Giant T-Mobile deal jumps in heavy trading; Millicom prices $800 million offering; NGL on tap

By Paul Deckelman and Paul A. Harris

New York, Oct. 9 - T-Mobile USA Inc. was easily the most popular name in Junkbondland on Wednesday, as traders reported that several hundred million dollars of the gigantic five-part deal changed hands - and were seen having firmed smartly across the board. The wireless service provider's parent company, Deutsche Telekom AG, had sold $5.6 billion of those notes in a deal that had actually priced late Tuesday.

There was also some related activity for a second consecutive session in the legacy bonds of T-Mobile's MetroPCS Wireless Inc. subsidiary.

The wireless sector remained the focus of Wednesday's new-deal activity as well, as global provider Millicom International Cellular SA priced $800 million of eight-year paper, the session's only dollar-denominated, fully junk-rated transaction. Those bonds firmed slightly in initial aftermarket dealings.

And practically alone among recently priced deals, there was some more trading in engineering company Michael Baker International, LLC's new debt.

High-yield syndicate sources heard price talk on oil and gas midstream services provider NGL Energy Partners LP's $400 million of eight-year notes, which are expected to come to market during Thursday's session.

Away from the new-deal realm, there was some downside activity in the bonds of Crown Castle International Corp., reported to be closing in on a $5 billion deal to buy wireless giant AT&T Inc.'s vast collection of communications antenna towers.

Market activity away from trading in T-Mobile was described as light, with investors still warily watching Washington - although there seemed to be some signs that the now eight-day government shutdown impasse might be moderating a little.

Statistical indicators of market performance were mixed for a third consecutive session.

Millicom prices inside of talk

Luxembourg-based Millicom International Cellular SA priced Wednesday's sole dollar-denominated deal, an $800 million issue of eight-year senior notes (Ba2/BB+) that came at par to yield 6 5/8%.

The yield printed 12½ basis points inside of yield talk set in the 6 7/8% area.

Joint bookrunner BNP will bill and deliver. Citigroup and JPMorgan were also joint bookrunners.

Proceeds will be used to reinforce the company's stake in a Colombia-based asset.

In addition to high-yield investors, the Millicom deal generated interest among emerging markets accounts, according to a trader.

Meanwhile, most market sources learned on Wednesday the final terms of Deutsche Telekom's massively upsized remarketing of $5.6 billion of T-Mobile USA senior notes (Ba3/BB) in five tranches.

However, the deal priced late Tuesday, according to a market source, who added that it went well.

Deutsche Bank, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan and Morgan Stanley managed the remarketing effort, which was upsized from $3.1 billion (see related story in this issue).

NGL Energy talk is 6 5/8% area

Looking ahead to the Thursday session, NGL Energy Partners talked its $400 million offering of eight-year senior notes (B2/BB-/BB-) with a yield in the 6 5/8% area.

Books closed Wednesday, except for those accounts scheduled to meet with the company on Wednesday afternoon and Thursday morning, for whom books close at 10:30 a.m. ET Thursday.

The deal is set to price Thursday.

RBC is the left bookrunner for the debt refinancing deal. RBS, Deutsche Bank, PNC, BofA Merrill Lynch, UBS and SunTrust are the joint bookrunners.

Hapag-Lloyd taps 7¾% notes

The European high-yield primary market had news on Wednesday as well.

Germany-based container shipping firm Hapag-Lloyd AG priced a €150 million add-on to its 7¾% senior notes due Oct. 1, 2018 (Caa1/B-) at 101¾ to yield 7.33%.

The reoffer price came in the middle of the 101½ to 102 price talk.

The deal traded in the secondary market to 103½ bid, according to a London-based market source.

Joint bookrunner Deutsche Bank will bill and deliver for the debt refinancing deal. Citigroup and JPMorgan were also joint bookrunners.

The original €250 million issue priced at par in September, so Hapag-Lloyd realized interest savings of 42 bps with the Wednesday add-on versus the original issue.

Elsewhere, the market learned of Norway-based EWOS Group's plans to sell €300 million of seven-year secured fixed-rate notes and NOK 1 billion of seven-year secured floating-rate notes.

Deutsche Bank, Danske Bank, Rabobank and Swedbank will lead the acquisition deal.

And Italy's Rhiag Group stopped the roadshow for its €350 million two-part offering of seven-year notes on Wednesday after private equity group Apax Partners agreed to buy the company, according to a London-based sellside source.

Apax entered into a definitive agreement for Apax Funds to acquire Rhiag.

The deal could resurface as early as next week, but the leverage picture will likely change, and the debt offer will thus be impacted, the sellsider said (see related story in this issue).

Wajax C$125 million deal

The Canadian high-yield primary market also generated news on Wednesday.

Wajax Corp. plans to hold a roadshow Oct. 15-16 in Toronto for a C$125 million offering of seven-year senior notes (/BB+/DBRS: BB (low)).

BMO and Scotia are the bookrunners for the debt refinancing and general corporate purposes deal.

Crew seven-year deal this week

Meanwhile Crew Energy Inc. plans to price a Canadian dollar-denominated offering of seven-year senior notes (/B-/DBRS: B) before the end of the week via TD, GMP and Scotia.

Proceeds will be used to refinance debt.

Terrific T-Mobile trading

In the secondary market, a trader declared that "most of the excitement was in T-Mobile. It was pretty much T-Mobile all day - or it was nothing."

He said that Wednesday trading volume in the five tranches of bonds that priced on Tuesday was easily above $600 million - and was all to the upside.

