Valeant, American Axle price; Frontier, J.C. Penney new issues continue activity; recent Sprint dominant

By James McCandless and Paul A. Harris

San Antonio, March 12 – The high-yield primary market saw three deals price in the United States on Monday for $1.95 billion in total, as the secondary market began the week on a slow note, traders said.

Valeant Pharmaceuticals International, Inc. priced an upsized $1.5 billion issue of eight-year senior notes, while American Axle & Manufacturing, Inc. priced an upsized $400 million of senior notes, also due in eight years.

Rounding out Monday’s pricings, CEVA Group plc priced an upsized $50 million tack-on to its 9% first lien senior secured notes due Sept. 1, 2020.

In the secondary market, Frontier Communications Corp. saw its Thursday $1.6 billion issue of eight-year second-lien secured notes actively traded.

Fellow Thursday pricing J.C. Penney Co., Inc. saw a rating on its $400 million issue of seven-year senior secured second priority notes Monday.

The $1 billion pricing from Sprint Corp. continued to be one of the dominant issues of the secondary market session.

More heavy volume was seen in Intelsat SA and Northern Oil and Gas Inc.

Valeant upsizes

In Monday's primary market Valeant Pharmaceuticals International, Inc. priced an upsized $1.5 billion issue of eight-year senior notes (Caa1/B-/B-) at par to yield 9¼%.

The yield printed in the middle of price talk in the 9¼% area. Initial guidance was in the 9¼% to 9½% area.

Deutsche Bank managed the debt refinancing deal.

American Axle upsized

American Axle & Manufacturing, Inc. priced an upsized $400 million issue of eight-year senior notes (B2/B) at par to yield 6¼% in a Monday drive-by.

The issue size was increased from $350 million.

The yield printed in the middle of yield talk in the 6¼% area, and tight to the 6¼% to 6 3/8% initial guidance.

Citigroup was the left bookrunner. Barclays, BofA Merrill Lynch, JP Morgan and RBC were the joint bookrunners.

The Detroit-based manufacturer and designer of driveline and drivetrain systems plans to use the proceeds, plus cash on hand, to refinance its 6¼% senior notes due 2021. The additional proceeds resulting from the $50 million upsizing of the deal will be used to reduce the cash portion of the tender.

CEVA upiszed and rich

CEVA Group plc priced an upsized $50 million tack-on to its 9% first lien senior secured notes due Sept. 1, 2020 at 100.75 to yield 9.179%.

The issue size was increased from $40 million.

The reoffer price came at the rich end of the 100.25 to 100.75 price talk.

Credit Suisse was the sole bookrunner.

The company, which is based in Hoofddorp, the Netherlands, plans to use the proceeds to repay its 4% senior notes due May 1.

Guitar Center roadshow

Guitar Center, Inc. plans to market $635 million of 3.5-year senior secured notes on a roadshow set to run through Wednesday.

UBS is the lead bookrunner. Wells Fargo, BofA Merrill Lynch, JP Morgan and Citizens are the joint bookrunners.

The Westlake Village, Calif. music retailer plans to use the proceeds to redeem its 6½% senior secured notes due 2019.

Parkland Fuel brings $500 million

Parkland Fuel Corp. is expected to price $500 million of eight-year senior notes (expected ratings B1/BB-) during the March 12 week.

BofA Merrill Lynch is leading the deal.

The Calgary, Alta., marketer of fuel and petroleum products plans to use the proceeds to repay bank debt.

Paprec €800 million two-part

Paprec Holding launched an €800 million two-part offering of seven-year senior secured notes (expected ratings B1/B+).

The deal is coming in tranches of fixed-rate notes which come with three years of call protection and floating-rate notes which come with one year of call protection.

Tranche sizes remain to be determined.

Joint physical bookrunner Credit Suisse will bill and deliver for the Rule 144A and Regulation S deal. BNP Paribas and Credit Agricole CIB are also joint physical bookrunners.

Elsewhere Aker BP ASA announced in a Monday press release that it has launched a $500 million offering of senior notes, with proceeds to refinance debt.

And in another debt refinancing deal Germany-based containerboard company Progroup AG announced in a Monday press release that it plans to offer €450 million of eight-year senior secured notes.

Frontier notes trade

Norwalk, Conn.-based wireline telecom name Frontier Communications’ new $1.6 billion issue of eight-year second-lien secured notes started the week as some of the most active in the secondary market, a market source confirmed.

“Even on slow days, Frontier will trade,” a trader said.

The 8½% notes due 2026 fell to below 98 bid.

J.C. Penney continues activity

Plano, Texas-based retailer J.C. Penney, which priced an upsized $400 million issue of seven-year senior secured second priority notes on Thursday at 8 5/8% yield, saw the issue trade again after being rated. Fitch assigned a BB- rating to the new notes, cut a rating to another set of notes, and affirmed its outlook (see related story in this issue).

“It started out overbought,” a trader said. “Now it’s come back down”

A market source said that it traded back down to par bid.

Sprint rolls on

Overland Park, Kan.-based wireless company Sprint’s recent $1 billion new issue saw more activity Monday, a trader said. The activity comes off the heels of a Friday announcement that it would be laying off 500 people working in their headquarters over the next several weeks.

The 7 5/8% notes due 2026 reversed some of last week’s losses by trading up about ½ point to close at 99½ bid.

Volume names active

Elsewhere in telecom, Luxembourg-based satellite communications company Intelsat continues to be favored as comments about the company and similar ones benefiting from changes to the nation’s 5G network spur activity.

The Intelsat Jackson SA 5½% paper due 2023 traded down to finish close to 82½ bid. The 7¼% paper due 2020 rose about 1¾ points to close at near 96 bid.

Minnetonka, Minn.-based independent oil and gas name Northern Oil and Gas’ 8% issues due 2020 fell 1 point to close at 91 bid.

Indexes level

The KDP High Yield Daily Index held at 70.56 and kept its yield at 5.78%.

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