CNH brings upsized drive-by, bonds trade up; new Continental Resources is hot, DISH is not

By Paul Deckelman and Paul A. Harris

New York, April 3 - CNH Global NV was heard by high-yield syndicate sources to have priced an upsized $600 million issue of five-year bullet notes on Wednesday via a subsidiary. Although the quickly-shopped deal came to market fairly late in the session, a trader later quoted the new bonds as having firmed by at least a point in initial secondary dealings.

The construction and agricultural heavy machinery maker's deal was the day's sole fully junk-rated, dollar-denominated issue from a domestic or industrialized-country issuer. Market sources also noted a $300 million split-rated 10-year offering from a subsidiary of luxury homebuilder Toll Brothers Inc., although that deal came off its lead underwriter's investment-grade desk and was thought to have mostly been aimed at high-grade players.

Traders meantime saw strong aftermarket performance from Tuesday's upsized $1.5 billion drive-by offering from energy operator Continental Resources Inc., which priced a 10-year deal.

However, they said that Tuesday's other quick-to-market transaction - the massively upsized $2.3 billion two-part offering from satellite TV broadcaster DISH DBS Corp. - failed to find its footing on Wednesday, both of its tranches trading below their respective issue prices.

Away from the deals which have actually priced, oil and gas company Penn Virginia Corp. and nitrogen fertilizer manufacturer Rentech Nitrogen Partners, LP each announced upcoming junk bond offerings, and syndicate sources saw both companies hitting the road to market them to prospective investors; pricing on both is expected to take place next week.

The high-yield secondary sphere was described as generally quiet, and mostly softened from its early peak levels as equities retreated on what analysts said were weak economic data and investor jitters over North Korean saber-rattling. Statistical junk market performance indicators were mixed on the session.

CNH upsizes, prices tight

Two issuers brought quick-to-market single-tranche deals on Wednesday, raising a total of $900 million in one pure junk and one split-rated deal.

CNH Capital LLC priced an upsized $600 million issue of non-callable five-year notes (Ba2/BB) at par to yield 3 5/8%.

The deal was increased from $500 million, and the yield printed at the tight end of the 3 5/8% to 3¾% yield talk.

Joint bookrunner Barclays will bill and deliver. BNP, Deutsche Bank and J.P. Morgan were also joint bookrunners.

The Burr Ridge, Ill.-based agricultural and construction equipment company plans to use the proceeds for general corporate purposes including the purchase of receivables and other assets, and to repay debt as it becomes due.

Toll brings 7-B deal

In a deal transacted on the high-grade desks, Toll Brothers Finance Corp. priced a $300 million issue 10-year senior notes (Ba1/BB+/BBB-) at par to yield 4 3/8%, on top of talk.

Bookrunners were Citigroup, Deutsche Bank, RBS and SunTrust.

Proceeds will be used for general corporate purposes, including repayment or repurchase of outstanding debt.

Penn Virginia starts roadshow

The roadshow calendar built on Wednesday.

Penn Virginia began a roadshow on Wednesday for a $400 million offering of seven-year senior notes.

The deal is set to price in the week ahead.

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

The Radnor, Pa.-based independent oil and gas company plans to use the proceeds to finance the acquisition of certain Eagle Ford properties from Magnum Hunter Resources.

Rentech starts Thursday

Rentech Nitrogen Partners, LP and Rentech Nitrogen Finance Corp. plan to start a roadshow on Thursday for a $320 million offering of eight-year senior secured notes.

The deal is set to price in the week ahead.

Credit Suisse, BMO, Morgan Stanley and RBC are the joint bookrunners.

The nitrogen fertilizer company plans to use the proceeds to refinance debt and fund future capital expenditures.

CNH seen firmer

In the secondary market, traders mostly had not seen the new CNH 3 3/8% notes, owing to the lateness of the hour at which it was heard to have been priced.

However, one trader did offer a late quote of 101 bid, 101¼ offered - up solidly from the par level at which the Burr Ridge, Ill.-based heavy equipment manufacturer had priced its upsized, quick-to-market deal earlier in the session.

Continental deal climbs

Among the issues which priced on Tuesday, a trader said that Continental Resources' 4½% notes due 2013 "did very well."

