Omnicare, Abengoa Yield price; Avis, Truven drive by; new DISH busy, funds jump $2.44 billion

By Paul Deckelman and Paul A. Harris

New York, Nov. 6 – Omnicare, Inc. came to market on Thursday with a $700 million two-part issue, high-yield syndicate sources said. However, the pharmaceutical services provider’s bonds priced too late in the session for any kind of meaningful aftermarket.

That was also the case with the day’s several other deals. Those were Abengoa Yield plc’s $255 million of five-year notes plus a pair of quick-to-market add-on offerings: vehicle rental giant Avis Budget Car Rental LLC’s upsized $175 million of its existing 2023 notes and Truven Health Analytics Inc.’s $40 million addition to its 2020 notes.

Market-watchers said that the $1.17 billion that got done in five tranches brought by four issuers was down from the $3.73 billion of new dollar-denominated, fully junk-rated paper from domestic or industrialized-country borrowers that had priced in four tranches during Wednesday’s session, chief among them DISH DBS Corp.’s sharply upsized $2 billion of 10-year notes.

Those new bonds were easily the busiest deal in Junkbondland on Thursday, with volume approaching the $200 million mark as the new bonds moved up.

Another recently priced credit seen trading on brisk volume – though nowhere near the kind of turnover seen in DISH – was Wednesday’s 10-year deal from MSCI Inc.

Away from the new deals, Molycorp Inc.’s bonds slid badly after the rare-earth mining concern reported a much wider quarterly loss amid a toxic mix of lower pricing, lower volume and higher costs.

Statistical market-performance measures turned mixed on Thursday after having been higher across the board on Wednesday.

But high-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw a third consecutive week of sizable inflows of investor cash; $2.44 billion more came into the funds than left them in the week ended Wednesday. In fact, it was the biggest such cash boost seen so far this year and pushed the cumulative fund-flows tally back into the black after several months of languishing in the red.

Omnicare comes inside of talk

Four issuers in the dollar-denominated primary market combined to bring five tranches on Thursday, raising an overall total of $1.17 billion.

Omnicare priced $700 million of non-callable senior notes (Ba2/) in two tranches.

Both tranches came 12.5 basis points inside of yield talk.

A $400 million tranche of eight-year notes priced at par to yield 4¾%, versus talk in the 5% area.

A $300 million tranche of 10-year notes priced at par to yield 5%, versus talk in the 5¼% area.

As the deal was on the block, a trader remarked that it was doing “very, very well.”

BofA Merrill Lynch was the left bookrunner. Barclays, Goldman Sachs & Co., J.P. Morgan Securities LLC and SunTrust Robinson Humphrey Inc. were the joint bookrunners.

The Cincinnati-based provider of pharmaceutical services plans to use the proceeds to fund the redemption of its 2020 notes and for general corporate purposes, including, without limitation, refinancing a portion of other outstanding debt securities, including convertibles.

Abengoa Yield issues in dollars

Abengoa Yield priced a $255 million issue of unrated non-callable five-year senior notes at par to yield 7%.

The yield printed on top of yield talk.

The acquisition deal came in place of a similarly structured €200 million offering that ran a roadshow at the end of October and was shopped with early yield guidance in the mid-5% context, sources said.

As with the euro-denominated offering, joint bookrunner BofA Merrill Lynch will bill and deliver for the dollar-denominated deal. As before, Citigroup, HSBC and Santander were also joint bookrunners.

Avis Budget upsizes

Avis Budget Car Rental and Avis Budget Finance, Inc. priced an upsized $175 million add-on to their 5½% senior notes due April 1, 2023 (expected ratings B1/B+) at 99.625 to yield 99.556%.

The acquisition financing deal was upsized from $150 million.

The reoffer price came at the rich end of yield talk in the 99.5 area.

Credit Agricole CIB was the left bookrunner. Deutsche Bank Securities Inc. and JPMorgan were the joint bookrunners.

Truven taps 10 5/8% notes

Truven Health Analytics launched and priced a $40 million add-on to its 10 5/8% senior notes due 2020 (existing ratings Caa2/CCC+) at 103 to yield 9.604%.

JPMorgan was the bookrunner for the quick-to-market add-on, proceeds from which will be used for acquisition financing.

The original $327 million issue was priced at 99.345 to yield 10¾% by Wolverine Healthcare Analytics, Inc. in May 2012.

Essar Steel Algoma talk

Trailing an extended marketing period, Essar Steel Algoma Inc. released final price talk for a revamped and slightly downsized $624 million two-part offering of secured notes.

An upsized $375 million tranche of five-year senior secured notes (Ba3/B+), which come with two years of call protection, is talked to price at a discount to yield in the 9½% area. The tranche was upsized from $350 million.

A downsized $249 million tranche of seven-year junior secured notes (B3/B-), which come with three years of call protection, is talked at 14% with a PIK option at the issuer's discretion. The junior secured notes have been spoken for by the company's existing unsecured noteholders, according to the source. The tranche was downsized from $275 million.

Books close at noon ET Friday.

The overall deal size was originally in the market at $625 million and thus is downsized by $1 million.

Deutsche Bank is the left bookrunner. Goldman Sachs and Jefferies LLC are the joint bookrunners.

Blue Racer talk

Blue Racer Midstream, LLC talked its $400 million offering of eight-year senior notes (B3/B) to yield 6½% to 6¾%.

