American Builders Supply, Bonanza Creek price deals; CrownRock up next; funds gain $32 million

By Paul Deckelman and Paul A. Harris

New York, April 4 - American Builders & Contractors Supply Co. Inc. came to market on Thursday with a downsized $500 million offering of eight-year notes, high-yield syndicate sources said.

Traders saw the building supply company's new bonds firm solidly when they were freed for initial aftermarket dealings.

Bonanza Creek Energy, Inc., an oil and gas exploration and production company, priced Thursday's only other dollar-denominated, fully junk-rated deal from a domestic or industrialized country issuer. However, that $300 million eight-year transaction came too late in the session for any kind of aftermarket.

The Bonanza Creek pricing was just one of several primaryside events Thursday originating in that same energy sector.

Texas E&P operator CrownRock LP was heard to have upsized its coming eight-year notes offering to $400 million while doing a little tinkering with the proposed indenture. Syndicate sources heard price talk on the deal, which is expected to get done during Friday's session.

Midstates Petroleum Co., Inc. was meantime heard to have lined up $620 million of bridge loan commitments in support of its acquisition of oil-weighted properties in Texas and Oklahoma. Planned permanent financing for the purchase is expected to be largely debt based.

Away from the energy sphere, New Cotai LLC, a Macau gaming company, hit the road to market its $360 million of payment-in-kind notes. Pricing is expected next week.

Among recently priced names, Wednesday's issue from CNH Global NV and Tuesday's from Continental Resources Inc. were seen by traders holding their own in the secondary arena. But Tuesday's DISH DBS Corp. deal continued to struggle.

The traders described the day's dealings as quiet.

Statistical market performance measures turned firmer after having been mixed on Wednesday.

And flows of investor cash into or out of high-yield mutual funds and exchange-traded funds - a key barometer of overall Junkbondland liquidity trends - showed a small gain in the latest week, a major tracking service said - although another such agency saw a respectably large inflow to those funds.

AMG sees $32 million inflow

As Thursday's market activity was coming to a close, junk market participants familiar with the fund-flow statistics generated by AMG Data Services, Inc. reported that in the week ended Wednesday, $32.1 million more came into those funds than left them.

It was the second consecutive smallish inflow reported by Arcata, Calif.-based AMG, a unit of the Lipper analytics division of Thomson Reuters Corp., and the third straight cash addition overall; in the previous week, ended March 27, Lipper had seen a $34.1 million inflow. Those two small gains followed the $200.9 million inflow that had been seen in the week ended March 20.

Even with all three combined for a total of $267 million of inflows during that time, that still represents just a partial comeback from the $418.1 million outflow seen the week before that, ended March 13, by Lipper.

Fourteen weeks into the new year, 2013 net inflows as reported by Lipper so far have amounted to about $883 million, according to a Prospect News analysis of the figures.

There have now been nine inflows and five outflows reported by Lipper so far this year.

In 2012, when cumulative net inflows for the year totaled an estimated $32 billion, according to the analysis, inflows to the funds were recorded in 39 weeks of the year and outflows in the remaining 13 weeks.

EPFR sees $997 million inflow

The other major fund-tracking service, Cambridge, Mass.-based EPFR Global, meantime said that in the week ended Wednesday, $997 million more entered the funds it tracks than left them.

It was actually the second consecutive week the service had seen a $997 million cash addition, having also reported one for the preceding week, ended March 27.

It was the seventh consecutive weekly inflow to be reported by EPFR, which uses a different methodology from Lipper that includes some foreign-domiciled funds as well as domestic funds in its tally. During that time, a total of $6.43 billion more came into the funds than left them, according to a Prospect News analysis of EPFR's figures.

On a year-to-date basis, 2013 has seen a cumulative net inflow of about $9.18 billion, according to the analysis, with inflows seen in 12 of the year's 14 weeks so far against just two weekly outflows.

EPFR meantime saw a $437 million cash injection to the strictly U.S.-only funds it tracks - a category more closely aligned with Lipper's domestic-only fund universe. That followed a $394 million inflow to those funds in the week ended March 27.

The latest week's inflow to the U.S.-only funds was the sixth consecutive inflow, according to the analysis, for a total of about $3.21 billion during that time.

