Upsized Antero, Blackboard, Exopack lead $2 billion day; Antero, Exopack trade up; funds gain

By Paul Deckelman and Paul A. Harris

New York, Oct. 24 - The high-yield primary sphere turned in its second consecutive $2 billion tally of new junk-rated, dollar denominated paper on Thursday, syndicate sources said.

However, unlike Wednesday's session, which saw just one giant-sized, three-part deal from Gaming and Leisure Properties, Inc. accounting for all of the new paper, Thursday's was considerably more broad based, with five single-tranche deals recorded.

There was one megadeal, as energy operator Antero Resources Corp. brought a quickly shopped and radically upsized $1 billion offering of eight-year notes to market. Traders said the new bonds firmed smartly when they were freed to trade.

They also saw good aftermarket action in plastic packaging maker Exopack Holding Corp.'s $325 million of six-year notes, which priced off the forward calendar.

Another scheduled deal that was completed was education software provider Blackboard, Inc.'s $365 million of six-year notes.

Rounding out the action were a couple more drive-by deals, including automotive transport company Jack Cooper Holdings Corp.'s $150 million add-on to its existing 2020 secured notes and beauty supplies distributor Sally Beauty Holdings, Inc.'s $200 million of 10-year notes, with both of those offerings brought to market via financing subsidiaries.

Away from the new deals, a trader called Thursday's tone generally healthy.

One non-new-deal name seen on the upside in busy trading was Caesars Entertainment Corp., although there was no fresh news out about the gaming giant.

Statistical market performance indicators, though, were mixed for a second consecutive day, although one index hit its third consecutive new high point for the year so far.

And flows of money into and out of high-yield mutual funds and exchange-traded funds - a key barometer of overall market liquidity trends - notched a seventh consecutive week on the upside, with a massive inflow to those funds reported.

Lipper funds gain $2 billion

As market activity was winding down on Thursday, junk market participants familiar with the fund-flow statistics generated by AMG Data Services said that during the week ended Wednesday, some $2.019 billion more came into those funds than left them.

It was the seventh consecutive weekly gain in the junk funds, going back to the week ended Sept. 11.

The latest inflow followed the $626 million gain reported by Arcata, Calif.-based AMG, a unit of the Lipper analytics division of ThomsonReuters Corp., during the week ended Oct. 16.

During that seven-week stretch, which also included two other giant-sized-sized inflows of $3.1 billion during the week ended Sept. 25 and $1.395 billion in the week ended Sept. 18, net inflows have totaled some $8.498 billion, according to a Prospect News analysis of the fund-flow numbers.

For the year so far, inflows have now been seen in 27 weeks, against 16 weeks of outflows, according to the analysis.

For a number of weeks, cumulative fund flows for the year as a whole were negative due to a sizable losing streak that seen during May and June that included several multi-billion-dollar outflow numbers, prompted by investor worries over whether the Federal Reserve would end its accommodative monetary policy.

At one point in late June, the red ink topped the $9 billion mark, according to the analysis.

However, encouraged by recent indications that the central bank would not be trimming its bond-buying policies as quickly as feared due to a still-shaky economy, investors have been pumping money back into Junkbondland through the funds, analysts said, causing the cumulative outflow number to be gradually whittled down week by week.

And the latest week's big inflow completed that process, swinging the year-to-date fund-flow number back into the black for the first time since late May, according to the analysis, as the estimated $1.15 billion net outflow for the year seen last week morphed into a roughly $867 million net inflow this week.

Cumulative fund-flow estimates may be revised upward or downward or be rounded off and could include unannounced revisions and adjustments to figures from prior weeks.

The sustained flows of fresh cash into junk - and the mutual funds and ETFs represent but a small, though quantifiable, percentage of the total amount of investor money coming into or leaving the more than $1 trillion junk market - were seen by analysts as a key catalyst behind the high-yield secondary sphere's strong performance last year versus other fixed-income asset classes/

This was also seen as one of the major drivers behind the robust patterns of primary activity and secondary strength, which had continued for much of this year's first half, before turning choppy over the past several months.

However, the recent run of consecutive net inflows coincided with the explosive expansion of junk primary activity seen last month, when over $47 billion of new paper priced, according to the Prospect News new-issuance data. This marked the biggest September ever.

Antero doubles to $1 billion

The new issue market got its legs on Thursday as five dollar-denominated issuers raised a combined total of $2 billion.

Three of the five issuers came with a.m.-to-p.m. drive-by deals.

Antero Resources priced a massively upsized $1 billion issue of eight-year senior notes (B1/BB-) at par to yield 5 3/8%.

The deal, which was announced at a size of $500 million on Thursday morning, doubled in size.

