Hecla prices, Rentech also; new bonds firm; Penn Virginia on tap; Penney gyrations continue

By Paul Deckelman and Paul A. Harris

New York, April 9 - The high-yield market saw a pair of deals price on Tuesday, which was in contrast with Monday's session, when no purely junk-rated, dollar-denominated paper from domestic or industrialized country issuers came to market.

Silver and precious metals producer Hecla Mining Co. was heard by syndicate sources to have done an upsized $500 million of eight-year notes.

Fertilizer manufacturer Rentech Nitrogen Partners LP priced $320 million of eight-year secured paper.

Traders said that both of the new issues moved up when they hit the secondary market, with Rentech's notes rising by more than a point from their pricing level, while Hecla's gains were a little more conservative.

Recently priced new deals, such as energy operator CrownRock LP's eight-years, remained around the mostly higher initial aftermarket levels those bonds reached after pricing. The notable exception was DISH DBS Corp.'s underperforming megadeal.

Away from the transactions that have come to market, the syndicate sources said that price talk emerged on energy company Penn Virginia Corp.'s upcoming eight-year bond deal, which is expected to get done during Wednesday's session.

In the non-U.S. dollar market, German media and marketing company Constantin Medien AG unveiled plans for a five-year euro-denominated bond deal, while Canadian health care company Centric Health Corp. said it will sell a tranche of five-year secured notes denominated in Canadian dollars.

Apart from the new issues, secondary market activity was described as muted. However, there was some volume seen in J.C. Penney Co. Inc.'s paper, which continued to move around as investors reacted to the not-wholly-unexpected news of the CEO ouster.

Statistical measures of market performance turned mixed after having been mostly firmer on Monday.

Hecla upsizes

Two single-tranche deals priced on Tuesday, generating a combined total of $820 million of proceeds.

Executions were tight, as both deals priced at the tight end of price talk, and one was significantly upsized.

Hecla Mining priced an upsized $500 million issue of eight-year senior notes (B2/B) at par to yield 6 7/8%.

The issue was upsized from $400 million.

The yield printed at the tight end of the 6 7/8% to 7 1/8% yield talk.

The deal was seen in the Street at par ½ bid, 101 offered, according to a trader.

BofA Merrill Lynch and Scotia were the joint bookrunners.

The Coeur d'Alene, Idaho-based silver producer plans to use the proceeds to pay the cash portion of the Aurizon Mines Ltd. acquisition and for general corporate purposes.

The $100 million of additional proceeds, resulting from the upsizing of the issue, will also be used for general corporate purposes.

Rentech at the tight end

Rentech Nitrogen Partners and Rentech Nitrogen Finance Corp. priced a $320 million issue of eight-year second-lien senior secured notes (B1/B) at par to yield 6½%.

The yield printed at the tight end of the 6½% to 6¾% yield talk.

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

The proceeds will be used to refinance debt and fund future capital expenditures.

Penn Virginia sets talk

Looking toward the Wednesday session, Penn Virginia plans to price its $400 million offering of seven-year senior notes (Caa1/B-) via left bookrunner RBC.

Dealers talked the notes with a yield in the 8½% area on Tuesday.

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.

Centric starts Wednesday

Also on Wednesday, Centric Health plans to start a brief roadshow for a Canadian dollar-denominated offering of five-year senior secured notes (/B-//DBRS B high).

The deal size is expected to be C$175 million to C$200 million.

The roadshow wraps up on Thursday, and the deal is expected to price the same day.

National Bank Financial will lead the deal. The group of underwriters will include TD Securities, Scotiabank, AltaCorp Capital Inc., BMO Capital Markets and RBC Dominion Securities Inc.

Proceeds will be used to fund the partial repayment of the Toronto-based health care company's current senior lender facilities, as well as to fund the partial redemption of Alaris preferred units and for general corporate purposes.

Hecla heads higher

In the secondary market, a trader said that Hecla Mining's 6 7/8% notes due 2021 "traded up off the break," moving up to a 1003/4-to-101 bid context.

A second trader saw the new issue at 100½ bid, 101 offered, while a third pegged them at 100 5/8 bid, 101 1/8 offered.

Those levels were up modestly from par, where the Coeur d'Alene, Idaho-based producer of silver and other precious metals had priced its $500 million offering, upsized from an originally announced $400 million size.

Rentech on the rise

The day's other new deal - from Los Angeles-based chemical fertilizer manufacturer Rentech Nitrogen Partners - also improved when the bonds were freed for trading.

Those 6½% second-lien senior secured notes due 2021 were seen by one trader bid without at 1011/4, while a second trader also said that he had not seen a right-side level, against a 101 bid.

However, at another desk, a trader did see a two-sided market at 101 bid, 101¾ offered, after the $320 million issue had priced at par.

Recent deals hang in

Among recently priced bond issues, a trader said that "there was some activity" in CrownRock LP's 7 1/8% notes due 2021.

He quoted the new bonds as trading inside a 1011/4-to101 5/8 range, versus a 101½ bid level seen in Monday's trading.

However, a second trader located the bonds within a wide 991/2-to 101¼ context.

The Midland, Texas-based oil and natural gas company, along with its CrownRock Finance, Inc. subsidiary, had priced that $400 million issue at par on Friday, after upsizing it from an original $350 million.

The new bonds had immediately moved to above 101 bid when they went into the aftermarket and stayed there on Monday and again on Tuesday.

