Murphy Oil, Venoco price to cap $5.65 billion primary week; new Iron Mountain trades actively

By Paul Deckelman and Aleesia Forni

New York, Aug. 9 - Murphy Oil USA Inc. and energy sector peer Venoco, Inc. were heard by high-yield syndicate sources to have each priced a new issue on Friday - Murphy a $500 million offering of 10-year notes and Venoco a $255 million tranche of five-year senior PIK toggle notes.

They were the only two pricings seen Friday of fully junk-rated, dollar-denominated issues from domestic or industrialized-country borrowers.

The day's roughly $748 million of new issuance lifted the week's total of new paper to about $5.65 billion in 17 tranches, according to data compiled by Prospect News.

That's down from the $7.58 billion in 21 tranches that priced the week before, ended Aug, 2, according to the data.

On a year-to-date basis, issuance rose to about $197.29 billion in 460 tranches, running about 11% ahead of the pace seen at this time last year, which ultimately saw record new issuance.

Among the recently priced deals, Thursday's dollar-denominated offering from Iron Mountain, Inc. was heavily traded, though there was not much price movement from where the information technology and records storage company's bonds had come to market.

That was also pretty much the case for such credits as Halcon Resources Corp.

But recent deals from BMC Software, Inc. and Dream Works Animation SKG, Inc. continued to trade at a premium.

In the overall secondary market, statistical performance indicators were seen mixed on the session, but they were down across the board from week-earlier levels for a third consecutive time.

Venoco upsizes

Two new issuers came to the high-yield primary market on Friday, market sources said.

The session saw Venoco price an upsized $255 million issue of senior PIK toggle notes due 2018 at 97.304 to yield 13%, according to syndicate sources.

The notes priced on top of talk and come with a 12¼% cash-pay coupon and a 13% PIK coupon.

The notes were issued via Denver Parent Corp.

The Rule 144A and Regulation S deal comes with two years of call protection and a make-whole call for the first two years at Treasuries plus 50 basis points.

Proceeds will be used to redeem Denver Parent's existing senior secured notes, to fund Venoco's tender offer for its 11½% senior notes due 2017 and to redeem any 11½% notes not purchased through the tender offer.

Citigroup Global Markets Inc. and BofA Merrill Lynch are the joint bookrunners.

ABN Amro Inc., BOSC, Credit Suisse Securities (USA) LLC, Keybanc Capital Markets LLC, Santander Investment Securities Inc., Scotia Capital (USA) Inc. and RB International are the co-managers.

The issuer is a Denver-based energy company.

Murphy Oil prices tight

There was also a $500 million offering of 6% senior notes due 2023 from Murphy Oil USA, which priced at par, according to an informed source.

The notes were sold at the tight end of talk, which was set at a yield of 6% to 6¼%.

The Rule 144A and Regulation S with registration rights notes will be non-callable for five years.

Proceeds from the offering will be used to fund a dividend to Murphy Oil Corp.

J.P. Morgan Securities LLC and Stephens Inc. were the joint bookrunners.

The oil and gas exploration and production company is based in El Dorado, Ark.

Orionstone postpones deal

A deal from Orionstone Pty. Ltd. that was expected to price on Friday was pushed back, according to a source close to the deal.

The company is now planning to price its $200 million seven-year senior secured notes during the Aug. 12 week.

Morgan Stanley will be the bookrunner for the Rule 144A for life deal.

The bonds will have three years of call protection.

The company plans to use the proceeds from the new deal to repay existing debt plus applicable fees.

Orionstone is a Mackay, Australia-based provider of heavy equipment to that country's mining and construction industries.

Murphy moves up

In the secondary market, a trader said that he saw Murphy Oil's new 6% notes due 2023 at 100½ bid on the break, although he added that he had not seen any offers at that point in the afternoon.

At another desk, though, a trader pegged the new bonds at 100¾ bid, 101¼ offered.

The day's other new issue, from sector peer Venoco, was seen by traders having priced too late in the session for any kind of meaningful aftermarket activity.

Iron Mountain trades actively

Thursday's new issue from Iron Mountain proved to be "the dominant new-issue name today," a trader said, noting very heavy trading in the Boston-based information technology and document management company's 6% notes due 2023.

Market sources said that more than $80 million of those bonds changed hands on just a round-lot basis, in addition to brisk trading in smaller odd-lot pieces.

A market source saw the bonds get up to 100½ bid before easing from that peak to go out at par bid, unchanged from the level at which that $600 million deal had priced Thursday after having been upsized from an original $450 million.

The bonds "went below issue" initially, another trader said, quoting them down around 99¾ bid, 99 7/8 offered, before they firmed a little to 100 1/8% bid, 100¼ offered going out.

