BreitBurn, Norbord, Forum drive by; new T-Mobile volume zooms; busy ServiceMaster dips

By Paul Deckelman and Paul A. Harris

New York, Nov. 19 - High-yield new issuance continued on Tuesday, with four deals totaling some $944 million of new dollar-denominated junk bonds coming to market.

But traders said that the new issues from BreitBurn Energy Partners LP, Norbord Inc., U.S. Concrete, Inc. and Forum Energy Technologies, Inc. clearly took a back seat to activity in Monday's big new deal from T-Mobile USA Inc.

That $2 billion two-part deal had come to market too late in Monday's session for any kind of a real aftermarket - and investors made up for lost time when it freed to trade on Tuesday, racking up incredible volume of nearly $400 million between the two tranches. The number-four U.S. wireless carrier's issue of 8.25-year bonds firmed smartly, jumping more than a point from their issue price from the get-go and staying up there, while the companion issue of 10.25-year paper showed more modest gains, though still on heavy volume.

That trading completely overshadowed any activity in the Tuesday issues, as well as the considerably more modest dealings in Monday's other megadeal - the $1 billion issue of 8.25-year bonds from a unit of liquid natural gas company Cheniere Energy Partners, LP.

Away from the new-deal realm, traders saw continued active dealings in ServiceMaster Co., whose bonds had been battered on Friday, then rebounded in heavy trading Monday; Tuesday again saw sizable volume, but at somewhat lower prices.

Statistical indicators of market performance were mixed for a second straight session on Tuesday.

BreitBurn upsizes

The Tuesday primary market session saw four issuers bring single-tranche deals to raise a combined total of $944 million.

Three of the four transactions came quick-to-market.

All four deals were undertaken in order to refinance debt.

BreitBurn Energy Partners L.P. and BreitBurn Finance Corp. priced an upsized $400 million add-on to their 7 7/8% senior notes due 2022 (B3/B-) at 100¼ to yield 7.823%.

The deal was upsized from $300 million

The reoffer price came at the rich end of the 100 to 100¼ price talk.

Wells Fargo was the left bookrunner for the quick-to-market transaction. Barclays, BMO, JP Morgan and Mitsubishi were the joint bookrunners.

Norbord drives by

Norbord, Inc. priced a $240 million issue of non-callable seven-year senior secured notes (Ba2/BB-//DBRS: BB) at par to yield 5 3/8%, on top of yield talk.

BofA Merrill Lynch is the sole bookrunner.

U.S. Concrete restructures

In the only Tuesday transaction to clear at the end of a roadshow, U.S. Concrete Inc. priced a $200 million issue of restructured five-year senior secured notes (Caa1/B) at par to yield 8½%.

The maturity was reduced to five years from seven years.

With the reduction in maturity, price talk was also slashed: the yield printed on top of yield talk that had been downwardly revised from earlier talk of 9% to 9¼%.

JPMorgan was the bookrunner.

Forum Energy taps 6¼% notes

Forum Energy Technologies, Inc. priced a $100 million add-on to its 6¼% senior notes due Oct. 1, 2021 (expected ratings Ba3/BB) at 103¼ to yield 5.59%.

The reoffer price came rich to price talk set in the 103 area.

JP Morgan, Wells Fargo, BofA Merrill Lynch, Citigroup and Deutsche Bank were the joint bookrunners for the quick-to-market deal.

Tervita talks 4.25-year deal

Tervita Corp. talked its $325 million offering of 4.25-year senior notes (Caa2/CCC) to price with four to five points of original issue discount, with a yield in the 12% area.

The deal is set to price on Wednesday morning.

RBC is the left bookrunner for the debt refinancing deal. Deutsche Bank, Goldman Sachs and TD Securities are the joint bookrunners.

Brake Bros sets talk

Away from North America, England-based Brakes Bros Ltd. talked its £200 million offering of five-year senior secured notes (expected B3/confirmed B-) to price with a yield in the 7¼% area.

The books close at 1 p.m. GMT on Wednesday.

