Breitburn boosted by EIG investment; Peabody completes tender, bonds mixed; Murray paper pops

By Stephanie N. Rotondo and Paul A. Harris

New York, March 30 – The high-yield bond market was trending higher Monday, even as oil prices ended modestly lower.

The commodity was again under pressure as a deadline for talks on the Iran nuclear program was fast approaching.

West Texas Intermediate crude drifted down 35 cents to $48.52 per barrel for May delivery. Brent crude dipped 19 cents to $56.22.

In addition to the oil price decline, several energy companies had news of their own Monday, resulting in a move one way or another.

Breitburn Energy Partners LP, for instance, got a sizeable boost as the company announced a $1 billion investment from a group led by EIG Global Partners.

In the coal space, Peabody Energy Corp.’s debt was mixed after the company issued its final tender results.

And, sector peer Murray Energy Corp. saw its bonds trending higher after the company announced it had increased the amount to be paid in its own tender offer.

Murray first announced the tender on Thursday.

Market starts strong

Despite the wishy-washiness of the energy arena, the high-yield bond market was gaining ground as the week kicked off.

The KDP High yield Index ended at 71.25 with a 5.36% yield on Monday. That compared to Friday’s reading of 71.19 with a 5.38% yield.

The CDX North American Series 24 index gained just over ¼ of a point to 106.99 bid, 107.07 offered, according to a market source.

ArcelorMittal drive by

Nearly all of Monday's primary market news came out of Europe, where two issuers brought a combined three tranches to raise an overall total of €1.65 billion.

All three tranches came tight to spread talk.

ArcelorMittal priced €900 million of senior notes (Ba1/BB/BB-) in two tranches.

The general corporate purposes deal included €400 million of three-year floating-rate notes that priced at par to yield Euribor plus 203 basis points. The spread came tight to spread talk in the 201 bps area.

In addition, ArcelorMittal price a €500 million tranche of 3% six-year fixed-rate notes at mid-swaps plus 275 bps, tight to spread talk in the 280 bps area. The fixed-rate notes sold at a reoffer price of 99.546 to yield 3.084%.

Joint bookrunner Credit Agricole will bill and deliver. Goldman Sachs International, JPMorgan and UniCredit were also joint bookrunners.

Prysmian prices tight

Prysmian SpA priced an upsized €750 million issue of 2½% seven-year senior notes at a 225 basis points spread to mid-swaps.

The debt refinancing deal was upsized from €500 million.

The spread came tight to the mid-swaps plus 240 bps spread talk.

Banca Akros, Banca IMI, Citigroup, Credit Agricole CIB, ING and UniCredit were the arrangers.

Radio One roadshow

The active forward calendar took aboard one deal on Monday, as Radio One Inc. began a roadshow for a $350 million offering of seven-year senior secured notes (B2).

The acquisition deal is set to price later this week.

Credit Suisse is the bookrunner.

Mixed daily cash flows

The cash flows of the dedicated high-yield funds were mixed on Friday, the most recent session for which data was available at press time, according to a trader.

High-yield ETFs saw $125 million of daily outflows on Friday, while actively managed funds saw $30 million of inflows.

High-yield bonds were a little better in Monday trading, the source said, adding that ETFs were buying during the Monday session.

Breitburn up on investment

Breitburn Energy Partners’ bonds were boosted on Monday by news the company was getting a $1 billion investment from a group led by EIG Global Partners.

A trader said the 8 5/8% notes due 2020 put on over 3 points to close at 73¼. The 7 7/8% notes due 2022 earned a like amount, ending at 73½.

The company’s preferred units were also higher, as the 8.25% series A cumulative redeemable rose 11 cents to close at $20.68.

Under the terms of the investment agreement, the investor group will buy $650 million of 9¼% senior secured notes due May 2020 as well as $350 million of convertible preferred units.

Proceeds will be used to reduce credit facility borrowings.

Breitburn is an oil and gas company based in Los Angeles.

Peabody wraps tender

Peabody released the final results of its cash tender offer for its 7 3/8% senior notes due 2016 on Monday.

All told, the company tendered $566.88 million of notes, or 87%, of the $650 million outstanding bonds.

The total included $1.23 million of the debt tendered after the early deadline.

The offer expired on March 27. The remaining outstanding notes will be redeemed April 15.

Though the offer seemed to go fairly well, a trader saw the St. Louis-based coal producer’s debt ending mixed on the day.

The 6½% notes due 2020, he said, were up half a point at 65¾. But the 6¼% notes due 2021 fell nearly 2 points to 63.

As for the $1 billion of 10% second-lien notes due 2022 – a deal that came at 97.566 to yield 10½% on March 5 – those closed down almost a point at 90.

Murray ups tender payment

Fellow coal producer Murray Energy is currently in the midst of its own tender offer, which was first announced on Thursday.

Come Monday, the St. Clairsville, Ohio-based company said it was increasing the amount of cash it would give to holders of its 8 5/8% senior secured notes due 2021 and 9½% notes due 2020.

On the news, the 9½% notes were seen jumping 4 points to 112½.

Murray will pay $1,109.70 for each $1,000 of 8 5/8% notes validly tendered and $1,178.70 for each $1,000 of the 9½% notes.

Those prices are up from $1,100.00 and $1,150.00 respectively.

The amount also includes a $50.00 early tender payment for notes tendered by 5 p.m. ET on April 8.

Murray noted in a prepared statement that “a large majority” of bondholders had agreed to participate in the tender at the amended terms.

The offer expires at 11:59 p.m. ET on April 22.

Energy mixed

Among other energy names, it was a fairly mixed day.

A trader said that Transocean Ltd. was trading busily. He said the 7½% notes due 2031 were “fairly active” at 76½, which was down a touch. The 2½% notes due 2017, meantime, saw “pretty good volume” and ended steady at 92.

The 6.8% notes due 2038 rose 1¼ points to 72½, the trader said.

W&T Offshore Inc.’s 8½% notes due 2019 then closed off a quarter-point at 61¾.

Holding steady were Key Energy Services Inc.’s 6¾% notes due 2021, which finished at 64¾, according to a market source.

Resolute Energy Corp. managed to improve with the market, as the 8½% notes due 2020 earned “almost 2 points,” closing at 43.

Rounding out the sector, Seventy-Seven Energy Inc.’s 6 5/8% notes due 2019 declined 2½ points, to 75¾.

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