Among other issues that came to market last week, a trader saw the bonds of two other energy operators continuing to do well.

He said that Denver-based Bonanza Creek Energy, Inc.'s 6¾% notes due 2021 were at 102 7/8 bid, 103½ offered on Tuesday, around the same aftermarket levels they had held ever since the $300 million deal priced on Thursday.

And Continental Resources Inc.'s 4½% notes due 2023 likewise held onto their gains, staying around 102 7/8 bid, 103 5/8 offered.

The Oklahoma City-based oil producer had priced its quick-to-market $1.5 billion transaction at par last Tuesday after greatly enlarging it from an originally announced $1 billion.

However, last Tuesday's other even bigger megadeal - from DISH DBS Corp. - continued to languish below its issue price, where those bonds have been almost from the moment they were freed for secondary dealings.

During the morning, a trader saw its $1.2 billion of 4¼% notes due 2018 at 99¼ bid, 99¾ offered, while the Englewood, Colo.-based satellite television broadcaster's $1.1 billion of 5 1/8% notes due 2020 were at 99 bid, 991/4.

Both halves of that drive-by offering had priced at par after it was radically upsized to $2.3 billion from $1 billion originally.

During the afternoon, another trader said the five-year notes were at 99¼ bid, 99¾ offered, while the seven-years were at 99 1/8 bid, 99½ offered.

Another quiet session

Away from the new deals, a trader said, there was "kind of a muted tone, I think," calling the junk market largely unchanged.

"When equities started to rise around midday, the market wanted to improve a little - but I would still say it's 'unched,' for the most part."

Market indicators turn mixed

Statistical junk market performance indicators turned mixed on Tuesday after having been firmer on Monday.

The Markit Series 20 CDX North American High Yield index rose by 1/8 of a point - its fourth straight advance - to close at 103¾ bid, 104 offered. On Monday, it had gained 13/32 point.

However, the KDP High Yield Daily Index lost 3 basis points to end at 75.60, after having risen by 2 bps on Monday. Its yield was unchanged on Tuesday, after having declined by 1 bp on Monday to 5.48%.

But the widely followed Merrill Lynch High Yield Master II Index showed improvement, adding on 0.105% for its second consecutive gain. The index had did better on Monday when it rose by 0.085% to bounce back from a loss on Friday.

Tuesday's gain lifted its year-to-date return to 3.21%, a new peak level for the year. That was up from the previous high point for the year, Monday's 3.101%.

Penney percolates

Among specifc credits, a trader said that he "saw some markets" in J.C. Penney.

He said that "some of the names weakened up a little," with the company's 5.65% notes due 2020 at 821/2-to-82¾ bid, versus an 83-84 context on Monday and early Tuesday.

A second trader said that there was "not a lot of activity, but definitely interesting news," including the ouster of embattled chief executive officer Ron Johnson.

He said the Plano, Texas-based department store retailer's bonds were, "for the most part, they were pretty much unchanged for most of the day, surprisingly."

He said that Penney's 5¾% notes due 2017 were going home in an 86-87 range, "where most of the trading was today." Pegging them at 861/2, he called that probably up a half-point on the day.

"But they had good volume, of over $15 million."

He said that at one point, the bonds got as good as 88 bid.

He said that Penney's 6 3/8% bonds due 2036 "did not have as much activity" as the '17s, with about $5 million or $6 million traded.

He said that paper started the day around 761/2-to-77, but were finishing at75-to-751/2, which he called down 1 point.

He noted that one trade at 87½ showed up on the Trace bond-tracking system, but "that was a wayward mistake and it was cancelled."

A market source at another desk said that the 5¾% notes were unchanged on the day, quoting them going out at an even 86 bid on round-lot volume of over $11 million.

He saw its 5.65% notes due 2020 down 1½ points on the day at 82½ bid, with over $16 million changing hands, while Penney's 7.95% notes due 2017 dropped by as much as 1¾ points to finish at 92½ bid. However, only a couple million of those bonds saw any trading.

Over on the equity side of the fence, Penney's New York Stock Exchange-traded shares "got hammered pretty hard," a trader said, losing $1.94, or 12.22%, to close at $13.93. Total trading volume for the day was at least 6.5 times the norm.

Despite assertions made last month that CEO Johnson's job was safe, he was, in fact, replaced in the wake of his mostly failed attempt to turnaround the company.

Johnson had been hired in 2011, replacing Michael Ullman III - the same Mike Ullman who, ironically, is now replacing Johnson.

Most of Johnson's ideas, especially getting rid of such traditional Penney marketing mainstays as sales promotions and coupons, were met with disdain by consumers and the turnaround effort fizzled.

In late February, J.C. Penney reported a fourth-quarter net loss of $552 million, or $2.51 per share and a full-year net loss of $985 million, or $4.49 per share.

Same-store sales for all of 2012 - the key retailing industry performance metric - declined by over 25%.

But a trader said that the re-hiring of Ullman, who reportedly does not have an employment contract, hasn't really sparked any confidence in investors.

"I think they're hoping it's [just] on an interim basis," he said.

Interim or not, the new CEO is only going to have a very short time to get things in line. One reported analysis of the company's financials indicates that if J.C. Penney continues to burn through cash at the same rate it did in 2012, it will run out of funds and could be forced into bankruptcy by Labor Day.

Stephanie N. Rotondo contributed to this review

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