Brand Energy caps $8.27 billion primary week, Dollar Financial pulls deal; existing bonds fall

By Paul Deckelman and Paul A. Harris

New York, Nov. 22 - Brand Energy & Infrastructure Services, Inc. was heard by high-yield syndicate sources to have come to market on Friday with a downsized $500 million offering of eight-year notes.

The new issue from the provider of specialized industrial services to the energy and infrastructure sectors got done too late in the session for any aftermarket activity, traders said.

It was the sole U.S. dollar-denominated, junk-rated issue from a domestic or industrialized-country borrower to have priced during the session, and capped off a week that saw $8.27 billion of such paper pricing in 16 tranches, according to data compiled by Prospect News. While respectably busy, that was down from the $11.2 billion of new junk bonds that came to market in the week ended last Friday, Nov. 15. That week-ago total was all the more impressive because it came during the holiday-shortened week following the Veterans Day market close on Nov. 11.

The Brand Energy deal lifted total year-to-date junk issuance to $303.28 billion in 652 tranches, according to the data, up about 3% from the pace seen last year, which turned out to be a record year for junk-bond issuance. About $293.5 billion of new junk paper had priced in 615 tranches by this point on the calendar in 2012, the data indicated.

Primaryside players noted that even as the Brand Energy deal was getting done, another prospective issuer - DFC Global Corp. - announced that it was withdrawing its $650 million equivalent two-part deal, which was to have consisted of a tranche of notes denominated in Canadian dollars and one denominated in sterling. It cited "market conditions" as the reason for the deal's withdrawal. The news triggered a retreat in the financial services company's existing bonds, which were actively traded.

Elsewhere, there was some activity in Charter Communications Inc.'s paper on news reports that it was lining up financing to make a takeover run at larger rival Time Warner Cable.

But overall, Friday's session was called quiet by market participants. Statistical market performance indicators were mixed for a fifth straight session. However, those indicators were unchanged to higher on the week, breaking out of a four-week long rut that had seen the indicators mixed versus the week before.

Brand Energy downsizes

The only deal to clear the market by Friday's close came from Brand Energy & Infrastructure Services, which priced a downsized $500 million issue of eight-year senior notes (Caa1/CCC+) at par to yield 8½%.

The deal was reduced from $550 million, with $50 million of proceeds shifted to the concurrent term loan.

The yield printed 25 basis points beyond the wide end of the 8% to 8¼% yield talk.

Morgan Stanley, Citigroup, Goldman Sachs, UBS, HSBC, ING, Natixis, RBS, SG and SunTrust were the joint bookrunners for the buyout financing.

Kratos sets talk

Kratos Defense & Security Solutions, Inc. talked its $675 million offering of senior secured second-lien notes due 2020 (expected ratings B3/B) to yield 7¼% to 7½% on Friday.

Books were scheduled to close on Friday afternoon, and some market observers expected final terms for the deal to roll out before the weekend.

However no terms were available at the Friday close, according to an informed source.

Wells Fargo is the left bookrunner. SunTrust is the joint bookrunner.

Dollar Financial pulls $650 million

DFC Global has withdrawn its $650 million equivalent two-part offering of senior notes (B2/B) according to a company press release which appeared on Friday.

The deal had been scheduled to price on Friday.

The company "decided not to proceed with the previously-announced senior notes offering by its wholly owned subsidiaries National Money Mart Co. and Dollar Financial UK Holding plc at this time, due principally to current market conditions," the release stated.

A company spokesman explained that market conditions may be interpreted to mean conditions pertaining to a certain sector or transaction, which may be entirely different from conditions in the broad market.

Wise Metals to roadshow

Looking to the week ahead, Wise Metals Group LLC and Wise Alloys Finance Corp. have a one-day roadshow planned for Monday during which they will market a $625 million offering of five-year senior secured notes (expected ratings Caa1/B-).

The deal is set to price on Tuesday.

BofA Merrill Lynch is the left bookrunner. Wells Fargo and Houlihan Lokey are the joint bookrunners.

The Baltimore, Md.-based producer of aluminum beverage sheet plans to use the proceeds to refinance debt and redeem preferred equity interests.

Astaldi starts meetings Monday

Italy's Astaldi SpA plans to roadshow a €400 million offering of seven-year senior notes (expected ratings B1/B+/B+) on Monday and Tuesday in London.

The deal is expected to price during the middle part of the week ahead.

BNP, Banca IMI, Bancao Bilbao, Credit Agricole, Credit Suisse, Deutsche Bank, HSBC, ING, Natixis and UniCredit are managing the sale.

BNP will bill and deliver.

The Rome-based construction group to plans to use the proceeds to refinance debt.

Astaldi takes its place among several other euro-denominated transactions expected to price during the week ahead.

Italian sports betting firm SNAI SpA is roadshowing a €460 million two-part offering of senior notes though Tuesday.

The deal includes €300 million of 4.5-year senior secured notes (expected: mid- to high-B ratings), and €160 million of five-year senior subordinated notes (expected: high CCC).

Joint physical bookrunner J.P. Morgan will bill and deliver. Banca IMI and UniCredit are also joint physical bookrunners.

And Germany-based Tank & Rast GmbH Motorway is on the road with a €460 million offering of seven-year senior second-lien notes.

