Telesat Canada notes, US Airways pass-throughs price; downgraded Nokia still under stress

By Paul Deckelman and Paul A. Harris

New York, April 30 - The high-yield market closed out the month of April on Monday on a positive note, with most issues finishing with gains and statistical measures of market performance pointing higher.

In the primary arena, just one strictly high-yield deal priced from satellite communications operator Telesat Canada, a quickly shopped $700 million issue of five-year notes that appeared too late in the day for any kind of aftermarket.

Earlier, US Airways Group Inc. came to market with an upsized, split-rated three-part issue of aircraft passthrough certificates, which was seen to have gained a little altitude when they began trading.

A $40 million add-on deal from transaction and payment processing provider Evertec, LLC, which was originally expected to price Monday, was heard to have been pushed back to Tuesday.

The forward calendar grew in the meantime. CNG Financial, Inc., a provider of alternative financial services, shopped around a $350 million offering of eight-year secured notes. Travel services company Carlson Wagonlit BV was heard by syndicate sources to be hitting the road, first in Europe and later in the United States with an $850 million seven-year secured deal. European paper manufacturer Lecta SA was slated to begin marketing a two-part euro-denominated deal to investors over there Tuesday.

The issues that priced last week, including those from Levi Strauss & Co. and Ineos Finance plc, were quoted at around the same levels to which they rose after their respective pricings.

Away from the new deals, phone maker Nokia Corp.'s paper - beaten down by several points in heavy trading Friday after Standard & Poor's lowered its ratings to junk - remained actively traded Monday and still under pressure.

Telesat $700 million drive-by

Two companies brought a combined three tranches of notes, raising a total of $944 million on Monday.

Telesat Canada and Telesat priced a $700 million issue of five-year senior notes (B3/B-) at par to yield 6%, on top of price talk.

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

The Ottawa-based fixed satellite services operator plans to use the proceeds to the fund tender of its 11% notes due 2015.

US Airways certificates

US Airways priced an overall $623 million of passthrough certificates, series 2012-1, $244 million of which were junk.

The deal included a $125 million of tranche of class B certificates (B2/B+/BB-) at par to yield 8%. The tranche was upsized from $88 million. The certificates have a final distribution on Oct. 1, 2019 and final maturity on April 1, 2021.

The deal also included an added $119 million tranche of class C certificates (B3/B/B), which priced at par to yield 9 1/8%. The class C tranche notes have a final expected distribution date and final maturity of Oct. 1, 2015.

In addition to the junk, US Airways priced a $380 million tranche of class A certificate (Ba2/BBB/A-) at par to yield 5.9%. The tranche was upsized from $357 million.

Bookrunners were Citigroup and Goldman Sachs. Morgan Stanley led the quick-to-market deal, which was priced on the investment-grade desk.

Evertec for Tuesday

The calendar built purposefully on Monday.

The amount of that buildup took one syndicate banker by surprise.

This source looks for $5 billion to $6 billion of issuance for the week and professed knowledge of two drive-by deals that will come, should market conditions permit.

Another official from a different high-yield syndicate thought the $5 billion to $6 billion figure somewhat high, but has visibility of two sizable transactions that are expected to be announced before the end of the week.

Among Monday's announcements, Evertec and Evertec Finance Corp. plan to price a $40 million add-on to their 11% senior notes due Oct. 1, 2018 (existing ratings Caa1/B-) on Tuesday.

Bank of America Merrill Lynch is the lead left bookrunner. Morgan Stanley is the joint bookrunner.

The proceeds, together with the proceeds from the credit agreement transactions and available cash on hand, will be used to pay a cash dividend to the direct parent company, Carib Holdings, which in turn will ultimately be paid as a cash dividend to the stockholders of the indirect parent company, Carib Inc.

The add-on notes will be fungible with the existing notes upon registration.

The original $220 million issue priced at par in September 2010.

Carlson Wagonlit starts show

Carlson Wagonlit began a roadshow Monday in Europe for an $850 million equivalent offering of seven-year senior secured notes in dollars and euros.

The European roadshow wraps up Wednesday.

A roadshow gets underway in the United States on Thursday and wraps up May 8.

The deal is expected to price May 9.

J.P. Morgan is the left bookrunner. BNP, Jefferies, Lloyds and Morgan Stanley are the joint bookrunners.

The Amsterdam-based travel management services provider plans to use the proceeds to refinance its existing loan debt and floating-rate notes.

CNG sets Tuesday investor call

CNG Financial will host an investor call on Tuesday for its $350 million offering of eight-year secured notes.

