Upsized Regal, TreeHouse deals lead nearly $1.3 billion primary revival; new Regal bonds rise

By Paul Deckelman and Paul A. Harris

New York, Feb. 25 - The high-yield primary market came back to life on Tuesday after having gone without any dollar-denominated, junk-rated pricings on either Friday or Monday.

Syndicate sources saw three quickly shopped deals get done, including a radically upsized $775 million offering of new eight-year notes from movie theater operator Regal Entertainment Group. Traders saw those new Regal bonds firm smartly on heavy volume when they reached the aftermarket.

The day also saw food manufacturer TreeHouse Foods, Inc. price an upsized $400 million of eight-year notes. Meanwhile, homebuilder Lennar Corp. - which was just in the market at the beginning of the month to sell an issue of five-year notes - returned with a $100 million add-on to the earlier deal. Both of those transactions happened too late in the day for any kind of aftermarket trading.

Away from the deals that have actually priced, the syndicate sources heard price talk on casino operator Greektown Holdings LLC's $425 million of five-year notes, which could price as soon as Wednesday.

The non-new-deal secondary arena was generally quiet and mostly firm.

But an exception to that was chemicals maker Momentive Performance Materials Inc., whose 2016 bonds nosedived in active trading, and the company's other issues were also lower.

Statistical market performance measures turned mixed after having been higher across the board on Monday.

Regal massively uspsizes

Trailing an ultra-quiet Monday session, the high-yield primary market regained its legs on Tuesday, as three issuers brought single-tranche drive-by deals to raise a combined total of $1.28 billion.

Regal Entertainment Group priced a massively upsized $775 million issue of eight-year senior notes (B3/B-) at par to yield 5¾%.

The deal was upsized from $350 million.

The yield printed on top of yield talk.

Credit Suisse, Barclays, BofA Merrill Lynch, Deutsche Bank and Wells Fargo were the joint bookrunners for the debt refinancing deal.

Treehouse at the tight end

Treehouse Foods priced a $400 million issue of eight-year senior notes (Ba2/BB) at par to yield 4 7/8%, at the tight end of yield talk in the 5% area.

BofA Merrill Lynch was the left bookrunner. J.P. Morgan, Wells Fargo, BMO and SunTrust were the joint bookrunners for the debt refinancing.

Lennar taps 4½% notes

Lennar priced a $100 million add-on to its 4½% non-callable senior notes due June 15, 2019 (Ba3/BB-/BB+) at 1001/2.

The quick-to-market deal came without official price talk.

Citigroup was the sole bookrunner.

The Miami-based homebuilder plans to use the proceeds for general corporate purposes and working capital.

The deal came a little less than three weeks after the original $400 million issue, which priced at par on Feb. 5.

Greektown sets 9% talk

Greektown Holdings and Greektown Mothership Corp. talked a $425 million offering of five-year senior secured notes to price with a yield in the 9% area.

Books close at 9:30 a.m. ET on Wednesday, and the deal is expected to price on Wednesday afternoon.

Jefferies LLC is the left bookrunner. Credit Suisse, Goldman Sachs, UBS and Wells Fargo are joint bookrunners.

The Detroit-based gaming, lodging and dining company and owner and operator of Greektown Casino-Hotel plans to use the proceeds to refinance debt and for general corporate purposes.

Cloud Peak 10-year deal

Cloud Peak Energy Resources LLC plans to price a $200 million offering of 10-year senior notes (expected ratings B1/BB-) on Thursday.

Goldman Sachs, RBC, JPMorgan, Credit Suisse, Deutsche Bank, Credit Agricole and Wells Fargo are joint bookrunners for the refinancing deal.

Renault in demand

In the European primary market, Renault SA priced a €500 million issue of 3 1/8% seven-year senior notes (Ba1/BB+) at a 175 basis points spread to mid-swaps.

The spread came at the tight end of the 175 bps to 180 bps spread talk.

The deal played to €6.2 billion of orders.

The notes sold at a reoffer price of 99.653 and yield of 3.181%.

Credit Agricole, Commerzbank, HSBC and SG CIB were the joint bookrunners for the general corporate purposes deal.

HSBC will bill and deliver.

New Regals rule market

In the secondary arena, the dominant name of the day, by far, was Regal Entertainment Group.

