Goodyear, T-Mobile lead $4.35 billion drive-by parade; Ally and Huntington Ingalls also price

By Paul Deckelman and Paul A. Harris

New York, Nov. 2 – Fresh off a not-so-busy October, the high-yield primary sphere started November off with a bang on Monday. Four issuers brought a total of $4.35 billion of new junk-rated, dollar-denominated paper to market via quickly shopped transactions.

That one-day tally was nearly half of the $9.4 billion that got done in all of October, according to data compiled by Prospect News.

And it was the second session in the last three in which more than $4 billion of paper got done in drive-by offerings, essentially mirroring what happened Thursday.

The big deal of the day was wireless carrier T-Mobile USA, Inc.’s $2 billion offering of 10.25-year notes, which was upsized from an originally announced $1 billion.

Tire manufacturer Goodyear Tire & Rubber Co. also did a megadeal, pricing $1 billion of eight-year notes.

The day saw somewhat smaller but still substantial new deals from banking and auto loan company Ally Financial Inc., which came to market with $750 million of three-year notes, pricing the bonds at a discount, and naval shipbuilder Huntington Ingalls Industries Inc., which sailed in with a $600 million 10-year offering.

The latter issue was the first of the day’s deals to price and consequentially was the one most often seen in aftermarket dealings; traders said the new bonds firmed smartly in the secondary on active volume.

They also reported continued firm trading levels in the new issues that came to market at the tail end of last week, First Data Corp., Level 3 Communications, Inc. and Lennar Corp.

Statistical market-performance indicators turner stronger across the board on Monday after having been mixed for a second straight session on Friday.

T-Mobile doubles deal size

The month of November got off to a roaring start on Monday as four drive-by issuers priced $4.35 billion of junk.

Executions saw three of the four deals coming at the tight end of yield talk and the fourth pricing inside of talk.

T-Mobile priced the only upsized issue of the session, a $2 billion tranche of 10.25-year senior notes (Ba3/BB) that came at par to yield 6½%.

The issue size was increased from $1 billion.

The yield printed at the tight end of yield talk in the 6 5/8% area. Initial yield guidance was in the high 6% area, according to a market source.

Deutsche Bank Securities Inc. was the left bookrunner. Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Barclays and Goldman Sachs & Co. were the joint bookrunners.

T-Mobile plans to use the proceeds for general corporate purposes, which may include acquisition of additional spectrum.

Goodyear prices $1 billion

Goodyear priced a $1 billion issue of eight-year senior notes (Ba3/BB) at par to yield 5 1/8%.

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

Goldman Sachs was the left bookrunner for the debt refinancing. Barclays, BNP Paribas, Citigroup, Credit Agricole, Deutsche Bank, HSBC and JPMorgan were the joint bookrunners.

Ally 3¼% three-year notes

Ally Financial priced a $750 million issue of 3¼% three-year senior notes (/BB+/BB+) at 99.858 to yield 3.3%.

The yield printed at the tight end of the 3.3% to 3.4% yield talk. Initial guidance was 3½% to 3 5/8%.

Joint bookrunner Citigroup will bill and deliver for the general corporate purposes deal. Goldman Sachs, Morgan Stanley and RBC were also joint bookrunners.

Huntington Ingalls inside talk

Huntington Ingalls priced a $600 million issue of 10-year senior notes (Ba2/BB+/BB+) at par to yield 5%.

The yield printed 12.5 basis points beneath the tight end of yield talk in the 5¼% area, according to a trader who also said that early guidance had the deal yielding 5¼% to 5½%.

JP Morgan, BofA Merrill Lynch, Wells Fargo, Mizuho, Scotia and US Bancorp were the joint bookrunners.

The Newport News, Va.-based shipbuilder plans to use the proceeds and cash on hand to fund the tender offer its 7 1/8% notes due 2021 and to redeem the notes that are not tendered. Any remaining proceeds will be used for general corporate purposes.

Platform Specialty on deck

Platform Specialty Products Corp. plans to participate in an investor conference call beginning at 10:30 a.m. ET on Tuesday.

The Miami-based specialty chemicals company plans to roll out a $400 million offering of senior notes due May 1, 2021.

The deal is set to price on Tuesday afternoon.

Credit Suisse and Barclays are the joint bookrunners for the acquisition financing.

Molina Healthcare roadshow

Molina Healthcare, Inc. started a roadshow on Monday in New York for a $500 million offering of seven-year senior bullet notes.

SunTrust is the left bookrunner for the general corporate purposes deal. BofA Merrill Lynch and UBS are the joint bookrunners.

ICBPI sets roadshow

In the European primary market, Italy's ICBPI (Istituto Centrale Delle Banche Popolari Italiane) plans to start a roadshow on Tuesday for a €1.1 billion two-part offering of 5.5-year senior secured PIK toggle notes.

The offer is coming in tranches of fixed-rate notes and floating-rate notes, the sizes of which remain to be determined.

The roadshow wraps up on Friday.

Physical bookrunner Goldman Sachs will bill and deliver for the buyout deal. HSBC and JPMorgan are also physical bookrunners.

Cabot Financial starts Tuesday

Cabot Financial (Luxembourg) II SA plans to hold a roadshow for a €280 million offering of six-year senior secured floating-rate notes (expected ratings B2/B+) in London on Tuesday and Wednesday and price the deal thereafter.

Global coordinator JPMorgan will bill and deliver for the debt refinancing. Goldman Sachs and Morgan Stanley are also global coordinators.

DNB, HSBC, Lloyds and Royal Bank of Scotland are bookrunners.

