AES, Access Midstream lead $2.4 billion day; new deals near issue price; RadioShack slides

By Paul Deckelman and Paul A. Harris

New York, March 4 - The high-yield primary sphere had a busy session on Tuesday, as some $2.4 billion of new junk-rated, dollar-denominated paper came to market.

Although that volume total was down from Monday's $4.1 billion - which was one of the biggest-volume days recorded so far this year - it was spread out over five different drive-by deals, while most of Monday's issuance came from just one borrower, hospital giant HCA Inc., doing a $3.5 billion two-part transaction.

In contrast, Tuesday's activity mostly came out of the energy sector. There was a pair of upsized $750 million 10-year offerings, one from power generating company AES Corp. and the other from oil and gas transportation, processing and storage company Access Midstream Partners, LP. There was also a pair of $300 million deals from two San Antonio-based energy names: petroleum refiner and marketer Tesoro Corp., doing a 10-year issue, and drilling services company Pioneer Energy Services Corp., doing an eight-year deal.

The day's lone non-energy pricing was a $300 million eight-year transaction from aircraft parts company Spirit AeroSystems, Inc.

Traders said that all of those deals stayed pretty much around their respective par issue prices when they moved into the aftermarket.

HCA's new bonds meantime easily dominated the high-yield Most Actives list, with both tranches seen having racked up over $100 million in volume. Those bonds, too, hung around their issue price.

Away from the new deals, the recently beleaguered NII Holdings Inc. was among the day's busiest non-HCA bonds, enjoying a rare upside day.

But RadioShack Corp.'s bonds got pounded down in heavy trading, along with its shares, after the embattled electronics retailer released dismal fourth-quarter numbers and announced plans to close as many as 1,100 underperforming stores.

Junkbondland's overall tone was said to have improved from Monday's broadly lower session, in line with an equities rebound on an easing of Ukrainian tensions.

Statistical market-performance measures turned mixed on Tuesday after having been down across the board on Monday.

Access Midstream upsizes

Tuesday's primary market generated a news volume reminiscent of the torrid days of late 2013, as five issuers came with single-tranche deals to raise a combined total of $2.4 billion.

Executions were notable.

All five deals came as drive-bys.

Three of the five were upsized.

And four of the five priced at the tight end of talk, while the fifth priced on top of talk.

Access Midstream Partners and ACMP Finance Corp. priced an upsized $750 million issue of 10-year senior notes (Ba2/BB) at par to yield 4 7/8%.

The deal was upsized from $600 million.

The yield printed on top of yield talk.

Wells Fargo was the left bookrunner. Citigroup, Goldman Sachs, J.P. Morgan, Mitsubishi and RBC were the joint bookrunners.

The Delaware limited partnership plans to use the proceeds, including the additional $150 million resulting from the upsizing of the deal, to repay its revolver, including amounts incurred to fund the purchase of MidCon Compression LLC, and some expenses relating to that acquisition as well as for general partnership purposes including funding working capital, the partnership's capital expenditure program and acquisitions.

AES at the tight end

AES priced an upsized $750 million issue of 10-year senior notes (Ba3/BB-) at par to yield 5½%.

The deal was upsized from $500 million.

The yield printed at the tight end of the 5½% to 5 5/8% yield talk.

Goldman Sachs, Citigroup and Credit Suisse were the joint bookrunners for the debt refinancing deal.

Pioneer Energy upsizes

Pioneer Energy Services priced an upsized $300 million issue of eight-year senior notes (B2/B+) at par to yield 6 1/8%.

The deal was upsized from $250 million.

The yield printed at the tight end of yield talk in the 6¼% area.

BofA Merrill Lynch, Goldman Sachs, Wells Fargo and RBC were the joint bookrunners for the debt refinancing deal.

Spirit AeroSystems at the tight end

Spirit AeroSystems, Inc. priced a $300 million issue of eight-year senior notes (Ba3/B+) at par to yield 5¼%, at the tight end of yield talk in the 5 3/8% area.

BofA Merrill Lynch, Citigroup, RBS, Scotia and Morgan Stanley were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Tesoro prices tight

Tesoro priced a $300 million issue of 10-year senior notes (Ba2/BB+) at par to yield 5 1/8%.

The yield printed at the tight end of yield talk in the 5¼% area.

RBS, JPMorgan, Deutsche Bank and Mitsubishi were the joint bookrunners for the debt refinancing.