The deal is set to price later this week.

Credit Suisse, Jefferies and Wells Fargo are the joint bookrunners.

The notes come with four years of call protection. However, a special call provision allows the issuer to redeem up to 10% of the notes annually at 103. The notes also feature a 101% poison put.

The Cincinnati-based provider of international alternative financial services plans to use the proceeds to fund the tender offer for its existing 12¼% notes and 13¾% notes and for general corporate purposes.

Lecta starts Tuesday

Luxembourg-based Lecta plans to start a roadshow on Tuesday in London for its €590 million two-part notes offer.

The deal features tranches of six-year floating-rate notes and seven-year fixed-rate notes.

Joint bookrunner Deutsche Bank will bill and deliver. Credit Suisse and Morgan Stanley also are joint bookrunners.

The coated paper manufacturer plans to use the proceeds to refinance debt.

Telesat too late to trade

In the secondary realm, a trader said that people were sitting around waiting for the only new junk deal that was scheduled to price on Monday - the $700 million five-year issue from Ottawa-based satellite communications company Telsat Canada.

While that quick-to-market deal did eventually price, it came well after most activity wound down and did not see any real aftermarket action.

The company's existing 11% notes due 2015 - the subject of a pending tender offer that will be paid for with the new deal's proceeds - traded in a narrow range between last week's 106½ level and 106¼ on Monday. Round-lot volume was a brisk $12 million, which was relatively heavy for that typically lightly traded issue.

Airline pass-throughs take off

With little going on in the purely junk primary sphere, some market participants were dabbling in US Airways' new passthrough certificates. The Tempe, Ariz.-based airline carrier priced an upsized three-part $623.379 million fly-by passthrough certificate deal.

A trader saw one of the two junk-rated tranches - the $124.98 million of 8% class B certificates due 2019 - initially firming a little to 100½ bid, 101½ offered after that B2/BB+/BB- issue priced at par.

He noted that "the B tranche is relatively small, so we have not seen a lot of activity in that one."

At another desk later on, a trader saw that paper moving up to 101¼ bid, 101¾ offered.

He saw the investment-grade (Ba2/BBB/A-) 5.9% class A certificates due 2024 trading at 100¾ bid, 101¼ offered. That was up from the par level in which the $379.785 million tranche priced.

He did not see any immediate aftermarket in the other junk-rated part of that deal: the $118.636 million 9 1/8% class C certificates due 2015. That B3/B/B tranche - a late addition to the class "A" and "B" certificates that were originally shopped around - also priced at par.

US Airways' existing 6.82% pass-through paper due 2016 was seen up 1 ¾ points Monday, at 89¾ bid.

Last week's deals hold ground

Among the deals that priced last week, traders saw the bonds generally holding on to the gains they notched in aftermarket trading after their respective pricings.

For instance, one trader quoted Levi Strauss & Co.'s 6 7/8% notes due 2022 at 102 3/8 bid, 102¾ offered.

That was about the level at which the iconic San Francisco-based blue jeans manufacturer's upsized $385 million issue traded from about midweek on.

The bonds priced at par last Tuesday after that quickly shopped deal was increased from its originally announced $350 million size.

However, a second trader said that he did not see any trading in the Levi's bonds.

He did, however, see Ineos Finance's 7½% senior secured notes due 2020 trading at 102¾ bid, 103¼ offered.

Another trader saw those bonds at 102 5/8 bid, 103 offered.

The British chemical company's deal - originally sized at $2.2 billion, then downsized successively to $1.7 billion and finally to $775 million -priced at par last Thursday, coming off the forward calendar after a roadshow. The bonds quickly moved up to around the 102½ bid level when they were freed for secondary dealings later in that session.

A market source at another shop quoted Plains Exploration and Production Co.'s 6 1/8% notes due 2019 at 101 bid on Monday.

That was about the level at which the Houston-based oil and natural gas operator's $750 million drive-by deal - upsized from an originally announced $500 million - gradually moved up to by the end of last week, after first pricing at par last Tuesday.

Petroleos, Nokia stay busy

Away from the new deals, a trader said it was "a little quiet day here on my side of the world."

However, he said that "the big names" were Petroleos de Venezuela SA and Nokia Inc., especially after the latter company's bonds fell in heavy trading on Friday following a Standard & Poor's downgrade of the mobile phone maker's ratings to junk-bond status.

"Those were in the Top 10 volume," he said.

