Springleaf add-on, Provident, Summit drive by; recent deals busy; Dynegy, Neiman Marcus gain

By Paul Deckelman and Paul A. Harris

New York, May 24 – The high-yield primary market resumed its busy pace on Wednesday, as a total of $1.125 billion of new junk bonds were priced in a trio of quickly shopped new deals – up from the $500 million that had gotten done on Tuesday in a single transaction.

Consumer loan company Springleaf Finance Corp. – which had just visited Junkbondland exactly two weeks ago to price an issue of new five-year notes – came back for seconds on Wednesday, bringing a $500 million add-on tranche of those same notes.

Another loan company – Provident Funding Associates, LP, which specializes in residential mortgage lending – priced $325 million of eight-year paper.

The day’s sole new issue from something other than a financial company – concrete, cement and asphalt supplier Summit Materials, Inc. – was a $300 million issue of eight-year notes.

The latter issue was the only one of the three initially seen in the aftermarket, firming smartly in brisk trading.

Secondary traders meantime saw active dealings in new bonds that were priced earlier in the week, including Tuesday’s transaction from Navient Corp. and some of the deals that were priced on Monday, including KAR Auction Services, Inc., Chesapeake Energy Corp., PBF Energy, Inc. and Molina Healthcare, Inc.

Apart from the deals that have actually come to market already, primaryside sources heard cloud networking services provider GTT Communications, Inc. shopping around an add-on to its existing 2024 notes, joining other forward calendar deals being marketed by NOVA Chemicals Corp. and PetSmart, Inc., with all three seen as likely Thursday pricings.

Outside of the new-deal realm, traders saw Dynegy Corp.’s bonds – which had shot up on Monday on news reports it is in talks to be acquired, only to fall back from those peak levels on Tuesday – were up again on Wednesday.

Neiman Marcus Group, Inc. rose on a report that it has been in talks with real estate giant Related Cos. on a possible investment by Related in the recently underperforming luxury department store chain operator.

Statistical market performance measures were mostly higher for a fourth straight session on Wednesday, having improved across the board on Friday and then stayed on the upside all this week so far; the indicators had been mixed lower all around last Wednesday and were mixed last Thursday.

Springleaf brings add-on

In Wednesday's primary market session, Springleaf Finance Corp. priced a $500 million add-on to its existing 6 1/8% senior bullet notes due May 15, 2022 (B2/B).

The quickly shopped offering priced at 101.25 late in the session, with Barclays Capital Inc. as the bookrunner for the public offering.

The notes are immediately fungible with the $500 million of such paper that Springleaf, a wholly owned indirect subsidiary of Evansville, Ind.-based consumer finance company OneMain Holdings Inc., priced at par back on May 10.

The company plans to use the proceeds to repurchase about $466 million of its 6.9% medium-term notes, series J, due 2017 from a beneficial owner of the repurchased notes.

The remainder of the proceeds will be used for general corporate purposes which may include further debt repayment.

Summit Materials drives by

Summit Materials, Inc. priced a $300 million issue of eight-year senior notes (B3/BB-) at par to yield 5 1/8%.

The yield printed at the tight end of the 5 1/8% to 5 3/8% yield talk and in line with early guidance in the low 5% area.

BofA Merrill Lynch, Goldman Sachs, Citigroup, Deutsche Bank, RBC and Barclays were the bookrunners for the quick-to-market deal.

The Denver-based vertically integrated supplier of aggregates, cement, ready-mix concrete and asphalt plans to use the proceeds to fund acquisitions, with any remaining proceeds to be used for general corporate purposes.

Provident Funding eight-year deal

Provident Funding Associates, LP priced a $325 million issue of eight-year notes at par to yield 6 3/8%.

BofA Merrill Lynch and Barclays were the joint bookrunners.

Provident Funding is a Burlingame, Calif.-based private, independent mortgage company that originates and services residential mortgage loans.

NOVA Chemicals talks $2.1 billion

Looking ahead to what promises to be a busy Thursday session NOVA Chemicals Corp. set price talk in its $2.1 billion offering of non-callable senior notes, which are coming in two benchmark tranches (Ba2/BB+/BBB-).

The offer includes $750 million minimum of seven-year notes talked to yield in the 4 7/8% area and $750 million minimum of 10-year notes talked to yield in the 5¼% area.

The acquisition deal is set to price on Thursday.

Barclays and HSBC are the joint active bookrunners. Barclays will bill and deliver for the 10-year notes. HSBC will bill and deliver for the seven-year notes. TC, RBC and Scotia are the joint bookrunners.

PetSmart talks $2 billion

PetSmart, Inc. set price talk in its $2 billion two-part offering of eight-year notes, in a deal also set to price Thursday.

The acquisition deal includes $1.35 billion of senior first-lien notes (Ba3/B+) talked to yield in the 6% area and $650 million of senior notes (B3/B-) talked to yield in the 9% area.

Joint bookrunner Citigroup is the left lead for the first-lien notes. Joint bookrunner Barclays is the left lead for the unsecured notes. Jefferies LLC, Nomura and RBC Capital Markets are also joint bookrunners.

GTT Communications tap

Also on Thursday GTT Communications, Inc. plans to price a $150 million add-on to its 7 7/8% senior notes due 2024 later in the day.

Credit Suisse, KeyBanc and SunTrust are the joint bookrunners for the Rule 144A and Regulation S with registration rights offer.

Further out along the timeline Virtu Financial Inc. plans to price an $825 million offering of five-year senior secured second-lien notes (B1//B+) during the week ahead, at the conclusion of an investor roadshow.

JP Morgan is leading the acquisition deal.

Ansaldo Energia non-rated deal

In the European primary market Italian power engineering firm Ansaldo Energia SpA priced an upsized €350 million issue of non-rated senior notes at par to yield 2¾% on Wednesday.

