [negative] because everywhere you read, if it has to do with high-yield of bonds [overall], someone is saying, ‘Get your money out.’

“It will be interesting to see if this is the start of a longer-term trend.”

Central Garden gains

Among specific non-new-deal issues in the secondary market, a trader pointed out that Central Garden & Pet Co.’s 8¼% notes due 2018 had moved up after the Walnut Creek, Calif.-based maker of lawn and garden products and pet supplies announced that it had received an unsolicited letter from Harbinger Group requesting that Central discuss with Harbinger a possible acquisition by Harbinger of all outstanding shares of Central’s common stock at $10 per share in cash.

Harbinger, a New York-based holding company with interests in a variety of consumer products manufacturers and distributors, alternatively suggested that it might acquire Central’s pet products segment for $750 million in cash, subject to due diligence.

Central said that its board “will review Harbinger Group’s unsolicited letter in due course in consultation with its financial and legal advisors.”

Central’s notes gained 13/16 of a point on the session to end at 104 5/16 bid, up from prior levels around 103½, on volume of over 410 million. Its Nasdaq-traded shares, meantime, jumped as much 11.22% in initial dealings on the news before coming off those peaks to end up 58 cents, or 6.44%, at $9.58.

Volume of 1.283 million was more than 22 times the usual daily turnover.

Market indicators up on day

Statistical indicators of junk market performance, meanwhile, were higher across the board on Monday for a third consecutive session. They had also risen on Thursday and Friday, after having been mixed over the previous six sessions.

The KDP High Yield Daily index gained 5 basis points to end at 75.05, its third consecutive improvement, after having edged up by 1 bp on Friday. The yield came in by 1 basis point to 4.96%, after having been unchanged on Friday.

Before that, the yield had declined for two straight sessions.

The Markit CDX Series 22 index was up by 1/16 of a point on Monday to close at 109 3/32 bid, 109 5/32 offered, after having been unchanged on Friday and rising over the two sessions before that.

The widely followed Merrill Lynch High Yield Master II index continued to roar higher on Monday, posting its 14th straight advance. It was up by 0.072%, on top of Friday’s 0.086% rise.

The latest gain lifted its year-to-date return to 5.716%, which was its 13th straight new peak level for 2014, eclipsing the old mark of 5.641% that had been set on Friday.

Several other index components also hit new milestones for the year on Monday. Its average issue price rose to a third straight new high for the year of 105.9617, up from its previous high point for the year, Friday’s 105.9435.

The yield-to-worst declined to 4.848%, a third consecutive new low for the year as well as an all-time low level. It declined from 4.859% on Friday, its previous 2014 and all-time low.

And its spread-to-worst over comparable Treasury issues narrowed to 353 bps on Monday, its third successive new tight level for 2014. That was down from Friday’s 354 bps, the previously set tight spread for the year to date.

However, although junk bond yields are currently at their all-time lows, spreads remain up by more than 100 bps from their historical tight levels around 250 bps over comparable Treasuries, first set back in 1997 and then matched in 2007.

© 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.