Books closed Thursday, and the deal is set to price on Friday.

Wells Fargo Securities LLC, RBS Securities Inc., UBS Securities LLC, RBC Capital Markets Corp., SunTrust Robinson Humphrey, Comerica Securities Inc. and Barclays are the joint bookrunners.

Alliance starts Friday

In the euro-denominated primary market Alliance Automotive Group plans to start a European roadshow on Friday for a €325 million two-part offering of seven-year senior secured notes (expected ratings B2/B+).

The roadshow wraps up on Wednesday, and the deal is set to price thereafter.

The LBO deal is coming in tranches of fixed-rate notes that come with three years of call protection and floating-rate notes that come with one year of call protection and feature a 1% Euribor floor.

Joint bookrunner Credit Suisse will bill and deliver. UBS and Royal Bank of Scotland are also joint bookrunners.

DISH dominates trading

In the secondary market, a trader opined that DISH was “by far the most active” of any high-yield credits on Thursday.

He estimated that over $185 million of the new 5 7/8% notes due 2024 had changed hands and pegged the bonds in a 101-to-101 3/8 bid context, well up from the par level at which the Englewood, Colo.-based satellite television broadcaster had priced its quick-to-market issue on Wednesday.

The bonds had priced after the already hefty $1.25 billion deal, as originally announced, was sharply upsized to $2 billion. They had priced too late in the day for any kind of real aftermarket at that time.

A second trader saw the new DISH notes having moved up to a 101 1/8-to-101½ context.

Existing DISH bonds busy

On Wednesday, the news that DISH was bringing a giant-sized bond offering to market had caused some of the company’s existing issues to retreat in fairly active trading.

There was still some activity seen going on in that quarter on Thursday.

A market source saw the DISH 5% notes due 2023 lose ¼ point to end at 97¾ bid, on volume of over $29 million.

That loss came on top of Wednesday’s 1¾-point drop, which had happened on volume of over $30 million.

However, its 7 7/8% notes due 2019 were actually seen up 1/8 point at 115¼ bid, with over $11 million of the notes having traded.

Its 5 7/8% notes due 2022 gained ½ point to end at 104½ bid, with more than $10 million having changed hands.

DISH plans to use the new deal proceeds to refinance debt and for general corporate purposes.

MSCI moves around

A trader said that the new MSCI 5¼% notes due 2024 were busy for a second straight session, seeing over $40 million of the notes having traded.

He quoted the bonds at 101¾ bid, 102 offered, which he called up from the 101¼-to-101¾ level at which he had seen them on Wednesday.

A second market source saw the notes going home at 101 7/8 bid but called that level down about ¼ point.

On Wednesday, the bonds were being quoted as high as 102 1/8 bid, with over $65 million of the notes having changed hands.

MSCI, a New York-based provider of investment decision support tools, had priced $800 million of the notes at par on Wednesday in a regularly scheduled forward calendar offering.

Not much of other new deals

A trader said that there was not much activity in Wednesday’s other newly priced credits, NCL Corp. and Nexteer Automotive Group Ltd. Both had traded fairly actively, and at higher levels, on Wednesday.

The trader said that “they’re not even in the top 100 volume-wise today.”

He quoted NCL’s 5¼% notes due 2019 at 101 bid, 101¼ offered, while Nexteer’s 5 7/8% notes due 2021were at 101½ bid, 101¾ offered.

More than $45 million of Miami-based cruise ship operator NCL’s bonds had traded on Wednesday at around a 101-to-101 3/8 context after the $680 million deal had priced at par

Nexteer, a Saginaw, Mich.-based manufacturer of automotive steering and drivetrain components, had priced $250 million of its notes at par on Wednesday. Those bonds had driven up to 101 to 101½, with $17 million changing hands.

Molycorp gets mauled

Away from the new deals, a trader said that Molycorp’s 10% notes due 2020 had nosedived by 5¼ points on the day to end at 66¾ bid, on “a lot of trades.”

Another market source saw more than $14 million of the Greenwood Village, Colo.-based rare earths miner’s notes having traded at similar levels.

“They hit their all-time low as their quarterly loss widened,” he said.

Indicators turn mixed

Statistical indicators of junk market performance turned mixed on Thursday after having been stronger across the board on Wednesday. They had been lower all around on Tuesday.

The KDP High Yield Daily index rose by 8 bps on Thursday to end at 72.48, its second straight gain. It had risen by 10 bps on Wednesday following its 21-bps slide on Tuesday.

Its yield declined by 2 bps to 5.29%, narrowing for a second straight session; the yield had declined by 3 bps on Wednesday after having risen by 8 bps on Tuesday and having come in for five successive sessions before that.

The Markit CDX North American High Yield Series 23 index posted its second straight gain on Thursday, improving by 1/8 point to end at 107 1/32 bid, 107 1/16 offered. On Wednesday, it had been up by 1/8 point after having lost 3/16 point on Tuesday.

But the Merrill Lynch U.S. High Yield Master II index failed to keep pace with the other indicators, easing by 0.02%.

On Wednesday, it had risen by 0.079%, part of a recently choppy pattern of gains and losses.

The latest loss left the index’s year-to-date return at 4.624%, down from Wednesday’s 4.645%.

According to the Finra-Bloomberg Active US High Yield Bond index, Thursday’s junk market volume moderated to $3.51 billion from Wednesday’s $3.54 billion figure.

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