Yet another trader saw a similar trajectory from 99 3/8 bid, 99 7/8 offered at the start of trading to 100 1/8 bid, 100¼ offered later on.

That tranche of bonds priced as part of a dual-currency transaction that also saw C$200 million of 6 1/8% notes due 2021 price at par, downsized from C$300 million originally.

Halcon holds steady

Among Thursday's other issues, a trader saw Halcon Resources' 9¼% notes due 2022 trading around par to 100¼ after having come in from earlier levels as good as 100½ bid.

That was about where the Houston-based energy operator's quickly shopped $400 million issue had traded on Thursday after pricing at par. The issue was enlarged from an originally announced $300 million and traded between par and 100¼ in initial aftermarket dealings.

The trader meantime said that he had not seen any signs on Friday of Thursday's other two deals, Live Nation Entertainment Inc.'s quick-to-market $200 million add-on to its 7% notes due 2020 and Multi Packaging Solutions Inc.'s $200 million 8 1/8% notes due 2021.

Live Nation, a West Hollywood, Calif.-based concert and live show producer and ticket seller, priced its add-on at 104.5 to yield 5.954%, and the credit moved above 105 bid in the aftermarket later Thursday.

Multi Packaging, a New York-based cardboard carton maker, priced its bonds at par, and they gained a point in the aftermarket.

BMC, Dream Works hold gains

One of the traders said that there was "some activity in the older bonds" that priced earlier in the week.

For instance, he saw BMC Software's 8 1/8% notes due 2021 at "a wide" 101¾ bid, 102¾ bid.

The Houston-based software company's giant-sized $1.625 billion offering - upsized from $1.38 billion earlier - priced at par on Wednesday, the first such megadeal-sized offering seen in Junkbondland since around mid-July and the biggest junk deal since late June.

Those new bonds took the junk market by storm, quickly jumping to around the 101½ bid area when they were freed for aftermarket dealings later Wednesday afternoon. On Thursday, they continued to add to their gains, moving up to above the 102 bid area.

The trader said that the bonds had finished Thursday in a narrow 102 to 102 1/8 bid range, "but this morning they were a little wider," back down below the 102 level at 101¾ bid.

He also saw Dream Works Animation's 6 7/8% notes due 2020 get as good as a 102½ to 103 bid context on Thursday but saw the bonds off a little Friday, though in that same general area, at 102¼ bid, 103 offered.

The Glendale, Calif.-based television and movie production company priced $300 million of the notes on Wednesday at par.

J.C. Penney stays busy

Away from the new issues, J.C. Penney Co. Inc. remained a notable name in Friday trading, just one day after it was reported that activist investor Bill Ackman was calling for a quick turnaround on a search for a new chief executive officer.

One trader said the name "continues to slide," seeing the 5.65% notes due 2020 fall to a low of 69 before rebounding to 693/4.

He called that about unchanged on the day.

Another trader pegged the issue in the 69 to 70 range, noting that the 2020 paper was the most active of the J.C. Penney structure.

The first trader meantime pegged the 6 7/8% notes due 2015 at 891/2, up about a point. The second trader said the paper "rebounded a little" to 89½ bid, 90 offered.

According to a report from CNBC on Thursday, the Plano, Texas-based company's board of directors agreed to look into possible replacements for CEO Mike Ullman during a July meeting. The search was initially proposed by Ackman, who wants a new CEO named within 45 days.

Ackman said in a letter that former CEO Allen Questrom had agreed to come back to the company as chairman as long as he agreed with the new choice for CEO.

Market indicators off on week

Statistical junk market performance indicators were mixed on Friday after having been higher across the board on Thursday and were lower for a third consecutive week.

The Markit Series 20 CDX North American High Yield index lost 1/16 point on Friday to end at 105 3/32 bid, 105 5/32 offered after having gained ¼ point on Thursday.

It was down from 105¾ bid, 106 offered seen the previous Friday, Aug. 2.

The KDP High Yield Daily index saw its second straight gain on Friday, rising by 5 basis points to 73.54, after gaining 2 bps Thursday.

Its yield was unchanged for a second straight session, at 6.11%.

Those results compared unfavorably to the 73.72 index reading and 6.03% yield seen the previous Friday.

And the widely followed Merrill Lynch High Yield Master II index saw its second straight gain Friday, rising 0.028%, on top of Thursday's 0.081% improvement.

That raised the index's year-to-date return to 3.165% from Thursday's 3.136% level. The return was down from its peak level for the year so far of 5.835%, recorded on May 9, though up solidly from its 2013 low point of 0.384%, set on June 25.

For the week, the index was down by 0.097%, its third straight weekly downturn. It had lost 0.193% the previous week, when the year-to-date return ended at 3.266%.

Stephanie N. Rotondo contributed to this review

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