SuperValu drive-by, Greystar, restructured Canbriam price; market quiet ahead of Veterans Day

By Paul Deckelman and Paul A. Harris

New York, Nov. 10 – With a rare non-Monday holiday just ahead, the Veterans Day-shortened week in Junkbondland opened on Monday with the pricing of three deals totaling $850 million, high-yield syndicate sources said.

That was down from the $1.775 billion of new dollar-denominated and fully junk-rated paper that had come to market on Friday.

The biggest transaction was the $350 million drive-by deal from supermarket operator and wholesale grocery supplier SuperValu Inc., which priced an issue of eight-year notes. Secondary market traders quoted those bonds up nearly a point when they were freed for aftermarket dealings.

There was also a pair of $250 million issues that priced as regularly scheduled forward-calendar offerings: Greystar Real Estate Partners LLC’s eight-year senior secured notes and Canadian oil and gas exploration and production operator Canbriam Energy Inc.’s five-year notes. The latter pricing came after the deal was restructured, its original seven-year maturity shortened. Traders did not report any immediate aftermarket activity in either credit.

There was continued brisk aftermarket trading in several of the issues that had priced last week, including Friday’s $850 million two-part offering from packaging products manufacturer Sealed Air Corp. and Thursday’s $700 million two-parter from pharmaceutical services provider Omnicare Inc.

Away from the new deals, traders reported generally quiet activity, with some participants completely taking Monday off or leaving early ahead of Tuesday’s scheduled shutdown of fixed-income markets in the United States in observance of Veterans Day.

Among the few features seen in such a nebulous market, recently hard-hit oil and gas names such as Sandridge Energy Inc., Linn Energy, LLC and Rosetta Resources Inc. were a little better.

Statistical market-performance measures were mixed for a third consecutive session.

SuperValu prices tight

A relatively quiet Monday session saw three issuers complete single-tranche issues and raise a combined total of $850 million.

SuperValu priced a $350 million issue of eight-year senior notes (B3/B-) at par to yield 7¾% in a quick-to-market transaction.

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

Initial guidance was 8%.

The deal was reported to be playing to an order book that was 2.5-times oversubscribed by 10:30 a.m. ET, a trader said.

However, trading of the bonds in the secondary market did not seem to reflect that level of demand, the trader added, noting that most of the new SuperValu 7¾% notes due 2022 were trading between par 3/8 and par ¾ in the secondary market.

Another trader saw them at par 3/8 bid, par 5/8 offered not long after they broke for trading.

Goldman Sachs, Credit Suisse, Morgan Stanley and Barclays were the joint bookrunners for the debt refinancing deal.

Canbriam restructured deal

Canbriam Energy priced a restructured $250 million issue of 9¾% five-year senior notes at 94 to yield 11.355%.

The maturity of the notes was decreased to five years from seven years.

Credit Suisse, BMO, RBC and Barclays were the joint bookrunners for the debt refinancing and general corporate purposes deal.

There was no widely circulated price talk on the Canbriam deal, according to market sources.

However, yield discussions had taken place in the 10% to 10½% context, according to a buyside source, who added that issuers with exposure to energy and commodities are facing headwinds in the high-yield primary market these days, largely due to recent precipitous drops in crude oil prices.

Obviously not all energy issuers are created equal, though.

Last Friday, Blue Racer Midstream, LLC priced an upsized $550 million issue of 6 1/8% senior notes due Nov. 15, 2022 (B3/B) at 98.451 to yield 6 3/8%.

The deal was upsized from $400 million, and the yield printed 12.5 basis points below the tight end of the 6½% to 6¾% yield talk.

Blue Racer's notes continued trading at a premium on Monday, according to a trader, who spotted them at par ¾ bid, 101 offered, after having been as good as 101 1/8 bid, 101 3/8 offered.

Greystar moves up timing

Greystar Real Estate Partners priced a $250 million issue of eight-year senior secured notes (B2/B+) at par to yield 8¼%.

The yield printed on top of yield talk.

Timing on the deal was moved ahead. The roadshow, which began last week, had been expected to run into the middle part of the present week.

J.P. Morgan and Capital One were the joint bookrunners.

The Charleston S.C.-based provider of multifamily property management, development and investment services plans to use the proceeds to refinance debt, fund equity recapitalization and cover general corporate purposes.

Virgin Australia roadshow

There was little in the way of new deal announcements on Monday, heading into the Tuesday Veterans Day holiday.

One deal was announced.

Virgin Australia Airlines began a roadshow for a $300 million offering of non-callable five-year senior notes (expected ratings B3/B-).

The roadshow is scheduled to wrap up on Wednesday.

Goldman Sachs is the bookrunner.

The Brisbane, Australia-based airline plans to use the proceeds to build additional dollar-denominated liquidity and meet its dollar-denominated financing obligations.

Continued inflows

Cash continued to flow into the dedicated high-yield funds on Friday, the most recent session for which information was available as the Prospect News High Yield Daily went to press on Monday.

High-yield exchange traded funds (ETFs) saw $34 million of inflows on Friday, while actively managed funds saw $120 million of inflows.

Friday was the second session of the present five-session reporting period that will conclude at the close this coming Wednesday.

The first session of the reporting period – Nov. 6 – also saw net inflows, with actively managed funds seeing $350 million of inflows, while ETFs sustained $110 million of daily outflows.

