ViaSat drives by, trades up; Chesapeake, First Data trading dominates secondary

By Paul Deckelman and Paul A. Harris

New York, Feb. 22 - ViaSat, Inc. came to market on Wednesday with a $275 million offering of 8.25-year bonds, high-yield syndicate sources said.

After the satellite communications systems provider's quickly-shopped deal was priced, traders saw the new bonds having improved by more than 1 point in the aftermarket.

But it was the only junk-rated pricing on the day and just the first so far this week, which has been shortened by Monday's Presidents' Day holiday. The relatively slow pace continues the recent cooling-off trend which the junk bond primary sphere has been seeing ever since the explosive $15 billion new issuance week that opened the month, the heaviest week so far this year.

With so little new junk paper, players are looking around elsewhere, including crossover high-grade issues like that from split-rated Methanex Corp., helping to keep the chemical manufacturer's new 10-year deal well above Tuesday's par issue price.

The recent seven-year deal from natural gas operator Chesapeake Energy Corp. remained the busiest Junkbondland name, holding above par, well up from its discounted issue price.

Away from the new deals, traders saw First Data Corp.'s debt up solidly in heavy trading, helped by the news that the credit card transaction processor is looking to amend and extend its bank loan agreement, and also bring some new bond debt.

Statistical measures of junk market performance remained mostly higher on the day.

ViaSat flies by

A single deal cleared the quiet high-yield primary market on Wednesday.

ViaSat priced a $275 million issue of 8.25-year senior notes (B1/B+) at par to yield 6 7/8%, at the tight end of the 6 7/8% to 7% price talk.

Timing was moved ahead. When announced mid-day Wednesday the deal was not set to price until Thursday morning.

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

Proceeds will be used to repay bank debt and for general corporate purposes which may include financing costs related to the purchase, launch and operation of additional satellites or satellite capacity, potential acquisitions, funding subscriber acquisition costs, working capital or capital expenditures.

ViaSat is a Carlsbad, Calif.-based designer, producer and marketer of satellite and other wireless communication and networking systems for government and commercial customers.

Viridian plans £405 million

Northern Ireland's Viridian is heading to market with £405 million equivalent of five-year senior secured notes in dollar- and sterling-denominated tranches (//expected BB).

The deal will be marketed via an investor roadshow set to get under way on Thursday.

Global coordinator Deutsche Bank AG will bill and deliver. Royal Bank of Scotland is also a global coordinator and joint bookrunner. UBS, Commerzbank and Barclays Capital are joint bookrunners.

Proceeds will be used to repay bank debt and for general corporate purposes.

Belfast-based Viridian is a vertically integrated electricity generation and supply utility.

New ViaSat deal seen higher

The new ViaSat offering of 8.25-year notes came fairly late in the session, with several traders having seen no aftermarket in it.

However, at another shop, a trader saw the Carlsbad, Calif.-based satellite communications systems provider's $275 million offering having gained altitude after pricing at par.

He quoted the new bonds at 101¼ bid, 101¾ offered.

Methanex holds gains

With no other fresh junk paper in the market, a trader said that Tuesday's split-rated (Ba1/BBB-) offering from Methanex, a Vancouver, B.C.-based methanol alcohol manufacturer, "was also busy, although that's partly investment grade."

The quick-to-market $250 million issue had priced on Tuesday off the high-grade desks at 99.615 to yield 5.3%, and those bonds were seen around 101½ bid in initial aftermarket dealings, with some junk accounts playing in it as well as high-grade investors.

On Wednesday, the trader said, the bonds spent most of the day between around 101¼ bid and their high print of 101.70.

A second junk trader declared that "guys were all over that deal. I think that it was spoken for even before it went on the books." Enthusiasm was not deterred by the deal finally pricing at 325 basis points over Treasuries, which he said was about 25 to 50 basis points inside initial unofficial price talk in the mid-to-high 300 bps over area.