The trader said there was huge size in Petroleos de Venezuela's 9% notes due 2021, which moved up to 82½ bid, 83 offered from an 80-81 context at the end of last week.

"So those were up a little bit," on volume of $55 million, the trader said.

"We saw it starting to pick up last week," he said of the Caracas-based Venezuelan state oil monopoly.

He saw Petroleos de Venezuela's 5¼% notes due 2017 up 1½ points, finishing at 79 bid, 79½ offered. "That seemed like it bounced and on good size" of about $22 million traded, the trader said.

"A few of the other issues traded actively - about $10 million or $20 million," he said.

These included the 8½% notes due 2017, which he said were up a couple of points to 90 bid, 90½ offered, on volume of $25 million to $39 million.

The oil company's 5 3/8% notes due 2027 gained three-quarters of a point to end at 62 bid, 62½ offered, he said, on volume of about $10 million.

As for Nokia, a trader said that the company's 6 5/8% bonds due 2039, which got whacked last week on the S&P downgrade to junk, "were still getting whacked" on Monday, quoting them at 80½ bid, 81 offered.

These losses came on top of the 2- to-3 point losses that the bonds took Friday after S&P cut the Finland-based phone maker's long-term corporate credit rating and its unsecured debt to BB+ from BBB- previously, while lowering its short-term corporate credit rating to B from A-3 previously. The ratings all carry a negative outlook.

"So they were down another point today," he said, pegging the volume at $45 million, shooting that Nokia issue and its 5 3/8% notes due 2017 right to the top of the high-yield most actives list.

He said the latter bonds actually gained a point after bouncing off Friday's lows to end at 86½ bid, 87 offered, on $55 million of turnover.

"Nokia saw some follow-through from Friday," a second trader declared.

"There's a pretty good chance that it falls out of the high-yield indexes, now that we're at the end of the month. So there was probably some forced selling ahead of that."

Nokia "bounced back up a little" from their Friday lows, "but they've taken a big hit," a third trader said.

He said both issues, while better than their lows, were still under pressure, seeing the 5 3/8s down 3/8 of a point at 86½ bid and the 6 5/8s off by 1¼ bid, to 81.

Caesars seen busy

A trader saw Caesars Entertainment Corp.'s 10¾% notes due 2016 finishing up 1 point at 87 bid, 87½ offered.

About $11 million of the bonds changed hands, putting it well up on the Junkbondland most-actives list, no including Petroleos de Venezuela and Nokia.

He saw the Las Vegas-based casino giant's Harrah's Entertainment 10% notes due 2018 ending "pretty much unchanged" at 75 ½ bid, 75 ¾ offered on volume of $8 million. That is usually the busiest bond in the Caesars capital structure.

But for whatever reason, "it wasn't as active as the other one," he said.

Caesars 5 5/8% notes due 2015 gained 1½ points to end at 77½ bid.

Warner Chilcott up on M&A talk

Elsewhere, a trader said that Warner Chilcott plc's 7¾% notes due 2018 were up by 1 or 2 points, at the 106 bid level, continuing a recent firming trend.

The paper started to move up last week and they moved up again, the trader said.

The Dublin, Ireland-based specialty pharmaceuticals company's paper was "on the tape over the weekend about being in talks with potential buyers, the trader said.

He noted that the company's stock had a great day amid the buyout buzz.

The company said that it hired Goldman Sachs as its financial advisor and would explore strategic options, including preliminary talks with potential buyers.

Recently, there have been rumors in the market that German aspirin kingpin Bayer AG might make a $32 per share bid for Warner Chilcott, but neither company would comment on that scuttlebutt.

On Monday, its Nasdaq-traded shares jumped as much as 23.8% on the M&A speculation, finally ending up $3.02, or 16.07%, at $21.81. Volume of 20.9 million shares was eight times the norm.

Market measures stay strong

Apart from the names like Nokia and Warner Chilcott, a trader said, "Nothing really jumped out."

But the market was firm overall; industrial bellwether Ford Motor Co.'s benchmark 7.45% bonds due 2031 were up 1 point on the day at 127½ bid, 128½ offered.

The statistical measures of junk-market performance gained for a fifth straight session.

A trader saw the Markit Group CDX North American Series 18 High Yield Index up by 1/8 point on Monday to end at 96 11/16 bid, 96 15 16 offered, after having gained 3/8 point on Friday.

The KDP High Yield Daily Index rose by 10 basis points Monday to finish at an even 74.00, after having jumped by 17 bps on Friday. Its yield declined by 6 bps to 6.50% after having come in by 5 bps Friday.

© 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.