Grifols talks $1 billion at 5¼%

Looking toward the Wednesday session, Grifols Worldwide Operations Ltd. talked its $1 billion offering of eight-year notes (B1/B+) with a yield in the 5¼% area.

The deal is expected to price on Wednesday afternoon.

Nomura, Morgan Stanley, BBVA, Deutsche Bank and HSBC are the joint bookrunners.

Mattamy to tap 6½% notes

Mattamy Group Corp. plans to participate in an investor conference call at 11:30 a.m. ET on Wednesday to discuss a proposed $100 million tack-on to its 6½% senior notes due Nov. 15, 2020.

The deal is set to price on Thursday.

Credit Suisse, RBC and Citigroup are the joint bookrunners.

The Burlington, Ont.-based residential homebuilder plans to use the proceeds for general corporate purposes.

The original $300 million issue priced at par in November 2012 as part of an overall $500 million equivalent issuance of the eight-year senior notes that also included a C$200 million tranche.

Lowell upsizes

There was also news from the European primary market on Tuesday.

Lowell Group Financing plc priced an upsized £115 million issue of five-year senior secured notes (B1/BB) at par to yield 5 7/8%.

The deal was upsized from £100 million.

The yield printed on top of yield talk in the 6% area.

Joint bookrunner JPMorgan will bill and deliver. Goldman Sachs was also a joint bookrunner.

The Leeds, England-based purchaser of non-performing consumer debt portfolios plans to use the proceeds to refinance debt, to fund cash on its balance sheet and for general corporate purposes. The additional proceeds, resulting from the £15 million upsizing of the deal, will be used for general corporate purposes.

Premier Foods £475 million deal

Premiere Foods Finance plc kicked off a £475 million two-part offering of senior secured notes (expected ratings B2/B/B) with an investor conference call on Tuesday.

A roadshow follows Wednesday through Friday, and the deal is expected to price on Friday.

Included are tranches of seven-year fixed-rate notes, non-callable for three years, and six-year floating-rate notes, non-callable for one year. Tranche sizes remain to be determined.

Active bookrunner Barclays will bill and deliver. BNP Paribas and HSBC are also active bookrunners. Credit Suisse and Lloyds are bookrunners.

The St. Albans, Hertfordshire, England-based food manufacturer plans to use the proceeds to refinance debt.

Day's deals straddle issue price

In the secondary market, Tesoro's 5 1/8% notes due 2024 were the first of the day's issue to price and, for a while, a trader said, "the only one trading right now."

He saw the notes at 99 7/8 bid, 100 1/8 offered, straddling their par issue price.

A second trader pegged the bonds at 99¾ bid, 100 1/8 offered.

Access Midstream's 4 7/8% notes due 2024, which also priced at par, initially traded in a par to 100¼ context. Then the Oklahoma City-based midstream energy company's issue traded into a 100¼ bid, and were seen going out around par bid, 100¼ offered.

AES's 5½% notes due 2024 were seen by one trader at par bid, 100½ offered, versus the par level at which the bonds had priced.

A second trader saw the Arlington, Va.-based power producing company's new deal firm a little to 100 3/8 bid, 100 7/8 offered.

Pioneer Energy Services' 6 1/8% notes due 2022 were initially trading in a wide par to 101 bid context, versus their par issue price. Later in the day, a trader saw them tighten up to 100¾ bid, 101 offered.

Another trader located those bonds late in the day at 100¾ bid, 101¼ offered.

Wichita, Kans.-based aircraft parts company Spirit AeroSystems' 5¼% notes due 2022 were initially seen by a trader at 100½ bid, up a little from their par issue price. He later saw the bonds going home at 100¾ bid, 101¾ offered.

New HCA bonds busy

Nashville-based hospital giant HCA's new deal dominated the Trace most-actives list, a market source said.

He noted that the company's 5% senior secured notes due 2024 racked up more than $140 million of trades heading into the close, quoting the notes at 100 1/8 bid. That was up by 1/8 from the par level at which the $2 billion issue had priced on Monday.

He also saw its 3¾% senior secured notes due 2019 up by more than ½ point to 100 11/16 bid, on volume of more than $100 million. The $1.5 billion tranche had also priced at par.

A market source at another shop suggested, though, that much of that trading - particularly in the 3¾% issue - probably came from high-grade players reaching down into the junk realm as a crossover play to pick up some yield, rather than from traditional junk accounts, given the relatively sparse coupon.