The issue size was increased from €300 million.

Joint bookrunner UniCredit will bill and deliver. Barclays, BNP Paribas, Credit Agricole CIB, Commerzbank, HSBC, Santander and SG CIB were also joint bookrunners.

Heathrow upsized and tight

Heathrow Finance plc launched and priced an upsized £275 million issue of 10-year senior secured bullet notes (Ba3//BB+) at par to yield 3 7/8%.

The issue size was increased from £250 million.

The yield printed at the tight end of yield talk in the 4% area.

Joint active bookrunner Barclays will bill and deliver. ING and JP Morgan were also joint active bookrunners. BofA Merrill Lynch, Credit Suisse, ICBC and RBC Capital Markets were passive bookrunners.

The London-based international airport plans to use the proceeds to refinance debt.

Tuesday outflows

The daily cash flows of the dedicated high-yield bond funds were negative on Tuesday, the most recent session for which data was available at press time.

High-yield ETFs sustained $141 million of outflows on the day.

Asset managers sustained $5 million of outflows on Tuesday.

Summit seen strong

In the secondary sphere, traders saw the new Summit Materials 5 1/8% notes due 2025 having moved solidly higher in initial aftermarket dealings, the only one of the day’s three new issues immediately seen trading around.

Two traders at different shops both quoted the notes at 101 bid late in the day, up by 1 point from their par issue price.

At another desk, a market source said the bonds were going home around 101 1/16 bid, with over $39 million having changed hands – enough volume to put the new credit high up on the day’s Most Actives list.

The traders meantime did not see any initial aftermarket activity in either Provident Funding’s 6 3/8% notes due 2025, or in Springleaf Finance’s 6 1/8% add-on notes due 2022.

The existing 6 1/8s – the new deal the company priced two weeks ago – have recently been trading above the 102½ bid market, with a trader seeing them on Tuesday in a 102 3/8 to 102 7/8 bid context.

Recent deals keeping busy

Traders saw continued brisk activity in the new deals that priced on Monday and Tuesday.

The latter’s 6¾% notes due 2025 from Navient Corp. were seen by one trader at 100 3/8 bid, about unchanged on the day, and by another at 100 7/16 bid, up 1/16 point. Over $44 million were traded.

The Newark, Del.-based loan servicer had priced $500 million of the notes at 99.99 in a quick-to-market transaction on Tuesday.

Going back a little further, Molina Healthcare’s 4 7/8% notes due 2025 gained 3/16 point on Wednesday, a trader said, ending at 100 5/16 bid, on volume of over $43 million.

The Long Beach, Calif.-based managed healthcare company had priced $330 million of the notes at par on Monday, one of a number of drive-by offerings that came to market that day.

PBF Energy’s 7¼% notes due 2025 – the only one of the recent new deals which has struggled from the get-go – remained under pressure on Wednesday, retreating by another ½ point to 98 5/8 bid, with over $20 million having traded.’

The Parisppany, N.J.-based oil refineries operator had priced $725 million of the notes at par on Monday. Chesapeake Energy’s new 8% notes due 2027 were seen trading at, or just under par on Wednesday, with over $13 million changing hands. That was down from levels seen on Tuesday. The Oklahoma City-based natural gas and oil exploitation and production company had priced $750 million of the notes on Monday.

KAR Auction Services’ 5 1/8% notes due 2025 were seen by a trader up ¼ point on Wednesday at 101 5/8 bid, with more than $12 million of turnover.

The Carmel, Ind.-based provider of vehicle auction services and floor-room financing for the used-vehicle industry, priced its $950 million quick-to-market offering at par on Monday, after the deal was upsized from an originally announced $800 million.

Dynegy bounces back

Away from the recently priced offerings, a trader said that Dynegy Corp.’s bonds “kind of sold off the other day [i.e., Tuesday], but they got a little bounce today.”

He saw the Houston-based power generator’s 8% notes due 2025 up by some 2½ points, at 96¼ bid, with over $31 million traded.

Its 7 3/8% notes due 2022 gained 1¾ point, to 97¾ bid, on turnover of $21 million.

Neiman Marcus moves up

A trader said that Neiman-Marcus Group’s 8% notes due 2021 were up by almost 2 points on Wednesday, ending at 53¼ bid, with over $20 million traded.

He cited published reports that the real estate giant Related Cos. had recently met with the Dallas-based retailer to discuss a possible investment in the company by Related – or even the possibility of an outright acquisition. There has been no further developments on that front, however.

Indicators stay firm

Statistical market performance measures were mostly higher for a fourth straight session on Wednesday, having improved across the board on Friday and then stayed on the upside all this week so far; the indicators had been mixed lower all around last Wednesday and were mixed last Thursday.

The KDP High Yield Daily index moved up by 5 basis points on Wednesday to end at 72.63, its fourth consecutive gain; it had risen by 8 bps on both Monday and again on Tuesday.

Its yield came in by 2 bps on Wednesday to end at 4.93%, its fourth straight narrowing. It had also tightened by 9 bps on Tuesday and by 3 bps on Monday.

The Markit CDX Series 28 index was unchanged on Wednesday at 107 9/16 bid, 107 19/32 offered; before that it had been on the rise for four consecutive sessions, including Tuesday, when it had edged up by 1/32 point, and on Monday, when it gained nearly 7/32 point.

The Merrill Lynch North American High Yield index posted its fourth straight upturn, rising by 0.046%, on top of Tuesday’s 0.094% advance and Monday’s gain of 0.146%.

Wednesday’s improvement lifted the index’s year-to-date return to 4.638%, its fourth consecutive new 2017 year-to-date high point. That was up from 4.59% on Tuesday, the previous new peak level.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.