"That just goes to show you how much money and how much demand for a better quality names is out there."

Chesapeake again most active

A trader opined: "There's still a lot of trading in those crazy Chesapeake [Energy] bonds - for some reason."

He said that he was "sure that more than the outstanding [amount] has traded" in the 10 days since the quickly shopped mega-deal first priced on Feb. 13.

He quoted the bonds trading "for most of the day" in a 100¼ to 100¾ offered context.

As has been the case pretty much continuously since it priced on last Monday, Chesapeake's new 6.775% notes due 2019 remained the most actively traded junk issue, with a market source estimating that almost $60 million of that $1.3 billion deal was changing hands on Wednesday, quoting it at 100¼ bid.

Another trader, seeing the bonds trading between 100¼ and 100½ bid, said: "I don't know where it's all going."

Chesapeake, an Oklahoma City-based natural gas producer, had come to market with its $1.3 billion same-day drive-by offering last Monday. The deal - upsized from the initially announced $1 billion - had priced at 98.75 to yield 7%, and then went on to become the most heavily traded issue in Junkbondland, with an astounding over $450 million knocked down last Tuesday and $150 million on both last Wednesday and Thursday.

The new deal had initially clung to trading levels at or just slightly above where it had priced, despite the great volume, leading traders to wonder why anyone was playing in it since it would be difficult to make money that way.

However, by last Thursday, the bonds had pushed up to around the 99¾ bid area, and by Friday, had actually cracked the previously unbeatable par barrier, where it's been ever since, on estimated volume of around or over $60 million on each of the last three sessions.

Other new deals little seen

With Chesapeake still taking up most of the oxygen in the junk bond secondary market, little or nothing was seen on Wednesday of other recently priced deals.

A trader said that he had seen "nothing since Friday" on PSS World Medical, Inc.'s new 6 3/8% notes due 2022.

The Jacksonville, Fla.-based provider of medical products and services priced its $250 million offering off the forward calendar last Thursday, and after that par pricing, the new bonds quickly shot up to 103¼ bid, 103 5/8 offered, which became a 103-104 context by Friday.

A trader saw MMI International Ltd.'s 8% senior secured notes due 2017 at 101 bid on Tuesday, "but nothing since then."

The Singapore-based precision engineering company priced $300 million of the bonds off the forward calendar on Friday at par, and they quickly moved as high as 101¾ bid, 102 offered, remaining above the 101 bid level on into this week.

Secondary market stronger

Away from the new deals, a trader said that "we saw a little flurry of secondary activity, though nothing was really shaking that much."

He said that "the buyers are definitely taking precedence over any sellers out there - for every seller, we have five buyers. Cash is still king and a lot of guys need to put it to work and they're looking for new ideas, regardless of the trade."

He said that with the holiday at the start of the week, and "a lot of kids off [from school], that probably had something to do with the lack of volume, and everyone is waiting for the new deal" from United Rentals Inc., which is expected to price some $2.2 billion in a three-part offering on Friday.

He said away from that "everything is very situational, but there are things getting done."

First Data firms on loan news

One of the most active names in the non-new-deal secondary on Wednesday was Atlanta-based First Data, which was heard to be in the bank-debt market seeking an amendment and extension of its credit agreement that would push the maturity on that facility out to 2017 from 2014.

Over $57 million of its 11¼% notes due 2016 changed hands, with a trader seeing those bonds "moving up quite a bit today, although they're off the top."

He saw the bonds get as good as 95 earlier in the day before settling in at 93½ bid, 93¾ offered - in contrast with Tuesday's levels around 91½ bid, 92 offered, "so they moved up nicely."

He saw the company's 10.55% notes due 2015 last at 102¼ bid, with most of the day's trading between 102¼ and 102½ bid, versus 100¾ bid, 101 offered on Tuesday.

"The news came out late [Tuesday] night, after the close, and they traded up first thing this morning."