That roadshow wraps up on Tuesday.

Global coordinator Deutsche Bank will bill and deliver. Barclays is also a global coordinator.

Commerzbank, Credit Suisse, ING, Nomura, RBC and UniCredit are joint bookrunners.

Brand a no-show

The day's only pricing, from Atlanta-based Brand Energy & Infrastructure, priced too late for any kind of an aftermarket.

A trader suggested that when the new deal does begin trade, "it's probably going to start somewhere around 101 bid. I heard they were tightening up the covenants and everything, and if they did, it should go pretty well."

Activity in recent deals

Among the deals that priced on Thursday, a trader saw LifePoint Hospitals Inc.'s 5½% notes due 2021 trading at 100 3/8 bid, 100 5/8 offered.

The Brentwood, Tenn.-based healthcare company had priced $700 million of those bonds at par on Thursday, after the quick-to-market offering was upsized from an originally announced $500 million.

The bonds priced too late in the session on Thursday for an aftermarket at that time.

At another desk, a trader saw the new Calumet Specialty Product Partners, LP 7 5/8% notes due 2022 at 101¼ bid, 101½ offered.

The Indianapolis-based producer of specialty hydrocarbon and fuel products, along with its Calumet Finance Corp. subsidiary, priced $350 million of the notes in a same-day transaction.

The bonds priced at 98.494 to yield 7 7/8%, after the offering was upsized from an originally announced $225 million.

A trader said that "we had buyers" for Wesco Distribution, Inc.'s new 5 3/8% notes due 2021 at around a 100 3/8 to 100 5/8 level, "but really there wasn't a lot of trading activity."

The Pittsburgh-based company - a subsidiary of Wesco International Inc., a provider of electrical, industrial and communications products and building materials, and supply-chain management and logistics services - priced $500 million of the notes at par in a scheduled forward calendar transaction that was upsized from an originally announced $400 million.

Going back a little further, T-Mobile USA Inc.'s new 6½% notes due 2024 were seen by a market source trading around 100¾ bid, on mid-afternoon volume of nearly $7 million, while its 6 1/8% notes due 2022 hovered around 101½ bid on about $6 million traded at mid-afternoon.

The company - a subsidiary of Bellevue, Wash.-based T-Mobile US, Inc., the Number-Four U.S. wireless telecommunications company - priced $1 billion of each tranche at par on Monday in a quick-to-market deal. When the bonds began trading on Tuesday, they generated an astounding nearly $400 million of volume between the two tranches, and they remained busily traded for the remainder of the week, although at considerably lower volume than seen on Tuesday.

Dollar Financial bonds slip

The news that DFC Global Corp. had decided not to proceed with its $650 million equivalent offering of Canadian dollar and pound sterling notes caused the Berwyn, Pa.-based financial services provider's existing bonds to fall, in active trading.

"They were the big loser today," a trader said, seeing its 10 3/8% notes due 2016 having opened on Friday morning at as low as 103 1/2, down several points from their pre-news levels, although they did come back a little to a 104 to 104 ½ bid context. He said that the bonds had began the week at 105 3/4, "so they were down as much as 2 ½ [points] on the news. I thought they got way too cheap."

He opined that "I think these guys will come back with another deal. They'll probably come to the U.S. [dollar market] with a deal. . .

A second trader said that "the deal should have gotten done," while quoting the bonds down around 103 bid, 104 offered versus prior levels around 106 1/8.

The bonds closed down around ¾ point on the day at 104 1/2, on volume of over $19 million, making it the most active junk issue of the day.

Charter up on Time Warner news

News reports that Charter Communications was lining up financing to make a takeover bid for larger rival Time Warner Cable boosted the Stamford, Conn.-based cable operators' COO Holdings LLC 5¾% notes due 2024, which closed at 94¾ bid, a market source said, up 2 points on the day.

Its most active issue - its 5 1/8% notes due 2013 - moved up to 94 bid, on volume of over $10 million.

Signs mixed on day, up on week

Overall, statistical junk-market performance indicators remained mixed for a fifth consecutive session on Friday.

But they were mostly higher on the week, breaking a four-week stretch of mixed week-to-week indicators.

The Markit Series 21 CDX North American High Yield Index gained 5/16 point on Friday to close at 107 bid, 107 1/8 offered, its second straight rise. The index had gained 9/32 point on Thursday after having been unchanged on Wednesday.

It was also up from the 106 13/32 bid, 106 15/32 level at which it had ended the previous Friday, Nov. 15.

The KDP High Yield Daily Index third straight loss, falling by 4 basis points to 74.24, after having eased by 5 bps on Thursday.

Its yield meantime was unchanged for a second straight session at 5.72%, after having come in for five consecutive sessions before that.

The index reading was unchanged from the previous Friday, although the yield had come in from 5.76% a week earlier.

And the widely followed Merrill Lynch High Yield Master II Index rose by 0.103%, rebounding after Thursday's 0.098% loss, which had snapped a five-session winning streak before that.

The gain lifted its year-to-date return to 6.433%, a new peak level for the year, versus 6.324% on Thursday and from 6.428% on Wednesday, the previous high point for the year.

The index was up by 0.271% on the week, its second straight weekly rise. It had risen 0.126% last week to close at 6.146%.

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