Joint bookrunner Barclays will bill and deliver. HSBC is also a joint bookrunner.

Afren starts roadshow

Afren plc began an international roadshow on Tuesday in Los Angeles for a to-be-determined amount of seven-year senior secured notes (/B+/B+).

The London-based oil and gas exploration, development and production company has operations in Africa and the Middle East. As such, the deal is being transacted on the emerging markets desk, but is expected to also garner an audience among high-yield investors, sources say.

Global coordinator Citigroup is a joint lead manager and joint bookrunner. BofA Merrill Lynch and Credit Suisse are also joint lead managers and joint bookrunners.

Proceeds will be used to fund the tender for the company's notes maturing in 2016 and 2019; a clause in the credit agreement allows for the security on the notes to fall away upon full repayment of the 2016 and 2019 notes.

T-Mobile takes charge

In the secondary market, traders said the big story of the day was clearly the enthusiastic trading in T-Mobile's big new two-part deal.

One said that some $200 million of the new 6 1/8% notes due 2022 had changed hands, quoting them in a bid context of 101 1/8 to 1011/4.

That was up from the par level at which the Bellevue, Wash.-based wireless carrier had priced that $1 billion tranche of bonds Monday in a quick-to-market deal brought by its T-Mobile USA Inc. subsidiary.

The other half of that megadeal - the $1 billion of new 6½% notes due 2024 - racked up more modest gains in firming to 100 5/8 to 1003/4, also up from a par issue price. The trader said that over $175 million of those bonds had traded on Tuesday.

"That was pretty much it," he said. "Most of the action was in T-Mobile, by far dominating, volume-wise."

A second market source agreed that T-Mobile was the name of the day, "clearly a big trader."

He opined that a lot of the trades in that paper - which had priced very late in the session on Monday - "probably took place last night, which will show up on Trace and were input this morning." The deal, he said, "didn't get freed up till well after 6 [p.m. ET]."

At another shop, a trader pegged the 6 1/8% notes at 101¼ bid, 101½ offered, and saw the 6½% notes trading between 100¾ and 101 bid.

Another market source said that according to Trace, there had been at least 166 round-lot trades of at least $1 million or more in the 6 1/8% notes and at least 140 such trades in the 6½% notes.

Some existing T-Mobile issues were also fairly actively traded, although nowhere nearly as active as the new bonds. Its 6 5/8% notes due 2020 were seen trading around 105¼ bid, little changed on the day, on volume of over $9 million, while its 6.836% paper due 2023 went home down 3/8 point at 103 7/8 bid, with over $8 million having changed hands.

T-Mobile's 6.464% notes due 2019 were around 105 7/8, its 6.633% notes due 2021 were quoted at just over 106 bid, and its 6.731% notes due 2022 finished at 104 1/8 bid, all three on mid-afternoon volume of over $5 million.

Day's deals little traded

While trading in the new T-Mobile notes could be likened to a feast, dealings in the new issues that came to market on Tuesday were more like a famine.

"T-Mobile pretty much sucked all of the oxygen out of the room," one market participant suggested.

A trader offered one quote on the first deal of the day afternoon to price - the $100 million tranche of bonds that Houston-based oilfield products and services company Forum Energy Technologies added onto its 6¼% notes due 2021. Those bonds priced at 1031/4; he saw them later at 104 bid, 105 offered.

The trader also quoted Toronto-based wood panel manufacturer Norbord Inc.'s $240 million of 5 3/8% senior secured notes due 2020 at 100¾ bid, 101¼ offered, up from their par issue price.

A second trader also saw the bonds at that level late in the day.

But there was no immediate aftermarket seen in either of the day's other two issues - Los Angeles-based oil and natural gas operator BreitBurn Energy Partners' upsized $400 million add-on to its 7 5/8% notes due 2022, or Euless, Texas-based cement products manufacturer U.S. Concrete's $200 million of 8½% notes due 2018.

