Access, Charter drive-by mega-deals pace nearly $5 billion session; new deals trade up

By Paul Deckelman and Aleesia Forni

New York, Dec. 12- The already hot high-yield primary sector really caught fire on Wednesday, with nearly $5 billion of new fully junk-rated, U.S. dollar-denominated paper heard by syndicate sources to have come to market, led by two massive drive-by transactions, as issuers continued to cram new deals in an take care of their financing needs before the traditional year-end holiday hiatus.

The big deal of the day came from Access Midstream Partners LP - the energy company that will acquire the company familiarly known in the junk world as Chesapeake Midstream Partners LP; it brought a quickly shopped $1.4 billion issue of 10.5-year notes to market late in the session.

Very familiar junker Charter Communications Inc. drove by with a $1 billion ten-year offering, which priced after being solidly upsized. It firmed modestly in the aftermarket.

There was an upsized $600 million of five-year secured notes from inVentiv Health, Inc., an upsized $375 million of eight-year paper from mattress-maker Tempur-Pedic International Inc. and $250 million five-year notes from helicopter leasing firm Milestone Aviation Group Ltd.; each of those regularly scheduled forward calendar deals were seen by traders having firmed solidly in secondary dealings.

But the standout secondary performer was Greek dairy products company FAGE International SA, whose $250 million add-on to its 2020 bonds priced off the forward calendar and then zoomed about 4 points when it was freed to trade.

On the other hand, hotel REIT FelCor Lodging Ltd.'s upsized and quick-to-market $525 million secured deal was only slightly up from its par issue price.

And Continental Airlines, Inc. did an unscheduled $425 million of aircraft pass-through certificates.

Looking ahead, Taminco Acqusition Corp. and Inmet Mining Corp. are both expected to hit the primary market on Thursday, market sources said.

Traders meantime saw Tuesday's deals such as Six Flags Entertainment Corp. and Michael Foods Holdings Inc. mostly continuing to hold the gains they'd already notched.

As has been the case in recent sessions, trading in the new issues dominated the secondary market, with little activity in non-new-deal paper seen. Statistical market performance indicators were unchanged-to-better

Access sells $1.4 billion

In Wednesday's largest transaction, Access Midstream tapped the market to price a $1.4 billion offering of 4.875% 10.5-year senior notes at par, according to a syndicate source.

Citigroup Global Markets Inc. is the left bookrunner. Barclays, UBS Investment Bank and Wells Fargo Securities LLC are the joint bookrunners.

The Oklahoma City-based midstream natural gas services provider plans to use the proceeds to help fund the acquisition of Chesapeake Midstream Operating, LLC, to repay revolver debt and for general partnership purposes.

Charter prices

Meanwhile, Charter Communications priced a $1 billion issue of 5.125% senior notes due 2023 at par on Wednesday, according to a market source.

Deutsche Bank Securities Inc. is the lead bookrunner. Bank of America Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, UBS Investment Bank, J.P. Morgan Securities LLC, Barclays and Morgan Stanley & Co. LLC are the joint bookrunners.

The Securities and Exchange Commission-registered notes will be non-callable for five years.

Proceeds will be used for general corporate purposes, including the repayment of existing bank debt.

The provider of cable television and internet services is based in St. Louis.

inVentiv sells $600 million

inVentiv Health priced an upsized $600 million issue of five-year senior secured notes at par to yield 9% on Wednesday, according to a syndicate source.

The yield printed on top of yield talk. The amount was increased from $550 million.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Jefferies & Co. and Wells Fargo Securities LLC were the joint bookrunners for the deal.

Proceeds will be used to refinance a portion of the company's term loan and to repay its revolver without reducing the commitments. The additional proceeds resulting from the $50 million upsizing of the issue will be used to provide incremental liquidity.

The issuer is a Burlington, Mass.-based provider of clinical, consulting and commercial services to the health care industry.

FelCor new issue

The primary market also saw FelCor Lodging launch and price an upsized $525 million issue of 10.25-year senior secured notes at par to yield 5 5/8% on Wednesday, according to a market source.

The quick-to-market deal was increased from $500 million, and the yield printed at the tight end of yield talk that was set in the 5¾% area.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Scotia Capital were the joint bookrunners.

Proceeds will be used to repay $186.5 million of a mortgage loan secured by seven hotels, to fund the redemption of $258.5 million of the existing 10% notes and for general corporate purposes, including debt repayment.