He saw the Bellevue, Wash.-based number four U.S. wireless services provider's 6.464% notes due 2019 moved up to a 103¼ to 103½ bid range, while a second trader saw them at 103 bid, 103½ offered. T-Mobile's corporate parent - German communications giant Deutsche Telekom AG - priced $1.25 billion of those bonds late Tuesday at a reoffer price of 102 to yield 6.033%.

Deutsche Telekom, which owns some 72% of the American company, priced a total of $5.6 billion of those bonds, which it had received from T-Mobile as part of the complex financing arrangements for T-Mobile's acquisition via a reverse merger transaction of smaller rival MetroPCS Wireless earlier this year.

The first trader meantime saw some $150 million of those newly sold bonds trading around on Wednesday, easily the top credit in the junk market's most-active list, although the other four tranches of the massive deal were not far behind.

The trader saw T-Mobile's 6.542% notes due 2020 trading at 102¼ bid, 102¾ offered, on volume of $123 million. Some $1.25 billion of those notes had been priced at par to yield 6.541%.

T-Mobile's 6.633% notes due 2021 traded up to 102 bid, 102½ offered from the par level at which that $1.25 billion of paper had priced. A second trader quoted them at 101¾ bid, 102¼ offered. Volume was over $130 million.

The company's $1.25 billion of 6.731% notes due 2022 were seen going out at 101½ bid, 102 offered, on volume of $110 million. Those notes had priced at 99 to yield 6.887%. At another desk, a trader pegged the bonds at 101¾ bid, 102¼ offered.

And its 6.836% notes due 2023 were seen by the first trader at 101 7/8 bid, 102 3/8 offered, on volume of $137 million. The second trader located the bonds at 102 bid, 102¼ offered. That, too, was up from the 98 level at which the $600 million tranche - the only one smaller than $1.25 billion - had priced on Tuesday to yield 7.128%.

All told, the first trader said, "they had a nice pop."

Meantime, MetroPCS' legacy bonds - originally issued when the Dallas-based company, now a unit of T-Mobile, had been the stand-alone number five U.S. wireless company - were seen busy for a second consecutive session.

Its most active issue was its 6 5/8% notes due 2020, which ended just below 104 bid, down about 1/16 point on the day, on volume of over $12 million. On Tuesday, they had lost ¾ point, with over $17 million having changed hands.

Its 7 7/8% notes due 2018 were seen off by 1/8 point at just under the 108 bid level, with about $5 million having traded. On Tuesday, those bonds had slipped by 5/8 point, on volume of over $11 million.

Millicom bonds seen firmer

The wireless communications sector continued to drive activity in the market, even away from the T-Mobile megadeal.

A trader saw Millicom International Cellular's new 6 5/8% notes due 2021 at 100 1/8 bid, while a second trader later in the session quoted them at 100½ bid, 100¾ offered, up from the par level at which the global wireless telecom provider's deal had priced.

Crown Castle off as deal looms

And news reports that Crown Castle International was close to inking a deal to buy telecom giant AT&T's thousands of wireless towers for around $5 billion helped give some impetus to trading in the Houston-based communications antenna tower company's bonds.

A trader saw its 5¼% notes due 2023 off by ½ point, at 102½ bid, but he said that there were "just a couple of million trading."

Its 3.849% notes due 2023 were down by 5/8 point, on volume of about $5 million.

The company's busiest credit - its 2.381% first-lien notes due 2017, which priced earlier this year - lost 1/8 point, on $15 million of volume.

Michael Baker trades around

Away from the wireless and communications names, a trader said that Michael Baker International's new 8¼% senior secured notes due 2018 moved up to 101 bid in morning trading from 100¾ bid, 101 offered at the close on Tuesday.

A second trader said that the bonds gained ¼ point to go out at 101 bid, 101½ offered.

Michael Baker, a Moon Township, Pa.-based engineering company, had priced its $350 million deal at par on Monday. The bonds had risen as high as 101¼ bid, 102¼ offered in initial aftermarket dealings after their pricing, but then had moved down to around the 100¾ bid level in Tuesday's dealings.

D.C. still dominates

Apart from the new deals and the communications names, a trader opined that "it was pretty darn dead out there."

While he saw some trading here and there in names such as Sprint Corp. and J.C. Penney Co. Inc., he called those movements "no great shakes," and said that "the market is kind of sideways, on not a lot of volume - no big upswings and no big downswings."

"Everybody is trying to figure out what the heck is going on in Washington," he added. "They're trying to figure out what their next move is going to be."

Some investors in both the bond and stock markets were cautiously hopeful at signs that the deadly gridlock might be starting to loosen up a little.

Republicans and Democrats were reportedly both floating the possibility of a short-term increase in the debt limit to give lawmakers time for broader negotiations on the budget, while President Obama meantime had begun inviting figures from both parties to the White House for meetings to discuss the now eight-day old government shutdown as well as raising the debt limit.

Market indicators stay mixed

Statistical junk-market performance indicators were mixed for a third consecutive session on Wednesday, their fourth such mixed finish in the last five sessions.

The Markit Series 21 CDX North American High Yield index rose by 9/32 point on Wednesday to end at 104 3/8 bid, 104½ offered, its first gain after two straight losses, including Tuesday's 13/32 point retreat.

However, the KDP High Yield Daily index turned southward, breaking a five-session winning streak. It was down by 6 basis points to end at 73.54, after having improved by 3 bps on Tuesday.

Its yield was unchanged at 6.07%, after having risen by 1 bp on Tuesday.

And the widely followed Merrill Lynch High Yield Master II index also moved into the loss column on Wednesday, finishing down by 0.017%, its first setback after six straight days of gains, including Tuesday's 0.03% rise.

The loss dropped its year-to-date return to 4.331% from Tuesday's 4.349% finish.

Cristal Cody contributed to this market comment

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