The yield printed in the middle of the 5¼% to 5½% yield talk. Initial guidance was in the 5½% area.

JP Morgan, Wells Fargo, Barclays, Capital One and Credit Agricole were the joint bookrunners.

The Denver-based oil and gas company plans to use $549.6 million of the proceeds to finance the redemption of its 9 3/8% senior notes due 2017. The remaining proceeds will be used to repay in full the company's $25 million of 9% senior notes due 2013, as well as the outstanding borrowings under its credit facility, and to fund its drilling and development program.

Blackboard at the tight end

In a roadshow deal, Blackboard priced a $365 million issue of six-year senior notes (Caa1/CCC+) at par to yield 7¾%.

The yield printed at the tight end of the 7¾% to 8% yield talk.

BofA Merrill Lynch was the left bookrunner for the debt refinancing deal. Deutsche Bank and Morgan Stanley were the joint bookrunners.

Exopack six-year notes

In another deal that ran a roadshow, Exopack Holding priced a $325 million issue of six-year senior notes (Caa2/B-) at par to yield 7 7/8% on Thursday.

The yield printed at the tight end of yield talk set in the 8% area.

Goldman Sach, J.P. Morgan, BofA Merrill Lynch, Barclays, Investec and Morgan Stanley were the joint bookrunners.

Proceeds will be used to refinance debt and to put cash on the balance sheet.

Sally Beauty drives by

In other quick-to-market action on Thursday, Sally Beauty Holdings priced a $200 million issue of 10-year senior notes (Ba2/BB+) at par to yield 5½%.

The yield printed on top of yield talk.

BofA Merrill Lynch was the left bookrunner for the debt refinancing and general corporate purposes deal.

JP Morgan, Wells Fargo, Credit Suisse, Deutsche Bank, Goldman Sachs and RBC were the joint bookrunners.

Jack Cooper taps 9¼% notes

Jack Cooper Finance Co. priced a $150 million add-on to its 9¼% senior secured notes due 2020 (B2/B-) at 105.25 to yield 8.059%.

The reoffer price came on top of price talk.

Wells Fargo ran the books for the quick-to-market add-on.

Proceeds will be used to finance the purchase of the majority of the assets of Allied Systems Holdings Inc.

Domestic & General deal

In news from England, Domestic & General Group Ltd. priced £500 million of high-yield notes in three tranches.

Financing unit Galaxy Bidco Ltd. priced two tranches of senior secured notes (B2//).

A £175 million tranche of Libor plus 500 basis points floating-rate notes priced at 99.5. The spread came at the tight end of the 500 to 525 bps spread talk. The reoffer price came on top of price talk.

A £200 million tranche of seven-year fixed-rate notes priced at par to yield 6 3/8%, at the tight end of yield talk set in the 6½% area.

A different financing unit, Galaxy Finco Ltd., priced a £125 million tranche of eight-year senior unsecured notes (B2//) at par to yield 7 7/8%, at the tight end of yield talk set in the 8% area.

Joint global coordinator Goldman Sachs will bill and deliver for the acquisition deal. Barclays and Credit Suisse were also joint global coordinators.

Tullow starts Friday

In other news out of England, Tullow Oil plc plans to start a roadshow in London on Friday for its $500 million offering of seven-year senior notes (expected B1//).

A roadshow is set to get under way in the United States during the week ahead.

JP Morgan and Deutsche Bank are the global coordinators. BNP Paribas, BofA Merrill Lynch, Barclays, Credit Agricole CIB and Standard Chartered are the joint bookrunners.

The London-based oil and gas exploration company plans to use the proceeds to pay down its revolver.

Dole upsizes, sets talk

The Friday session will get underway with just one deal on the calendar expected to price before the weekend.

Dole Food Co. Inc. upsized its offering of 5.5-year senior secured notes (Caal/CCC+) to $300 million from $275 million on Thursday.

Yield talk is 7¼% to 7½%.

Deutsche Bank, BofA Merrill Lynch and Scotia are the joint bookrunners.

The Rule 144A for life notes come with two years of call protection.

Proceeds will be used to help fund the purchase of the company by chairman and chief executive officer David H. Murdock. The additional proceeds, along with a $50 million upsizing of the concurrent term loan, will be used to put cash on the balance sheet.

Antero Resources rises

In the secondary market, a trader saw Antero Resources' new 5 3/8% notes due 2021 having firmed solidly to 101¼ bid, 101½ offered, up from their par issue price earlier in the session.

A second trader pegged the megadeal at 101¼ bid, 101 3/8 offered.

Exopack does excellently

One of the traders said that Exopack Holdings' 7 7/8% notes due 2019 "did really well," quoting the Chicago-based plastic packaging products maker's new issue trading "at least around 1011/2-102.