He saw the Oklahoma City-based oil producer's notes trading as high as a 103 to 103 1/8 bid context during the morning, before they came off that peak level to close around 102½ bid, 102 7/8 offered, which he said was a function of the overall junk market "getting weaker," weighed down in part by the decline in equities. "The market was getting sloppy" later on, he said.

Existing bonds up smartly

Continental Resources' existing 5% notes due 2022 - which had declined marginally on Tuesday ahead of the new deal, closing around 106½ bid - were seen having pushed solidly higher on Wednesday in brisk trading.

Two separate market sources each quoted those outstanding bonds ending at 107 5/8 bid, up 1 1/8 points on the session.

One of them noted that round-lot trading in the notes totaled more than $25 million - making it easily one of the busiest credits of the day in Junkbondland.

DISH disappoints

While Continental Resources' new issue sizzled, Tuesday's other offering, from Dish DBS Corp. merely fizzled.

DISH, a trader opined "didn't do well. I don't think I ever saw them offered higher than par" - the level at which the Englewood, Colo.-based satellite television broadcaster had priced both tranches of its sharply upsized $2.3 billion drive-by deal, one of the biggest deals to hit the junk market so far this year.

He said that both the $1.2 billion of 4¼% notes due 2018 and the $1.1 billion of 5 1/8% notes due 2020 were in a 99¼ to 99¾ bid range pretty much "all day, or 99½ to 99 5/8 when it got really tight."

He added that "this morning, when the [junk] market was firm, when the stock market was better," the two tranches had been in a 99 7/8 to par context.

"They looked like they were off and running" at that point, he said.

However, "then they fell off, like everything else," he declared, as junk generally softened in the face of the afternoon stock slide, prompted by a weaker-than-expected March showing by the ADP National Employment report on private-sector jobs creation. Those less-than-stellar numbers are seen as a bad omen ahead of Friday's much-anticipated Labor Department job-creation and jobless rate data, which is expected to be keenly scrutinized by financial market participants.

"Probably everything is off at least a quarter or so from their highs earlier today," he lamented. "They backed off when the Dow [Jones Industrial Average] backed off," he said.

That closely watched stock market measure slid by 111.66 points, or 0.76%, to finish Wednesday at 14,550.35. Broader market measures, such as the Standard & Poor's 500 index and the Nasdaq Composite index, were down even further, each surrendering more than 1% on the day.

Established DISH no better

Unlike Continental Resources, whose existing bonds firmed smartly on Wednesday - even in the face of the overall easiness in the junk precincts - DISH's outstanding issue continued Tuesday's downside momentum.

The company's 5 7/8% notes due 2022 eased by 1 1/8 points to close at 103¼ bid. Its 7 7/8% notes due 2019 likewise backpedaled to 116¼ bid, while its 6¾% notes due 2021, which had closed lower Tuesday well above the 110 mark, went home Wednesday at 109 bid.

A trader suggested that investors didn't like the idea of the company piling another more than $2 billion of new debt on top of an already highly leveraged capital structure. "So that's what transpired" [Tuesday] he said, with the downside momentum continuing Wednesday.

And although Continental Resources was also adding a pretty hefty chunk of new debt to its capital structure, the latter name won favor with both new-deal buyers and investors in its existing bond, he said, because "it's two separate, very different companies and industries. People have more confidence in that company [Continental Resources] and in the industry."

Market indicators turn mixed

Overall, statistical junk performance indicators turned mixed on Wednesday, after having been stronger across the board during Tuesday's session.

The Markit Series 20 CDX North American High Yield Index fell by ¼ point on Wednesday to finish at 103 3/32 bid, 103 7/32 offered, after having gained about the same amount on Tuesday for its third consecutive advance.

The KDP High Yield Daily Index, meanwhile eased by 1 basis point to close at 75.60, after having gained 5 bps on Tuesday, which had been its first rise after four straight losses before that dating back to the middle of last week.

However, its came in for a second straight session, by 1 bp, to end at 5.50%; on Tuesday, it had declined by 2 bps.

And the widely followed Merrill Lynch High Yield Master II index posted its fifth consecutive advance on Wednesday, rising by 0.043%, on top of Tuesday's 0.07% advance.

The latest gain lifted its year-to-date return to 3.064% - its fifth straight new peak level for 2013. That eclipsed the prior high-water mark of 3.019%, which had been the index's first finish above 3% so far this year.

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