Viking Cruises, TriMas, Alliant price as issuance pace slows; new deals continue to rule secondary; energy gains

By Paul Deckelman and Paul A. Harris

New York, Sept. 13 – The high-yield primary market pretty much had an impossible act to follow on Wednesday – a day after Tuesday’s record-heavy new issuance for the year so far – but gamely gave it a try, pushing out $1 billion of new dollar-denominated and fully junk-rated paper in three tranches.

However, that was far short of the more than $7 billion of such paper which had gotten done in seven tranches in an incredible burst of primary-side activity on Tuesday.

Passenger ship operator Viking Cruises Ltd. dropped anchor in the harbor with the day’s big deal, a $550 million offering of 10-year notes.

Diversified industrial manufacturer TriMas did $300 million of eight-year notes, like Viking a regularly scheduled deal off the forward calendar.

Insurance brokerage firm Alliant Holdings Intermediate, LLC contributed an unscheduled $150 million add-on to its existing 2023 notes.

Traders said that all three issues were quoted higher after pricing, but on not much volume.

They meantime saw continued active trading in some of the names from Tuesday’s $7.2 billion new-deal blowout, including Cheniere Energy Partners, LP, Tallgrass Energy Partners, LP, Golden Nugget, Inc. and Radian Group, Inc.

Apart from the new issues, the Most Actives list also saw considerable business in oil and natural gas names such as California Resources Corp., Denbury Resources, Inc. and Noble Energy Inc., aided by a surge in crude oil prices.

Statistical market performance measures were unchanged-to-higher on Wednesday, after having been mixed on Tuesday and higher across the board on Monday.

Viking prices inside talk

In a busy Wednesday session in the new issue market Viking Cruises Ltd. priced a $550 million issue of 10-year senior notes (B3/B) at par to yield 5 7/8%.

The yield printed 12.5 basis points inside of the 6% to 6¼% yield talk.

Wells Fargo Securities LLC was the left bookrunner. BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC were the joint bookrunners.

The Los Angeles-based cruise line plans to use the proceeds to fund a tender offer for any and all of its notes due in 2022.

TriMas eight-year deal

TriMas Corp. priced a $300 million issue of eight-year senior notes (B1/B+) at par to yield 4 7/8% at the conclusion of its roadshow.

The yield printed 12.5 basis points inside of the 5% to 5¼% yield talk.

BofA Merrill Lynch, JP Morgan Securities LLC, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC were the joint bookrunners.

The Bloomfield Hills, Mich.-based diversified industrial manufacturer plans to use the proceeds to pay off its term loan A facility due 2020 under its amended and restated credit agreement, and to repay a portion of outstanding obligations under its accounts receivable facility.

Alliant taps 8¼% notes

Alliant Holdings Intermediate, LLC and Alliant Holdings Co-Issuer, Inc. priced a $150 million add-on to their 8¼% senior notes due Aug. 1, 2023 (Caa2/CCC+) at 104.00.

The reoffer price came on top of price talk, and renders a 6.69% yield to worst, and a 7.395% yield to maturity.

Morgan Stanley & Co., BofA Merrill Lynch, Jefferies LLC, Macquarie Capital, Nomura, RBC Capital Markets and SunTrust Robinson Humphrey were the joint bookrunners.

The Newport Beach, Calif.-based specialty insurance brokerage firm plans to use the proceeds to acquire an institutional investor’s minority equity interest in the company.

Delphi Powertrain talk 5% to 5¼%

Delphi Powertrain talked its $750 million offering of non-callable eight-year senior notes (B1/BB/BB) to yield 5% to 5¼.

The offering is set to price Thursday.

Joint global coordinator and joint bookrunner Barclays lead left for the deal. Goldman Sachs & Co. is also a joint global coordinator and joint bookrunner. BofA Merrill Lynch, Citigroup Global Markets, Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are also joint bookrunners.

Proceeds, together with a $750 million term loan, will be used to fund operating cash, pay taxes, fees and expenses related to Delphi Automotive plc's spinoff of its Powertrain Systems segment, and distribute a dividend to Delphi Automotive.

Tronox talk 5 7/8% area

Tronox Finance plc talked its $450 million offering of eight-year senior notes (B3/B-) to yield in the 5 7/8% area.

The deal is set to price Thursday.

