Crown Rock, Valeant, Scientific Games drive by; Crown Rock, Games gain; new Caesars notes busy, Murray up

By Paul Deckelman and Paul A. Harris

New York, Oct. 2 – The first trading day of the new month, and of the fourth and final quarter of the calendar year, turned out to be a busy one, with three issuers each heard by syndicate sources to have brought an opportunistically timed and quickly shopped offering to market, two of them in megadeal-sized territory.

All three offerings were eight years in length.

CrownRock, LP, an oil and natural gas exploration and production company, priced $1 billion of unsecured eight-year notes, while Valeant Pharmaceuticals International, Inc., a Canadian drug manufacturer, came by with a $1 billion tranche of senior secured eight-year paper.

Late in the evening, syndicate sources indicated that Scientific Games Corp. had also done an eight-year deal, although full transaction terms were not immediately available.

Traders said that the new Crown Rock and Scientific Games offerings had firmed modestly in initial aftermarket dealings, the latter transaction on brisk volume.

They also saw continued heavy volume in Friday’s big new issue from gaming giant Caesars Entertainment Corp., with the new notes heard to have given back some of the gains they had initially notched.

Away from the new deals, coal operator Murray Energy Corp. was on the upside in active trading for a second straight session on Monday, helped by news late last week of a Department of Energy proposal aimed at preventing additional premature closures of certain coal-fired power-generating facilities.

Statistical market performance measures were higher across the board for a third straight session on Monday. The indicators had improved all around on Thursday and had built on those gains on Friday. Including Wednesday’s mixed session, the indicators have now been better in five out of the last six trading days.

CrownRock drives by

The drive through window was busy during Monday's session.

CrownRock, LP and CrownRock Finance, Inc. priced $1 billion of eight-year senior notes (B3/B+) at par to yield 5 5 /8%.

The yield printed in the middle of both price talk and initial guidance, both of which were set at 5½% to 5¾%.

Credit Suisse and Jefferies were joint bookrunners.

The Midland, Texas-based energy exploration and production company plans to use the proceeds to refinance its 7 1/8% senior notes due 2021 and 7¾% senior notes due 2023.

Valeant prices tight

Valeant Pharmaceuticals International, Inc. priced a $1 billion issue of eight-year senior secured notes (Ba3/BB-) at par to yield 5½% in a quick-to-market Monday trade.

The yield printed at the tight end of yield talk in the 5 5/8% area.

Initial guidance was in the 5¾% area, according to a trader who added that a debt capital markets transaction had been pretty well advertised, and the deal was expected to generate pretty good demand.

The Laval, Quebec-based specialty pharmaceutical company plans to use the proceeds to fund its concurrent tender offer for three series of notes set to mature in 2020: the 7% senior notes, the 6 3/8% senior notes, and the 5 3/8% senior notes.

Ahead of the tender and sale of new notes there were better buyers of Valeant bonds due in 2021 and 2023, possibly among investors who anticipate that it may become a challenge to retain exposure to the name, the trader said.

The perception in the market is that investors have regained a level of comfort in the credit trailing recent asset sale and deleveraging news, the source said.

Citigroup was the left bookrunner. Barclays, Deutsche Bank, DNB, Goldman Sachs, JP Morgan, Morgan Stanley, and RBC were the joint bookrunners.

Scientific Games prices notes

Scientific Games Corp. priced an issue of eight-year notes (B1/B+) at par to yield 5%.

Not all terms of the quick-to-market deal, led by J.P. Morgan Securities LLC, were immediately available at press time.

Syndicate sources said the notes would come with three years of call protection.

Initial yield guidance on the deal was 5% to 5¼%.

Prior to the pricing, a trader said that the deal was playing to $800 million of orders in the early afternoon.

The company – a Las Vegas-based provider of technology-based gaming systems, related products and services – had earlier announced that.it planned to offer $350 million senior secured notes in a Rule 144A/Regulation S transaction via its wholly owned subsidiary, Scientific Games International, Inc.

West Corp talk 8¾% to 9%

Looking ahead to the Tuesday session, West Corp. talked its $1.35 billion offering of eight-year senior notes (B3/CCC+/B-) to yield 8¾% to 9%.

Commitments were due late Monday, and the deal is set to price and allocate on Tuesday.

Joint bookrunner RBC will bill and deliver. Credit Suisse, Barclays, BofA Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley and Goldman Sachs were also joint bookrunners.

Time for Tuesday

Time Inc. commenced marketing its expected $300 million offering of eight-year senior notes (B2/B) on Monday.

Initial guidance is in the 7¼% area, a trader said.

The debt refinancing deal is set to price Tuesday.

Citigroup, Morgan Stanley, BofA Merrill Lynch, Barclays, BNP and JP Morgan are the joint bookrunners.

Dominion Diamond LBO deal

The Monday session also saw a significant build in the active forward calendar.

Dominion Diamond Corp. started a roadshow on Monday for a $550 million offering of five-year senior secured second-lien notes backing the buyout of the company.

The notes are set to price on Friday.

Credit Suisse, Citigroup, Natixis and UBS are the joint bookrunners.