A trader said of the latter issue that the deal came "50 basis points tighter than I thought they would price - so I'm really surprised by that."

However, he was not surprised that there was no immediate aftermarket activity in those two issues and not much of it in the other two deals, since "they [the underwriters] are pricing all of these things at 4 o'clock or 5 o'clock [ET] in the afternoon - nobody's trading them, other than the underwriter[s]."

Sabine stays near issue

Monday's other pricing, the $1 billion of new 6¼% senior secured notes due 2022 from Cheniere Energy's wholly-owned Sabine Pass Liquefaction, LP subsidiary, also stood in marked contrast to the new T-Mobile deal, both in terms of volume and bond-price movements.

Despite it being a big and presumably liquid issue, the Houston-based natural gas company's new bonds were not seen on anaybody's Most Actives list on Tuesday, and where they were traded, they were not much moved on the session.

One trader quoted the quick-to-market paper trading between its par issue price and 100¼ bid.

"A lot of them were trading right around 100 1/8 and were stuck there all day."

A second trader saw the bonds straddling their issue price, at 99 7/8 bid, 100 1/8 offered.

Another also saw the notes in a 100 to 100¼ range, "where it stuck when trading came to a stop."

ServiceMaster saga continues

Away from the new deals, a trader called the secondary market "unchanged to off slightly."

He saw "a lot of trading today" in ServiceMaster's 7% notes due 2020, with Trace volume of over $21 million, putting it among the busiest non-T-Mobile issues.

It was the second straight day of brisk dealings in the Memphis-based company's paper; on Monday, volume was over $30 million, shooting it right to the top of the actives list.

He saw the bonds in a 96 to 96½ range, down from around 97 to 97½ on Monday, which in turn had been up over 3 points from Friday, when the bonds had slid to 94 amid investor worries over whether the housecleaning and maintenance, extermination and lawn-care company's TruGreen lawn-care unit was dragging the rest of the company down.

ServiceMaster said in an 8-K filing with the Securities and Exchange Commission on Monday that it planned to divest itself of TruGreen by spinning the underperforming entity off to its shareholders - a step ServiceMaster said would benefit both companies. Once that is accomplished, ServiceMaster said it hoped to be able to do an initial public offering of shares within a year of the TruGreen transaction.

Traders said those reassuring statements helped spur the bonds on Monday to come back from Friday's lows.

"They bounced back [Monday], and then they came in a little [Tuesday]," one trader said.

"They seemed to trade in the mid-sixes [i.e., in a 96 bid context] mostly, as people again debate what's going on with the credit and whether they want to stick around and see whether they do the spin-off of TruGreen and how that plays out."

Market signs stay mixed

Overall, statistical junk-market performance indicators remained mixed for a second consecutive session on Tuesday; they had turned mixed on Monday after having been higher across the board on Friday.

But the mixed indicators seem to have emerged lately as the new default pattern; apart from Friday, the indicators have been mostly mixed going back to the end of October, with a lower session across the board here and there during that stretch.

The Markit Series 21 CDX North American High Yield index saw its second loss in a row on Tuesday, dipping by 3/16 point to end the day at 106 7/16 bid, 106 9/16 offered. That followed Monday's 7/32 point loss, which snapped a three-session winning streak.

But the KDP High Yield Daily index posted its third straight gain on Tuesday, improving by 6 bps to finish at 74.37, on top of Monday's 7-bps advance. On Friday, it had jumped by 22 bps - its first gain after having suffered 10 straight losses before that.

Its yield came in for a fourth consecutive session, declining by 1 bps to 5.73%; on Friday and again on Monday, it had tightened by 2 bps.

And the widely followed Merrill Lynch High Yield Master II index meantime rose by 0.042% on Tuesday, its fourth straight improvement. That followed Monday's 0.196% advance.

The latest gain lifted the index's year-to-date return to 6.398%, up from Monday's 6.354%; in fact, Tuesday's reading set a new peak level for 2013 so far, surpassing the old mark of 6.367%, which had been set back on Thursday, Nov. 7.

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