Citigroup Global Markets Inc. is the lead bookrunner. BofA Merrill Lynch, Goldman Sachs & Co., Wells Fargo Securities LLC, Credit Suisse Securities (USA) LLC, RBC Capital Markets and Barclays are the joint bookrunners.

The Stamford, Conn.-based mining and inorganic chemical company plans to use the proceeds to refinance debt and to support its acquisition of titanium dioxide operations from Saudi Arabian chemical and mining concern Cristal.

Waste Industries roadshow

Waste Industries plans to start a roadshow on Thursday in New York for a $305 million offering of eight-year senior notes (S&P: CCC+).

Barclays is the left bookrunner. Macquarie Capital and SunTrust Robinson Humphrey are the joint bookrunners.

Proceeds will be used to finance the acquisition of Waste Industries by HPS Investment Partners LLC and Equity Group Investments from Macquarie Infrastructure Partners.

Viridian prices €600 million

In the busy European session Viridian Group FinanceCo plc and Viridian Power and Energy Holdings DAC priced €600 million equivalent of senior secured notes (B1//BB-).

The deal included €350 million of eight-year notes that priced at par to yield 4% and £225 million seven-year notes that priced at par to yield 4¾%.

Joint global coordinator Deutsche Bank will bill and deliver. Barclays and Credit Suisse were also joint global coordinators. Lloyds and NatWest were joint bookrunners.

Proceeds, together with amounts received in relation to the settlement of certain forward foreign exchange contracts and cash on balance sheet, will be used to pay off €540 million of Viridian Group FundCo II Ltd.’s 7½% senior secured notes due 2020 and pay a £60 million dividend to Viridian Topco Ltd.

Intralot upsizes

Greece's Integrated Lottery Systems and Services (Intralot SA) priced an upsized €500 million issue of seven-year senior notes (B1/B/BB-) at par to yield 5¼%.

The issue size was increased from €450 million.

Morgan Stanley was the global coordinator. BNP Paribas, Citigroup, Deutsche Bank, Nomura and SG CIB were the joint bookrunners.

Virgin Media upsizes

Virgin Media Ltd. priced an upsized £450 million add-on to the Virgin Media Receivables Financing 5½% receivables-backed notes due Sept. 15, 2024 at 102.00 to yield 5.16%.

The issue size was increased from £200 million.

Credit Suisse was the global coordinator.

The Hook, England-based telephone, television and broadband internet services provider plans to use the proceeds for working capital.

MCS talk 4½% area

Promontoria MCS Holding, the parent of MCS Groupe, talked its €270 million offering of seven-year senior secured notes (S&P: BB-) to yield in the 4½% area, according to a market source.

The deal is set to price Thursday.

Credit Suisse is the lead.

Proceeds will be used to fund the acquisition of MCS, a France-based debt collector, by BC Partners LLP, and to repay MCS debt.

The issuing entity is Louvre Bidco SAS, which is indirectly owned by funds advised or managed by BC Partners.

Day’s deals quietly firmer

In the secondary market, traders saw better initial aftermarket levels in Wednesday’s three new junk-rated dollar issues, but saw none of them among the day’s Most Active names.

A trader saw around $8 million of the new Viking Cruises 5 7/8% notes due 2027 having traded, pegging them in a 100¼-to-101 bid range.

He saw the TriMas 4 7/8% notes due 2025 in that same 100¼ to 101 bid range, but only saw around $6 million having traded by late afternoon.

A second trader meantime initially quoted the bonds offered at 100½, with no bids seen, but later on saw two-sided trading around 100½ bid, 101 offered.

And one of the traders saw the Alliant Holdings add-on 8¼% notes due 2023 between 105 and 105 1/8 bid, up from their 10 issue price, but only on a trade or two.

Traders did see considerably more activity in some names that were not purely junk market issues, although they did generate some interest in Junkbondland.

For instance, Luxembourg-based wireless operator Millicom International Cellular SA priced $500 million 5 1/8% notes due 2028 at par on Wednesday in a deal that was more aimed at emerging markets investors, since that is where the company offers its cellular service, but the junk and EM investors together combined to generate around $13 million of volume on the new issue, pushing it up to around the 101 bid mark.

And split-rated (Ba1/BBB-/BB) Concho Resources Inc. saw brisk aftermarket action in the Midland, Texas-based energy company’s two-part deal, which attracted interest from both junk and crossover high-grade investors.

