Calfrac, MSCI price; Petrofac on tap; Sprint gains continue; Ultra Petroleum rebounds

By Paul A. Harris and Abigail W. Adams

Portland, Me., May 15 – While markets were volatile on Tuesday, the domestic high-yield primary market remained active with $1.15 billion notes pricing over two deals.

Calfrac Holdings LP priced a $650 million issue of eight-year senior notes (B3/B-) at par to yield 8½%, and MSCI Inc. priced a restructured $500 million issue of nine-year senior notes (Ba2/expected BB+) at par to yield 5 3/8% on Tuesday.

Both deals broke for trading early in the session and dominated secondary market activity.

Carriage Services, Inc. plans to start a roadshow on Wednesday for a $325 million offering of eight-year senior notes.

Petrofac Ltd. (Ba1/BBB-/BBB-) has been marketing a $300 million offering of five-year notes since last week. The deal was expected to price as early as Tuesday.

In the European primary market, NBG Pangea REIC is conducting a roadshow for a €400 million offering of five-year senior notes through Friday.

Premier Foods Finance plc plans to start a roadshow on Wednesday for a £300 million offering of five-year senior secured fixed-rate notes.

While new paper from Calfrac and MSCI dominated trading activity, Sprint Corp.’s 8¾% senior notes due 2032 and 6 7/8% senior notes due 2028 continued to see gains in active trading with the notes again up 1 to 1.5 points.

Ultra Petroleum Corp.’s 7 1/8% senior notes due 2025 (B2/B+) were up more than 3 points on Tuesday with the notes returning to the 64 range after dropping more than 3 points last week as investors responded to a shift in the company’s production strategy.

The secondary space was in general on the softer side on Tuesday, a market source said. While the front end of the market is still fairly strong, the bonds further out on the curve “definitely softened up a bit,” the source said.

The backup in Treasuries is contributing to the market’s weakness and all eyes will be watching movements in rates, the source said.

The rate increases will have a negative impact on the low coupon longer dated bonds in the double B space, the source said.

Calfrac prices $650 million

Calfrac Holdings priced a $650 million issue of eight-year senior notes (B3/B-) at par to yield 8½% on Tuesday.

The yield printed at the wide end of the 8¼% to 8½% yield talk.

There was also a change made to the restricted payments basket covenant.

RBC was the bookrunner for the debt refinancing deal.

MSCI restructures

In a deal that remained in the market longer than expected, MSCI priced a restructured $500 million issue of nine-year senior notes (Ba2/expected BB+) at par to yield 5 3/8% on Tuesday.

Revisions extended the maturity of the notes to nine years from 8.5 years and call protection to four years from 3.5 years.

The deal had been announced Monday as a quick-to-market trade but remained in the market overnight.

The yield printed at the wide end of yield talk in the 5¼% area.

Pricing on the deal crept wider since it was announced on Monday. Early guidance was in the low 5% area, sources say.

JP Morgan, Morgan Stanley and Goldman Sachs were the joint bookrunners.

The New York-based financial services provider plans to use the proceeds for general corporate purposes including stock buybacks and potential acquisitions.

Carriage Services roadshow

The new deal calendar continued to build on Tuesday.

Carriage Services plans to start a roadshow on Wednesday in New York for its $325 million offering of eight-year senior notes.

The deal, via left bookrunner Goldman Sachs, is set to price during the May 21 week.

The Houston-based provider of death care services and products plans to use the proceeds to pay off its existing credit facility and for general corporate purposes including acquisitions.

Petrofac on deck

Nearer at hand, London-based Petrofac Ltd. (Ba1/BBB-/BBB-) has been marketing $300 million of five-year notes with yield talk in the 6% area and spread talk in the Treasuries plus 300 basis points area.

The deal, in the market via JP Morgan and MUFG, was marketed last week by means of investor conference calls and had been expected to price as early as Tuesday.

Pangea roadshow

In the euro-denominated primary market NBG Pangea REIC is roadshowing a €400 million offering of five-year senior notes through Friday.