Proceeds will be used to fund the leveraged buyout of the Calgary, Alta.-based producer of rough diamonds by the Washington Companies.

Plastipak roadshow

Plastipak Holdings Inc. started a roadshow on Monday for a $500 million offering of eight-year senior notes.

Initial guidance has the deal coming with a 6¾% to 7% yield, the source added.

Pricing is expected on Friday.

JP Morgan is the lead for the debt refinancing deal.

Mixed Friday flows

The cash flows of the dedicated high-yield bond funds were modest and mixed on Friday, the most recent session for which data was available at press time.

The high-yield ETFs sustained $48 million of outflows on the day.

Actively managed funds saw $20 million of inflows on Friday.

Dedicated bank loan funds were also modestly positive on Friday, posting $55 million of inflows, the trader said.

Scientific Games gains

In the secondary market, traders said that the new Scientific Games 5% notes due 2025 were a bit higher on fairly active volume.

Two traders independently pegged the new notes at 100 bid, while at another shop, a trader saw them in a 100¼-to100 5/8 context, up from their par issue price.

More than $37 million of the Las Vegas-based gambling technology company’s notes were seen to have changed hands, putting the credit well up on the day’s Most Actives list.

Crown Rock rises

Traders also saw improvement in the new CrownRock LP 5 5/8% notes due 2025, with one locating the energy operator’s new paper trading between100¼ and 100¾ bid, up from their par issue price, although on less volume than the new Scientific Games issue had generated.

Existing Valeant adds to gains

The traders did not immediately report any initial aftermarket levels for the new Valeant Pharmaceuticals International 5½% senior secured notes due 2025, which also priced at par during the session.

However, the company’s existing 6 3/8% notes due 2020 moved up by nearly ½ point to 100¾ bid, on volume of more than $10 million.

Those notes are one of three series of bonds that the Canadian drug manufacturer plans to tender for, using the proceeds of its new bond deal.

Those existing notes, and other outstanding Valeant paper, were also up solidly on Friday on the news that the debt-laden company plans to sell its iNova Pharmaceuticals unit to a Carlyle Group-Pacific Equity Partners joint venture for $930 million and then use the proceeds from that asset sale to reduce its debt burden.

New Caesars notes stay busy

For a second consecutive session, the new Caesars Entertainment Corp. 5¼% notes due 2025 were the busiest credit in Junkbondland on Monday, with over $59 million traded, although that was only about one-third of Friday’s enormous turnover of more than $150 million.

The Las Vegas-based gaming giant had priced $1.7 billion of that paper at par on Friday in a regularly scheduled forward calendar offering, and the new bonds had moved up to 100¾ bid in initial aftermarket dealings.

On Monday, however, they retreated, dropping about ½ point to a 100 1/8-to-100¼ bid range, a trader said, while a second saw them falling back to par.

While those Caesars notes were off on the day, the traders did not see any erosion in other Caesars paper, or in the bonds of rival gaming operators such as MGM Resorts International, Wynn Las Vegas LLC, Station Casinos LLC or Boyd Gaming Corp. in the wake of the disastrous Sunday night shooting incident on the Las Vegas Strip that left at least 58 people dead and 515 wounded, the worst U.S. mass shooting incident ever.

On the equity side, some of the gaming names with properties in or near Las Vegas did suffer, with MGM Resorts shares off more than 5% and Wynn down 1.24%, although Caesars ended the day unchanged.

Murray adds to gains

Away from the new deals, traders said that Murray Energy’s 11¼% notes due 2021 continued to trend upward, following in Friday’s footsteps.

One trader said the debt was “quite active” and up a deuce at 61 7/8. A second trader said the bonds “continued to move up,” calling the paper up “another 1½ points” at 61½.

More than $41 million traded in Monday’s action.

On Friday, Murray became topical – with the bonds zooming by more than 3 points, on volume of over $60 million -- after the federal Energy Department released a proposal aimed at preventing additional premature closures of certain power generating facilities – such as what happened to FirstEnergy Corp. earlier this year.

While St. Clairsville, Ohio-based Murray is not itself a power producer, it is a coal mining company – and FirstEnergy happens to be one of its biggest customers.

Indicators continue gains

Statistical market performance measures were higher across the board for a third straight session on Monday. The indicators had improved all around on Thursday and had built on those gains on Friday. Including Wednesday’s mixed session, the indicators have now been better in five out of the last six trading days.

For a sixth straight session, the KDP Daily High Yield Index moved up, gaining by 3 basis points to close on Monday at 72.40, on top of Friday’s 2 bps gain.

Its yield came in by 1 bp, to 5.12%, its second straight narrowing; the yield had also tightened by 4 bps on Friday.

The newly rolled Markit CDX Series 29 High Yield Index ended at 107 29/32 bid, 107 31/32 offered, a gain of 3/32 point. It was the index’s seventh successive upturn. On Friday, the index had risen by ¼ point.

And the Merrill Lynch North American High Yield Index firmed by 0.029% on Monday, on top of Friday’s 0.069% advance, its third straight improvement.

That raised its year-to-date return to 7.077% from Friday’s close at 7.028%, its third straight new 2017 year-to-date peak level.

Stephanie N. Rotondo contributed to this review

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