Its $1 billion tranche of 3¾% notes due 2027, which priced at the equivalent of 99.636, had pushed up to nearly 100½ bid by the close, on volume of more than $75 million.

Its $800 million tranche of 4 7/8% long bonds due 2047 likewise firmed smartly to around the 102 bid area from a 99.749 equivalent issue price, with nearly $50 million traded.

Tuesday deals trading busily

The traders meantime saw considerable activity Wednesday – though at somewhat lower levels – in Tuesday’s new issues, including Houston-based liquefied natural gas company Cheniere Energy Partners’ 5¼% notes due 2025

The company had priced an upsized $1.5 billion of those notes at par and they had initially firmed to around 101 bid, but retreated slightly on Wednesday, ending around 100¾ bid, with around $50 million having traded.

Las Vegas-based gaming and hospitality company Golden Nugget’s new 8¾% senior subordinated notes due 2025 were likewise seen a little off – one trader said by as much as nearly ½ point – at 99¾ bid, with around $23 million having traded.

Tallgrass Energy Partners’ 5½% notes due in January of 2028 eased by ¼ point, to 100¼ bid. More than $56 million of the Leawood, Kans.-based energy pipeline company’s paper changed hands.

And Philadelphia-based mortgage insurer Radian’s new 4½% notes due 2024 saw more than $43 million of turnover, bucking the negative trend with a ½ point rise to 101¾ bid.

Energy issues push up

Away from the new deals, traders saw oil and gas names and other energy-related credits up on the day, given a boost by firmer world crude oil prices.

A trader said that California Resources Corp.’s 8% second-lien notes due 2022 were up by 1¼ points at 57¼, with over $32 million having traded.

Denbury Resources’ 5½% notes due 2022 were up a similar amount at 45, he said, on volume of more than $24 million.

In Noble Energy, the trader saw the 7¾% notes due 2024 rising “almost 2 points” to 85¼, with almost $20 million having changed hands, while its 7.7% notes due 2025 ticked up half a point to 82¼.

EP Energy Corp. was another gainer, its 8% notes due 2025 adding 1½ points to close at 70, the trader reported.

And MEG Energy Corp.’s 7% notes due 2024 inched up a point to 81½.

At another shop, a trader said there was “definitely some energy names trading with oil being higher.”

California Resources’ 8% notes were “active,” he said, and a point better at 57.

He also called EP Energy’s 8% notes a point better at 70.

The upward movement of the oil and gas arena came as West Texas Intermediate crude rose $1.14, or 2.36%, to $49.37.

The gains in crude were attributed to the monthly report from the International Energy Agency, which said that there were signs that global demand for crude was improving, thus resulting in a tightening of the market.

Investors chose to focus on the IEA report instead of the U.S. Energy Information Administration’s weekly inventory report, which showed a 5.9 million-barrel build in crude stockpiles.

Analysts polled by Thomson Reuters had expected an increase of 3.2 million barrels.

But the EIA also said that it had downwardly revised its domestic yearly output totals for 2017 and 2018, due to the recent round of hurricanes in the Gulf Coast area.

Indicators turn higher

Statistical market performance measures were unchanged-to-higher on Wednesday, after having been mixed on Tuesday and higher across the board on Monday.

The KDP Daily High Yield Index was unchanged Wednesday at 72.26, after having eased by 1 basis point on Tuesday to end there. It had firmed by 3 bps on Monday, after having lost 3 bps on Friday, its first loss after 11 straight gains.

Its yield was likewise steady at 5.15%, having come in by 1 bp on Tuesday to that level – after having been unchanged for an additional four sessions in a row between last Wednesday and Monday.

The Markit CDX Series 28 High Yield Index edged up by almost 1/16 point Wednesday to 107 13/32 bid, 107 7/16 offered, its third straight gain; on Tuesday, it was up by over 1/8 point. On Monday, the index had risen by almost 7/16 point, after having lost 7/32 point Friday, its second loss in a row.

The Merrill Lynch North American High Yield Index also made it three wins in a row on Wednesday, firming by 0.014% on top of gains of 0.036% on Tuesday and Monday’s 0.091% rise.

The latest upturn improved the index’s year-to-date return to 6.415% establishing a third straight new 2017 year-to-date peak level. The old mark of 6.401% had been set on Tuesday.

Stephanie N. Rotondo contributed to this review

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