For the year to date, the U.S.-only funds have received a cumulative net inflow of about $2.77 billion, according to the analysis - eight weeks of inflows versus six weeks of outflows.

Cumulative fund-flow estimates, whether from EPFR or from AMG/Lipper, may be revised upward or downward or be rounded off and could include unannounced revisions and adjustments to figures from prior weeks.

The continued flow of fresh cash into junk - and the mutual funds and ETFs represent but a small, though very observable and quantifiable percentage of the total amount of investor money coming into or leaving the junk market - has been seen by analysts as a key element behind the high-yield secondary sphere's strong performance last year versus other fixed-income asset classes and its record active new-deal pace, which easily topped the $350 billion mark - patterns of primary activity and secondary strength that have mostly continued into the 2013 so far.

American Builders downsizes

The Thursday session saw a pair of single-tranche deals price, generating a total of $800 million of proceeds.

The session was somewhat unusual in that it came and went without any drive-by transactions.

However, both of the roadshown deals that priced came with notable executions, one coming at the tight end of yield talk and the other coming on top of downwardly revised talk.

American Builders & Contractors Supply priced a downsized $500 million issue of eight-year senior notes (B3/B) at par to yield 5 5/8%.

The yield printed at the tight end of yield talk set in the 5¾% area.

ABC Supply was a totally bridged deal that went very well, according to a trader from a high-yield mutual fund, who added that allocations were tough.

The bond deal was downsized from $600 million while the company upsized its term loan.

Deutsche Bank Securities Inc., BofA Merrill Lynch and UBS Securities LLC were the joint bookrunners.

Proceeds will be used to help finance the redemption of the minority shares held by Advent International, Apollo and the founding family of the legacy Bradco Supply business and to redeem all outstanding stock appreciation rights.

Bonanza Creek upsizes

Bonanza Creek Energy priced an upsized $300 million issue of eight-year senior notes (B3/B-) at par to yield 6¾%.

The yield printed on top of yield talk that had firmed from earlier talk of 6¾% to 7%.

The deal was upsized from $250 million.

Allocations were also tough for the Bonanza Creek deal, according to the trader, who added that the order book was "wildly oversubscribed."

Wells Fargo Securities LLC was the left bookrunner. J.P. Morgan Securities LLC, KeyBanc Capital Markets and RBC Capital Markets were the joint bookrunners.

Proceeds will be used to repay all outstanding borrowings under the company's revolver. About $191.5 million remains outstanding as of March 28.

Proceeds will also be used for general corporate purposes, which may include funding the company's drilling and development program and capital expenditures.

CrownRock for Friday

CrownRock and CrownRock Finance, Inc. upsized their bond offering to $400 million from $350 million and talked the eight-year senior notes (/CCC+/) to yield 7% to 7¼%.

The books close at 11 a.m. ET on Friday, and the deal is set to price thereafter.

Credit Suisse Securities (USA) LLC and Mitsubishi UFJ Securities are the joint bookrunners.

Pricing levels were also heard on a couple of deals in the market for next week.

Hecla Mining Co. is in the market with a $400 million offering of eight-year senior notes (B2//) that are being discussed in a 7% area yield context, according to a buyside source.

The deal is being led by BofA Merrill Lynch and Scotia Capital.

And the Penn Virginia Corp. $400 million offering of seven-year senior notes (Caa1/B-) is being discussed with an 8½% to 8¾% yield.

RBC is the left bookrunner. Wells Fargo is the joint bookrunner.

Both deals are set to price during the April 8 week, sources said.

New Cotai notes

One roadshow started on Thursday.

New Cotai and New Cotai Capital Corp. plan to price a $360 million offering of non-rated six-year senior PIK notes and equity interests in New Cotai Participation Corp. during the week ahead.

Credit Suisse is the bookrunner.

The gaming company, which operates in Macau, plans to use the proceeds to partially fund equity commitments to the Macau Studio City project.

New Cotai Entertainment owns 40% of the Macau Studio City project.

American Builders firms up

In the secondary arena, traders said that the new 5 5/8% notes due 2021 from American Builders & Contractors Supply firmed smartly when they were freed for aftermarket dealings.