"They were really well-received," he reiterated.

A second trader saw the bonds at 101¼ bid, well up from their par issue price, while a third saw a two-sided market around 101¼ bid, 101¾ offered.

Blackboard seen better

Two separate traders quoted Blackboard Inc.'s 7¾% notes due 2019 trading around the 101 bid level on Thursday.

That was up from the par level at which the Washington, D.C.-based provider of enterprise software applications and related services to the education industry had priced its deal earlier in the day.

Sally Beauty looking good

A trader saw Sally Beauty's 5½% notes due 2023 at 100½ bid, although he said that he had seen no offered levels in the new deal.

At another shop, a trader was quoting the Denton, Texas-based beauty supplies retailer and distributor's new deal at 100 7/8 bid, 101 3/8 offered, up from their par issue price.

Traders did not see any immediate aftermarket action in the new 9¼% senior secured notes due 2020 that Kansas City, Mo.-based automotive transport operator Jack Cooper did Thursday as an add-on to its existing notes.

Gaming and Leisure treads

Going back to Wednesday's $2.05 billion three-part offering from Gaming & Leisure Properties, a trader said that the company's 4 7/8% notes due 2020 seemed to be trading "like they were in quicksand."

He said that the $1 billion tranche of notes, which had priced at par, was trading around 100¼ bid, 100½ offered, "or maybe 100 3/8 bid, 100 5/8 offered."

He saw better levels, however, in the new 4 3/8% notes due 2018, quoting those bonds as good as 101 bid, 101¾ offered, up from the par level at which the $550 million tranche had priced.

He saw no levels at all in the Wyomissing, Pa.-based gaming industry-focused real estate investment trust's $500 million of 5 3/8% notes due 2023, which also had priced at par via its GLP Capital LP financing unit.

And he said that Monday's new deal from Penn National Gaming Corp. - the Wyomissing-based casino and racetrack operator that is spinning its GLP real estate unit off - "is another one that got stuck in the cement," quoting the $300 million of 5 7/8% notes due 2021 around 100¼ bid, not far from their par issue price.

Caesars trades actively

Away from the new issues, another gaming credit - Caesars Entertainment's 10% notes due 2018, originally issued by predecessor company Harrah's Entertainment Inc. - was one of the busiest high-yield names on Thursday.

A market source saw over $31 million of those bonds having changed hands, quoting them up 1½ points on the day at 48 3/16 bid.

A second source saw them even better, up 2¼ points at 48¾ bid.

There was no fresh news out on the Las Vegas-based gaming giant to explain the rise.

Caesars had actually announced negative news earlier in the week, disclosing that the entity that operates its flagship Caesars Palace casino on the Las Vegas Strip is the subject of a federal probe into whether anti-money-laundering laws were broken.

And it withdrew from the bidding for the rights to co-operate a potentially lucrative casino that is to be built in the Boston area, after Massachusetts gaming regulators expressed concern about the company's finances, including its mammoth $23 billion debt load.

Better tone seen

The Caesars bonds were likely helped by what one trader called "a healthy day in the marketplace."

He said that it looked like "everyone wanted to buy. Things keep chugging along."

The whole market, he concluded, "had a healthy tone, psychologically."

Market signs remain mixed

Even so, statistical junk-market performance indicators were seen mixed for a second consecutive session on Thursday and the third session out of four this week, a stretch interrupted only on Tuesday, when the signposts were higher across the board.

The Markit Series 21 CDX North American High Yield index was seen down for a second day in a row on Thursday, easing by 1/16 of a point to end at 106¾ bid, 106 7/8 offered, after having lost 5/16 of a point on Wednesday.

The index has been gyrating around lately. On Tuesday, it had been up by 13/32 of a point, after having lost 7/32 point Monday, a loss that broke a string of three consecutive higher sessions and several unchanged sessions before that.

But the KDP High Yield Daily index posted its 10th consecutive gain on Thursday, rising by 18 basis points to end at 74.48, after having gained 3 bps Wednesday. Its yield declined by 4 bps to 5.69%, its 10th consecutive narrowing. On Wednesday, it had come in by 2 bps.

And the widely followed Merrill Lynch High Yield Master II index was on the upside for an 11th consecutive session on Thursday with a 0.106% gain. That followed Wednesday's 0.07% improvement.

The latest gain lifted its year-to-date return to 6.05%, its third straight new high point for 2013 so far. On Wednesday, it had firmed to 5.938%, the previous peak level for 2013.

Thursday's year-to-date return marked the first time that indicator has been above the psychologically significant 6% marker this year. The index had ended 2012 showing a gain for the year of 15.583%.

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