A trader said that more than $85 million of the Knoxville, Tenn.-based movie theater operator's new 5¾% notes due 2022 traded after the upsized issue had priced at par.

He said that after being freed for aftermarket action, the bonds traded as low as 101 1/8 bid and as high as 102 bid before settling into a 101¼ to 101½ bid context.

A second trader also saw those bonds get as good as 102, "and then they faded." He saw them going home trading between 101 3/8 and 101 5/8 on the bid side, on "a whole lot of trades."

Other deals unseen

Regal was the only one of the day's three pricings to arrive in time for any kind of secondary dealings.

Traders saw no activity at all in the new 4 7/8% notes due 2022 from Oak Brook, Ill.-based TreeHouse Foods, which claims to be the largest manufacturer of pickles and non-dairy powdered creamer in the United States and the largest manufacturer of private label salad dressings, powdered drink mixes and instant hot cereals in the United States and Canada, based on sales volume. Before that issue priced, a trader said that he had heard the offering would be "in decent shape."

Those market sources likewise saw no trading in builder Lennar's late-pricing 4½% add-on notes due 2019.

Primary comeback seen

One of the traders - noting the strong reception that the Regal deal got from investors once it had priced, as well as the opportunistic pricings of the TreeHouse and Lennar transactions - opined that "it's starting to pick up a little here" after two sessions that had seen no pricings of any kind.

He said that "the market held its own pretty well. The high point was the Regal deal - that's what people were zeroing in on today, and it did well. And everything else was fairly firm."

However, at another desk, a trader said that aside from Regal's royal debut, Tuesday's session was mostly "a hodgepodge of different names."

He said there were "your usual active characters."

One credit fitting that description was Caesars Entertainment Corp.'s 10% notes due 2018. The Las Vegas-based casino giant's legacy Harrah's Entertainment Inc. notes were among the day's busiest non-Regal bonds, with over $14 million having changed hands. They were seen down 1¼ point, going home, at 47 1/8 bid.

Momentive gets mauled

The big loser on the day was Momentive Performance Materials' 11½% notes due 2016.

A trader characterized the bonds' move as "just crazy," seeing them slide to around 35½ bid, down more than 11½ points on the day on volume of over $19 million.

"Yesterday, these bonds were offered in the 50s. Last week, they were trading around 50 or 51 - so these bonds are down 10 to 15 points," he said.

He saw the company's 9% notes due 2021 down 1 point, trading at the 89 bid level with over $10 million of that credit having changed hands.

He also said that its 8 7/8% notes due 2026 were holding steady at 106¾ bid, with over 6.5 million traded.

Albany, N.Y.-based performance materials maker Momentive's bonds have recently slid badly after Standard &Poor's warned in a research note that the company will likely have to either restructure its debt - or face a possible default.

Market indicators turn mixed

Statistical junk-market performance indicators turned mixed on Tuesday after having been higher across the board on Monday. Mixed and higher sessions have been alternating for pretty much all of the past week.

The Markit Series 21 CDX North American High Yield index lost 1/16 point to end at 107¾ bid, 107 13/16 offered, after having gained ¼ point on Monday.

While the Markit index has been choppy over the past week or so, with alternating days of gains or losses, the KDP High Yield Daily index and the Merrill Lynch High Yield Master II index have been models of consistency.

The KDP index recorded its 13th consecutive gain, rising by 5 bps to go out at 75.15, after moving up by 3 bps on Monday.

Its yield, meanwhile, came in - also for a 13th consecutive session - declining by 2 bps to finish at 5.26%. It had declined by 3 bps on Friday and again on Monday.

And the widely followed Merrill Lynch index recorded its 15th straight gain on Tuesday, rising by 0.158%, on top of its 0.165% improvement on Monday.

The latest upturn raised its year-to-date return to 2.401%, its 11th consecutive new peak level for the year, versus 2.239% on Monday.

The index's yield to worst declined to 5.248% - its fifth straight new low for the year, eclipsing the previous 2014 low of 5.291%, set on Monday. Those levels were well down from the 5.735% seen on Feb. 4, its highest point for the year so far.

Its spread to worst was 399 bps over comparable Treasuries, unchanged from Monday and down from 404 bps on Friday. Those spreads remained in from Feb. 4's 444 bps, the wide point for the year so far, although they also were up from the tight spread for the year, 398 bps, recorded on Jan. 22.

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