Huntington Ingalls higher

In the secondary market, a trader saw the new Huntington Ingalls 5% notes due 2025 “wrapped around 102,” up from the par level at which the deal had come to market.

At another shop a trader pegged the bonds at 102 and said volume was a very active $70 million, topping the junk Most Actives list.

Due to the relative lateness of the hour at which they finally priced, traders meanwhile did not report an immediate aftermarket action in the day’s other three issues – Bellevue, Wash.-based wireless service provider T-Mobile’s 6½% notes due January 2026, Akron, Ohio-based tire manufacturer Goodyear’s 5 1/8% notes due 2023 and Detroit-based banking and auto-loan company Ally’s 3¼% notes due 2018.

But T-Mobile’s existing 6 3/8% notes due 2025 did gain more than 1 point on the day to finish at 101 3.8 bid, with over $16 million of the notes having traded.

Thursday deals stay strong

The traders meanwhile saw continued strength in the new deals that priced on Thursday.

One saw the new First Data 7% notes due 2023 up ¾ point at 102 5/8 bid and said that more than $38 million traded.

A second trader located the bonds in a 102-to-102½ bid context, while a third saw them between 102 1/8 and 102 5/8 bid, calling that up ½ point from Friday’s levels.

The Atlanta-based transaction processing company priced a massively upsized $3.4 billion offering of the notes at par Thursday, more than quadrupling the drive-by transaction’s ultimate size from an originally announced $750 million in order to meet investor demand estimated by syndicate sources as better than $7 billion.

Lennar’s new 4 7/8% notes due 2015 gained more than ½ point on Monday, one of the traders said, going home at 99 7/8 bid, 100 1/8 offered.

A second trader saw the bonds going out at par, up 3/8 point on the day, with over $13 million traded.

The Miami-based homebuilder priced a quick-to-market $400 million of the notes at 99.169 to yield 5% after enlarging the deal from an originally announced $350 million.

Broomfield, Colo.-based fiber-optic telecommunications network provider Level 3’s 5 3/8% notes due January 2024 had firmed to around 101¾ bid, a trader said, up from its Friday levels in a 101-to-101¼ bid context.

The company had priced its quickly shopped $900 million offering at par via its Level 3 Financing, Inc. subsidiary after nearly doubling it in size from the originally announced $500 million.

Going back a little further, one of the traders quoted L Brands, Inc.’s 6 7/8% notes due 2035 at 104¼ bid, 104¾ offered.

The Columbus, Ohio-based retailer had priced an unscheduled $1 billion of the notes at par last Tuesday, more than doubling the deal’s size from the originally planned $400 million. The bonds quickly shot up to near the 102 mark on the break and continued to firm last week to first above 103 bid and then above 104 by the time the week ended.

Valeant vindicated?

Away from the new deals, traders noted another busy day of trading in Valeant Pharmaceuticals International Inc.’s bonds – although unlike last week, when the movement was mostly lower, Monday’s action was on the upside.

Citron Research, the California-based short-seller whose scathingly critical analysis of the company’s activities around two weeks ago caused a massive sell-off in its bonds and shares, was out with a much-ballyhooed follow-up report – but contrary to expectations that it would reveal new and unfavorable details about how the Laval, Quebec-based drug maker operates, the second report broke no new ground, causing Valeant to re-assert that the original negative report had been false and misleading.

With the potential negative of damaging new revelations having proved to be a dud, bond and stock investors seemed to view Valeant more constructively on Monday.

A trader said that more than $47 million of its 6 1/8% notes due 2025 had changed hands, with the bonds rising by ¾ point to 84¾ bid.

He said that its 5 7/8% notes due 2023 gained 5/8 point to end at 84 7/8 bid, with over $30 million traded.

Valeant, another trader said, “just kind of bounced around all day.” He saw the 6 1/8% notes go home ½ point better at 84½ bid and characterized the expectations around the new report as “kind of a non-event.”

Yet another trader said that Valeant “pretty much topped the charts today” volume-wise, seeing the 6 1/8% notes up ¾ point at 84¾ bid.

Stockholders agreed with their bond market cousins. The company’s New York Stock Exchange-traded shares pushed up by $6.70, or 7.15%, to end at $100.47. Volume of 26.4 million was more than three times the norm.

Indicators show improvement

Statistical measures of junk market performance turned higher on Monday after having been mixed for a second straight session on Friday.

Monday’s session was its second higher session out of the last four.

The KDP High Yield Daily index turned positive after having seen losses on Thursday and Friday.

It finished up by 8 basis points at 67.30 after having declined by 4 bps on Thursday and by another 3 bps on Friday.

Its yield came in by 3 bps on Monday by 6.43%, its second straight narrowing; it had also tightened by 1 bp on Friday to 6.46% after having been unchanged on Thursday and having lessened by 8 bps on Wednesday.

The Markit Series 25 CDX North American High Yield index gained 3/8 point on Monday to close at 103 17/32 bid, 103 19/32 offered. It had also gained 1/8 point on Friday after having lost 5/32 point, which followed a 5/16 point gain on Wednesday.

The Merrill Lynch North American Master II High Yield index finished up by 0.164% on Monday – its first gain after one loss and its third gain in the last four sessions – a positive trend interrupted only by Friday’s 0.007% loss, which had followed two straight advances.

The gain raised the index’s year-to-date return to 0.294% from 0.129% on Friday – versus the index’s worst 2015 year-to-date deficit, the 3.069% of red ink recorded on Oct. 2, which was the market measure’s lowest level since Oct. 5, 2011, when it had shown a 3.834% year-to-date deficit.

© 2015 Prospect News.
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