Initial guidance has the deal coming to yield in the high 3% area to 4%.

Citigroup, Credit Suisse and National Bank of Greece are the bookrunners.

The Athens-based real estate investment company plans to use proceeds to refinance debt.

Elsewhere Fincantieri SpA mandated Banca IMI, BNP Paribas, Deutsche Bank, Goldman Sachs International, HSBC and UniCredit to arrange meetings with fixed income investors beginning Monday.

A €300 million minimum Regulation S offering of fixed-rate senior notes with a five-year to seven-year maturity is expected to follow, pending market conditions.

The prospective issuer is a Trieste, Italy-based shipbuilder.

Premier Foods roadshows £300 million

In the sterling-denominated market Premier Foods Finance plans to start a roadshow on Wednesday for a £300 million offering of senior secured fixed-rate notes due October 2023 (expected ratings B2/B).

Physical bookrunner HSBC will bill and deliver for the Regulation S offer. Barclays, BNP Paribas and Lloyds are also physical bookrunners. Credit Suisse is a bookrunner.

The roadshow wraps up on Thursday and the deal is expected to price on Friday.

New paper

New paper from Calfrac and MSCI were the focus of the secondary market on Tuesday and dominated trading activity after the deals broke for trade.

Calfrac’s new 8½% senior notes were seen trading well above their issue price with most trades between par 5/8 to 101, sources said. More than $54 million of the bonds had traded by late afternoon.

MSCI’s new 5 3/8% notes were seen hovering at or just above par. The notes were seen at 99 7/8 bid, 100 1/8 offered mid-afternoon.

They were seen trading slightly above their issue price at par 1/8 late afternoon, a market source said. While MSCI’s new notes did not trade as high as Calfrac, they also saw heavy trading volume with more than $53 million of the bonds traded by late afternoon.

Sprint gains continue

After climbing 2 points yesterday, Sprint’s 8¾% notes due 2032 and 67/8% notes due 2028 continued to make gains in active trading on Tuesday.

The 8¾% notes were up another 1 1/8 point to trade up to 115¼. The 6 7/8% notes were up another 1½ point to trade up to 104.

The notes have been active since Monday when Sprint announced consent solicitations to amend the terms of its indenture to enable its merger with T-Mobile.

Bondholders are attempting to form a group to ask for more money for the consent, a market source said.

Sprint is currently offering to pay holders who give their consents to the amendments a pro rata share of $49.5 million for the 6 7/8% notes and $40 million for the 8¾% notes if it secures the needed majority for that series, Prospect News previously reported.

Ultra Petroleum rebounds

Ultra Petroleum’s 7 /18% senior notes due 2025 returned to their previous level on Tuesday after dropping last week as investors responded to a shift in the natural gas exploration and production company’s production strategy.

The notes saw large gains climbing more than 3 points to return to 64, a market source said.

The notes dropped 3¾ points to trade at 60¼ on Friday.

While Ultra Petroleum reported better than anticipated earnings on May 10, the company also announced it would change its production strategy by switching from vertical well drilling to horizontal well drilling.

Ultra Petroleum stock also rebounded on Tuesday and closed the day up almost 13% after sliding 13% on Friday.

Indexes see losses

Benchmarks for the high-yield secondary market all posted losses on Tuesday after indexes were mixed for the past two trading session.

The KDP High Yield index was down 5 basis points on Tuesday to 70.60 with the yield 5.83%. The index was flat on Monday at 70.65 while the yield increased 1 basis point to 5.82%. While the index was also 70.65 on Friday, the yield was 5.81%.

The Merrill Lynch High Yield index dropped back into negative territory after turning positive on Monday. The index was down 18.3 bps with the year-to-date return now negative 0.164.

The index crossed into positive territory on Monday with a year-to-date return 0.019%.

Monday marked the first time the year-to-date return was in positive territory since April 22.

The CDX High Yield 30 index dropped 37 bps on Tuesday to close the day at 106.77. Tuesday was the index’s third consecutive trading day of losses with the index down 7 bps on Monday and 4 bps on Friday.

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