FelCor is an Irving, Texas-based lodging real estate investment trust.

Tempur-Pedic upsizes

Tempur-Pedic priced an upsized $375 million issue of eight-year senior notes (B3/B+/) at par to yield 6 7/8% on Wednesday, according to a syndicate source.

The yield came 12.5 basis points tighter than the 7% to 7¼% yield talk.

Bank of America Merrill Lynch, Barclays, J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners.

Proceeds, along with proceeds from a new credit facility and cash on hand, will be used to help fund the acquisition of Sealy Corp. and repay substantially all of Sealy's and Tempur-Pedic's outstanding debt.

Tempur-Pedic is a Lexington, Ky.-based bedding manufacturer.

Milestone sells $250 million

Also in the primary, Ireland's Milestone Aviation sold a $250 million issue of non-rated five-year senior notes at par to yield 8 5/8% on Wednesday, according to a syndicate source.

The yield printed at the tight end of price talk set in the 8¾% area.

Jefferies & Co. Inc., Bank of America Merrill Lynch and Nomura Securities International Inc. were the joint bookrunners.

Proceeds will be used to finance the purchase of aircraft and to refinance previously purchased aircraft, with the remainder, if any, for general corporate purposes.

The issuer is a Dublin-based global aircraft leasing company exclusively focused on helicopters.

FAGE new issue

FAGE International and FAGE USA Dairy Industry priced a $250 million add-on to their 9 7/8% senior notes due Feb. 1, 2020 (B3/B/) at 101 to yield 9.618% on Wednesday, according to an informed source.

The reoffer price came on top of price talk, which was revised 50 basis points richer than the rich end of earlier price talk of 100 to 100.5.

Citigroup Global Markets Inc. was the bookrunner.

The Athens-based dairy company plans to use the proceeds to refinance its existing senior notes due 2015, to refinance other debt facilities, to fund capital expenditures and for general corporate purposes.

Taminco eyes $250 million

Taminco Acquisition met with investors on Wednesday afternoon to discuss a proposed $250 million offering of five-year senior payment-in-kind toggle notes, according to an informed source.

The order books close at 10 a.m. ET on Thursday.

The notes, which are talked with a yield in the 9½% area at an original issue discount of about 1 point, are scheduled to price after that.

Credit Suisse Securities (USA) LLC and Citigroup Global Markets are the joint bookrunners.

The Rule 144A for life notes become callable in one year at 102.

The Merelbeke, Belgium-based chemical company plans to use the proceeds to fund a dividend to its equity holders.

Inmet plans offering

Inmet Mining is also planning to come to market, as the company plans to price a $500 million offering of 8.5-year senior notes on Thursday, according to an informed source.

Joint bookrunner Credit Suisse Securities (USA) LLC will bill and deliver. J.P. Morgan Securities LLC is also a joint bookrunner.

The Rule 144A and Regulation S for life notes come with four years of call protection and feature a three-year 35% equity clawback.

The Toronto-based copper and zinc mining company plans to use the proceeds to fund capital expenditures in connection with its Cobre Panama project and for general corporate purposes.

Wild Wednesday

In the secondary market, a trader characterized Wednesday's session as "a wild day," with new deals clattering down the chute one after another and then heading over to the aftermarket.

"The market is well bid, there's no question," he said. The entire market is up - but new issues are the focus."

A second trader said that the junk secondary market "was pretty much all crossover," with the activity away from the new issues dominated by split-rated names of more interest to high-grade players, like Ford Motor Credit Co. LLC, ArcelorMittal SA and American International Group Inc.

"In traditional high yield, everyone was just sitting around and playing the calendar."

He said of the new deals that "things jumped to a premium."

FAGE firms up

The clear winner among the day's new deals had to be Greek dairy producer FAGE's add-on to its 9 7/8% notes due 2020. After pricing at 101, several traders saw the new bonds jump to a 105 to 105½ bid context.

A trader said that "allocations on that were terrible, absolutely terrible," causing investors to scramble around and try to buy a piece of the smallish $250 million issue in the secondary, boosting the price.

Day's deals move up

Away from the FAGE transaction, traders saw the remainder of the day's deals that made it to the secondary market - Access Midstream Partners came too late in the session for that - trading up.

For instance, a trader saw inVentiv Health's new 9% secured notes having firmed to 101½ bid, 102 offered, up from their par issue price.