One pegged the Beloit, Wis.-based building-supply company's $500 million deal at 102 bid - well up from the par level at which that deal had priced earlier after it was downsized from an original $600 million.

A second trader had not yet seen those bonds, but a third had them going home at 102½ bid, 103 offered, agreeing that the issue was definitely the standout secondary performer of the day.

CNH adds to gains

A trader said that Wednesday's new offering from CNH Capital LLC "kind of held up pretty well," seeing those 3 3/8% notes due 2018 having opened up in a 101-to-101¼ bid context. "Then that offering got lifted," he said, bringing the bonds up to a 1011/4-to-101½ or 1011/4-to-101 5/8 range all day before finally going out around that latter level.

"They were firm all day," he declared.

The company - a unit of Burr Ridge, Ill.-based CNH Global, a manufacturer of heavy construction and agricultural equipment - had priced $600 million of the bonds at par in a quick-to-market Wednesday deal after upsizing the issue from an originally announced $500 million. The new bonds had been quoted late Wednesday around a 101-to-101¼ bid context.

A second trader saw the new CNH paper on Thursday between 101 and 101¼ bid, although a third located them at 1011/4-to-1013/4, calling that up 1.4 points on the session.

Continental Resources strong

A trader said that Continental Resources'4½% notes due 2023 - which had shot up solidly to around the 103 bid level on Wednesday after pricing at par on Tuesday - "were maybe a tick lower" on Thursday.

He quoted the Oklahoma City-based oil producer's quickly shopped deal as hovering between 1023/4-and-103 bid, in ever so slightly from Wednesday's close at 103.

He called the $1.5 billion deal - which had been enlarged from its originally announced $1 billion - "unchanged to 1/8 weaker, though maybe it came back a little bit during the day."

A second trader saw the bonds trading between 102¼ and 102½ bid, later seeing them having moved up to 102½ bid.

DISH still struggles

The only real underachiever among recently priced issues remained DISH DBS' big two-part issue, which came to market on Tuesday.

The trader said that both tranches of the Englewood, Colo.-based satellite television broadcaster's drive-by deal "traded down this morning."

He saw its $1.1 billion of 5 1/8% notes due 2020 having traded into a 99¼ bid, "at the low," with the bonds trading late in the day between 99¼ and 991/2.

He saw the $1.2 billion of 4¼% notes at 99 3/8-to-99 5/8 bid, "so they never really got above the issue [price]; they were hitting par bids right off the bat. The underwriter was trying to hold it up, but it kept getting hit and they finally backed it up a little bit."

The two-part deal - massively upsized from an originally announced $1 billion - "opened up [Thursday] like it wanted to be stronger, but they did hit some bids and finally got into a stalemate.

"That's the best way to describe it."

Market largely steady

Elsewhere, the trader said that "most of the market was kind of unchanged." For instance, he said that H.J. Heinz Co.'s 4¼% second-lien senior secured notes due 2020 were "still par to 1/8 [i.e., 100 1/8]."

The Pittsburgh-based ketchup, baked beans and pickle kingpin had priced its $3.1 billion issue of those bonds - massively upsized from the $2.1 billion initially announced - at par back on March 22, and after first struggling a little, the bonds had managed to climb into that 100-to-100¼ context and stay there.

A second trader called volume levels "very light. It feels almost like it's summer.

"Things were at a standstill."

Market indicators improve

Overall, statistical junk performance indicators were firmer on Thursday, reverting to their tone seen earlier in the week, after having turned mixed on Wednesday.

The Markit Series 20 CDX North American High Yield index was up by 5/32 point Thursday to finish at 103 7/32 bid, 103 11/32 offered, after having lost ¼ point on Wednesday.

The KDP High Yield Daily index meanwhile rose by 2 basis points to close at 75.62, after having lost 1 bp on Wednesday.

And its yield came in for a third straight session, by 1 bp, to end at 5.49%.

The Merrill Lynch High Yield Master II index posted its sixth consecutive advance on Thursday, rising by 0.029%, on top of Wednesday's 0.043% advance.

The latest gain lifted its year-to-date return to 3.094% - its sixth straight new peak level for 2013. That eclipsed the prior high-water mark of 3.064%, which had just been established on Wednesday.

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