NII bonds rebound

Away from the new deals, a trader said that "NIHD is still trading a whole bunch," referring to the bonds of Reston, Va.-based NII Holdings, which provides wireless service to customers in Mexico and South America under the Nextel brand.

While those bonds have recently been taking their lumps in the junk market - especially after the company's auditors, citing liquidity worries, issued a "going concern" warning as part of its latest quarterly earnings release - on Tuesday, they were rebounding from their oversold condition.

The trader saw its NII Capital Corp. 10% notes due 2016 "up a little bit" at 44-45, on "a lot of volume."

He said those bonds "started the morning trading in pretty good size." While he said the 10s were about unchanged from their morning levels, "it might be a little higher from yesterday," estimating a gain of about ½ point or so. But he added that "they've been in this range, 44-451/2, over the last few days."

He saw the company's 7 5/8% notes due 2021 at 35-36, calling them "up a bit, up a couple of points." He saw at least $30 million of the '21s traded, although he cautioned that "the sizes are probably a lot bigger" than what's listed on Trace. "There are big chunks of these things trading: $2, $3, $5 million," he estimated.

NII's 8 7/8% notes due 2019 "were also active," the trader said, pegging the bonds at 44-451/2, with the late trades going off at around 44 bid. He called that up a couple of points from yesterday.

A market source at another desk estimated that over $28 million of the 10% notes had traded, heading into the close, calling the bonds up 5/8 point at 44 1/8 bid.

He saw the 7 5/8s up nearly 2 points on the day at 35 3/8 bid, with over $27 million having changed hands.

And he said that over $13 million of the 8 7/8s had traded, gaining some 2 5/8 points on the day to go home around the 44 mark.

RadioShack routed

There was no such reprieve for RadioShack's 6¾% notes due 2019, with a trader seeing those bonds having slid to around 56-58 late in the day after the Fort Worth-based consumer electronics retailer reported sharply wider fourth-quarter losses and said that it would close as many as 1,100 of its more than 5,000 locations in the United States (see related story elsewhere in this issue).

He said that "there was plenty of volume" - over $30 million - "and they were down a lot," having tumbled from previous levels in the middle 60s on Monday.

If the bonds were finishing at 58, he said, "they were [at least] 7 points lower. "So there's definitely one to write about today."

Another trader saw Radio Shack's bonds having fallen as low as the 55-56 area, down from the mid-60s previously.

During the fourth quarter, RadioShack's total net sales and operating revenues came in at $935.4 million versus $1.17 billion a year earlier, with comparable-store sales down 19% year-over-year, driven by traffic declines and soft performance in what RadioShack calls its mobility business - the sale of wireless phones, tablets and wireless service contracts or pre-paid minutes for such devices.

Its operating loss widened to $344 million from $25 million a year earlier; on an adjusted basis, excluding one-time items, the operating loss was $239.9 million.

The net loss also widened during the quarter to $400.2 million, or $3.97 per diluted share, versus $139.4 million last year. On an adjusted basis, the net loss was $305.8 million, up from $60.5 million a year ago.

Market indicators turn mixed

Statistical junk-market performance indicators turned mixed on Tuesday after having been lower across the board on Monday and steady-to-higher for a third consecutive session on Friday.

The Markit Series 21 CDX North American High Yield index gained ½ point to finish Tuesday at 108 bid, 108 1/8 offered, after having lost ½ point on Monday.

However, the KDP High Yield Daily index failed to join in on the rebound on Tuesday, falling for a second consecutive session as it eased by 5 basis points to end at 75.27. That was on top of Monday's 6 bps retreat - which snapped a 16-session winning streak, dating back to Feb. 6.

Its yield, meanwhile, rose by 1 bp to 5.17%, after having been unchanged on Monday. That unchanged performance had also ended a 16-session streak during which it had come in every day, tightening by 50 bps during that stretch.

But the widely followed Merrill Lynch High Yield Master II index got back on the winning track on Tuesday after a rare loss on Monday, rising by 0.07%, in contrast with Monday's 0.039% downturn, which had brought an abrupt end to an 18-session string of daily wins, going back to Feb. 5.

Tuesday's gain lifted its year-to-date return to 2.79%, a new peak level for the year, from Monday's 2.718% and from Friday's 2.759%, the previous 2014 peak level.

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