He also saw chopper leasing company Milestone Aviation's 8 5/8% notes hovering at 101 bid, 101½ offered, versus their par issue price, although "not a lot" was trading.

A trader saw Charter Communications' 5 1/8% notes at 100 ½ bid and Tempur-Pedic's 6 7/8% paper at 101 bid, both moving up from their par issue price after having been upsized.

The Continental Airlines 6 1/8% pass-through certificates gained a little altitude, a trader said, pegging the air carrier's new paper at 101 bid, 101½ offered.

However, one of the traders saw the new FelCor 5 5/8% notes at 100¼ bid, 100½ offered, characterizing the deal as "the laggard of the day." Another trader had the bonds going home at 100 3/8 bid, 100 5/8 offered.

Tuesday deals hold gains

Going back a day from the numerically unusual 12/12/12, traders saw the issues which had come to market on Tuesday mostly holding their own, with one major exception.

Illustrating how busy Wednesday's session was, a trader, when asked about Tuesday's issue from Brookfield Residential Properties Inc., asked, only half in jest, "did that come yesterday? It feels like forever ago."

He saw the Calgary, Alta.-based land developer and homebuilder's 6½% notes due 2020 at 102 3/8 bid, 102 5/8 offered, calling them "pretty much unchanged" from the secondary levels they had notched on Tuesday, when the bonds priced off the forward calendar at par after the deal was upsized - twice - first to $500 million from the originally announced $400 million, and then ultimately to its final size of $600 million. A second trader also called the bonds unchanged, at 102 bid, 102½ offered.

Michael Foods Holding's $275 million of 8½%/9¼% PIK toggle notes due 2018 "were holding up" at 102¾ bid, 103¼ offered, a trader said, while a second quoted the bonds at 103 bid, 103½ offered. That's about where they had traded on Tuesday after the Minnetonka, Minn.-based food products distributor's quick-to-market $275 million offering had priced at 99.5 to yield 8.61%.

Six Flags' 5¼% notes due 2021 stayed around 100¾ bid, 101 offered; the Grand Prairie, Texas-based regional theme park operator's $800 million scheduled forward calendar deal had priced at par, after upsizing from the originally announced $600 million.

Cleaver-Brooks, Inc.'s 8¾% senior secured notes due 2019 was "a tough bond to find right now," a trader said, seeing the Milwaukee-based boilermaker's bonds at 103 bid, "looking for a right side." The $300 million scheduled deal had priced at 99.361 to yield 8 7/8% on Tuesday, after upsizing from an originally planned $285 million. The bonds had quickly moved to around a 102-103 bid context in Tuesday's aftermarket.

In the only real break from the general pattern of Tuesday's deals managing to pretty much hold their initial aftermarket gains, the trader saw TPC Group Inc.'s new Sawgrass Merger Sub Inc. 8¾% senior secured notes due 2020 having backed up, calling the deal "an interesting one - it actually traded down to 101 today, one of the few bonds that actually sold off a little bit."

The Houston-based processor and service provider of products derived from niche petrochemical raw materials had priced its scheduled $655 million deal off the calendar at par, with the bonds heard to have gotten as good as 101¾ bid, 102¼ offered when they hit the aftermarket.

However, on Wednesday, the trader said, bonds dipped to 101, then "bounced a little bit," going home at 101¼ bid, 102 offered.

At another desk, though, a trader saw them little changed on the day, ending at 101 7/8 bid, 102 3/8 offered.

Indicators steady to higher

Away from the new-deal arena, statistical junk market performance indicators turned flat to higher on Wednesday, after six previous sessions of across-the-board gains.

The Markit Series 19 CDX North American High Yield index was unchanged at 101¼ bid, 101 3/8 offered, after having risen by ½ point on Tuesday.

However, the KDP High Yield Daily Index notched its 17th consecutive gain on Wednesday, rising by 11 basis points to end at 75.29, after Tuesday's 12-bps advance. But its yield was unchanged at 5.73%, snapping a string of 17 straight sessions during which it had come in each day, including Tuesday, when the yield narrowed by 5 bps.

The widely followed Merrill Lynch High Yield Master II index meantime rose by 0.138% on Wednesday - its 18th consecutive improvement - on top of the 0.178% rise reported on Tuesday.

That lifted its year-to-date cumulative return to 15.305% - its ninth consecutive new peak level for 2012, eclipsing the old mark of 15.146%, which had been recorded on Tuesday.

Paul A. Harris contributed to this report

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