Meanwhile, the market continued to buzz on Monday with news of the whopping $1.75 billion daily inflow to actively managed funds on Wednesday, the final day of the last reporting period.

That daily inflow sets a new record, a trader said on Monday, adding that it may have been spurred, in part, by the overwhelming victory by the Republican party in last Tuesday's election, which saw the Grand Old Party regain control of the United States Senate and thus solidify its control of Congress.

SuperValu seen better

In the secondary market, a trader quoted SuperValu’s new 7¾% notes due 2022 at 100¾ bid, 101¼ offered.

A second trader also saw the Eden Prairie, Minn.-based supermarket operator and wholesale grocery distributor’s quickly shopped issue at that level, up from its par issue price.

The traders did not see any immediate aftermarket activity from Calgary, Alta.-based oil and natural gas E&P operator Canbriam Energy’s 9¾% notes due 2019, which priced at a heavily discounted 94 after the offering was restructured.

And they likewise saw no immediate dealings in Greystar Real Estate Partners’ 8¼% senior secured notes due 2022 after their par pricing.

Sealed Air stays active

Among the deals that priced on Friday, a trader said that both tranches of Sealed Air’s two-part issue “stayed in a par to 100½ context all day.”

The Elmwood Park, N.J.-based producer of specialty packaging for the food processing and medical products industries priced a quickly shopped, upsized $850 million transaction consisting of $425 million of 4 7/8% notes due 2022 and $425 million of 5 1/8% notes due 2024, both of which priced at par. The overall issue was upsized from an originally announced $750 million.

Over $53 million of the eight-year notes had traded on Friday, firming to about 100 1/8 bid, while over $34 million had changed hands on Friday, ending at 100¼ bid.

Activity resumed on Monday, a market source said, with over $31 million of the notes changing hands and ending about unchanged on the day.

The source said that over $39 million of the 10-year issue traded, ending off ¼ of a point at par.

Among Friday’s other issues, a trader said that Blue Racer Midstream LLC’s 6 1/8% notes due 2022 were “wrapped around 101,” while a second trader pegged the bonds at 101 bid, 100¼ offered.

The Dallas-based midstream energy company had priced its $550 million issue, upsized from an originally announced $400 million, at 98.451 to yield 6 3/8%, and the bonds had immediately moved to around the 101 bid level when they were freed for aftermarket activity.

A trader saw Essar Steel Algoma’s 9½% senior secured notes due 2019 bid at 101¾ early in the session, but with no offered level.

A second trader did see two-sided markets in the credit at 102½ bid, 103½ offered.

The Sault Ste. Marie, Ont.-based steel manufacturer priced $375 million of the notes at par on Friday, upsizing the issue from $350 million originally.

Omnicare holds gains

Among other recently priced deals, Cincinnati-based pharmaceutical services provider Omnicare’s two-tranche issue continued to hold the hefty gains notched after both halves of that deal priced on Thursday.

A trader saw its 4¾% notes due 2022 at 101 bid, 101½ offered, while its 5% notes due 2024 finished at 101½ bid, 102 offered.

At another desk, a market source said that the 2022s were about unchanged on the day at 101 1/8 bid on $6 million of volume.

The 2024s were more actively traded, with $10 million of round-lot trades seen and the bonds finishing 3/8 of a point higher at 101 7/8 bid.

The market source said there had been a flurry of smaller odd-lot trades late in the session that temporarily lifted the bid levels to above 104, and larger trades just before the close brought the levels back down to around 101 7/8.

Energy names a bit firmer

A trader saw some of the recently hard-hit energy names doing a little better on Monday, even though oil prices continued to decline.

SandRidge Energy’s 7½% notes due 2021 ended at 90½ bid, up 2 points on the day.

Linn Energy’s 6½% notes due 2021rose nearly 3 points to end at 92 11/16, while its 7¾% notes due 2021 closed at an even 96, up ¾ of a point.

Rosetta Resources’ 5 7/8% notes due 2022gained 1 1/8 points to 98 3/8 bid.

Indicators stay mixed

A trader saw “some activity this morning, then that faded away once noon hit, which is to be expected with a holiday coming up [Tuesday].”

Statistical indicators of junk market performance were meanwhile mixed for a third consecutive session on Monday. They had turned mixed on Thursday and had stayed that way on Friday, after having been stronger across the board on Wednesday and lower all around on Tuesday.

The KDP High Yield Daily index ended at 72.46 and was down by 1 basis point, matching Friday’s downturn. It had risen by 8 bps on Thursday. Its yield, however, which would normally move inversely to the index reading and rise as the index declined, instead came in by 3 bps to end at 5.29%, after having risen by 3 bps on Friday.

The Markit CDX North American High Yield Series 23 index ended up by 3/16 on Monday at 107 1/8 bid, 107 ¼ offered, after having eased by 1/32 point on Friday, which in turn had followed two straight gains before that.

The Merrill Lynch U.S. High Yield Master II index put up its second consecutive advance, improving by 0.026%, on top of Friday’s 0.013% rise.

The latest gains lifted its year-to-date return to 4.664% from, 4.637% at Friday’s close, although it remained well down from its peak level for the year of 5.847%, recorded on Sept. 1.

© 2015 Prospect News.
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