He said the news "drives [the bonds] up because if all of this happens, it gives them some more liquidity, and extends the maturity of the existing paper, etc."

Mortgage insurance names up

Elsewhere in the secondary market, a trader said that Radian Group Inc.'s 5 5/8% notes due 2013 "doesn't trade a lot - but it was quoted higher" in an 82-84 context, which he called up 1 point.

"That's moved up - not much volume, but they're quoted higher."

He saw the Philadelphia-based mortgage insurance company's 5 3/8% notes due 2015 also quoted up "a bit," around 68-70, which he called up 4 points from recent levels, on "decent volume."

"So those mortgage types have improved as their stock has improved the last week or so."

Radian's New York Stock Exchange-traded shares, which were trading as low as $3.40 a week ago, closed at $4.10 on Tuesday and got as good as $4.20 in Wednesday's intra-day dealings, before coming off those peaks to end down 20 cents on the day, or 4.88%, at $3.90.

He also saw Milwaukee-based sector peer MGIC Investment Corp.'s 5% notes due 2017 around 73 bid, 74 offered, on just five or six trades. He said the bonds were "pretty much unchanged from where they were quoted [Tuesday], though up a few points from last week. But they're holding at the higher levels, on some volume.

"That's because both Radian and MTG's stocks have been up this last week or so," he said.

MGIC's NYSE-traded shares lost 33 cents, or 6.57%, on Wednesday, to end at $4.69, but they too have risen from a low of $4.37 a week ago, to Tuesday's close at $5.02 and Wednesday's intra-day peak of $5.03.

He further saw Armonk, N.Y.-based mortgage insurer MBIA Inc.'s 14% surplus notes due 2033 up 1 point at 61 bid, 63 offered. However, MBIA's NYSE shares bucked the general sector trend - they were higher a week ago, peaking at $11.98, and going home Wednesday down 28 cents, or 2.39%, at $11.44.

Clear Channel trades around

A trader said that he "saw Clear Channel [Communications Inc.] a few times today," seeing the San Antonio, Tex.-based media company's 9% priority-guarantee notes due 2021 as "the odds-on favorite" in the market.

He saw the bonds at 88 bid, 89 offered, with "a lot of activity" - about $10 million to $12 million traded. He said the bonds were up 1 point on the session.

"That was the active one today [among Clear Channel issues], the most active in that group."

Among other names, a trader saw Exide Technologies Inc.'s 8 5/8% notes due 2018 were "a name from the past," in that he hadn't seen too much recent activity in the Milton, Ga.-based automotive and industrial storage battery maker's paper.

He saw "some activity" in the bonds, with over $10 million traded. He pegged the bonds in a 76 to 76½ context, which he called down 1 point.

A trader said that Bon-Ton Stores Inc.'s 10¼% notes due 2014 traded around 64 to 64¼ bid "all day long," with between $9 million and $10 million of the York, Pa.-based retailer's bonds moving around.

He called that "unchanged, for the most part," from Tuesday's levels.

Market indicators mostly firm

Statistical measures of junk market performance were mostly firmer on Wednesday, just as they had been on Tuesday.

A trader said that the CDX North American Series 17 High Yield index eased by 1/8 point for a second consecutive session Wednesday to end at 96 7/8 bid, 97 1/8 offered.

But the KDP High Yield Daily Index rose for a third consecutive session on Wednesday, adding on 5 basis points to end at 74.21, after having gained 6 bps on Tuesday. Its yield came in by 3 bps to 6.64%, after having declined by 4 bps on Tuesday.

And the widely-followed Merrill Lynch High Yield Master II Index marked its fourth consecutive daily advance Wednesday, gaining 0.137%, on top of Tuesday's 0.108% rise.

The latest gain lifted the index's year-to-date return to 4.29%, a new peak level for 2012. That eclipsed the previous high of 4.147%, which was recorded on Tuesday.

© 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.