CNH, upsized Platform Specialty deals price; Platform pops; new T-Mobile jumps on heavy volume

By Paul Deckelman and Paul A. Harris

New York, Nov. 3 – The high-yield primary sphere remained busy on Tuesday, the second trading day of the new month of November. The session was not quite as active as the new-deal world had been on Monday to kick off the new month but respectably productive nonetheless.

Syndicate sources saw $1.1 billion of new dollar-denominated and fully junk-rated paper price in two tranches, although that paled in comparison to the more than $4 billion that had gotten done in four tranches on Monday.

International farm and construction equipment and truck and bus manufacturer CNH Industrial NV priced $600 million of five-year notes in a quickly shopped transaction via a U.S. financing arm.

And Platform Specialty Products Corp., a specialty chemicals maker, did an upsized $500 million of 5.5-year notes, also via a funding subsidiary. The deal, which had been announced on Monday and was in the market overnight, was quoted solidly higher in initial aftermarket dealings.

Traders meantime said that Monday’s upsized $2 billion deal from wireless service provider T-Mobile USA, Inc. was easily the busiest credit in Junkbondland on Tuesday and was up sharply from its issue price.

They also saw gains in the new bonds from Goodyear Tire & Rubber Co. and shipbuilder Huntington Ingalls Industries Inc., with both of those Monday deals also trading well up from their respective issue prices.

But Monday’s fourth deal, from banking and auto loan company Ally Financial Inc., was seen only a little better than its discounted issue price.

Away from the new deals, Valeant Pharmaceuticals International Inc.’s bonds rose for a second straight session in active dealings, continuing to recover some of the ground they lost last week amid allegations of improper corporate conduct by the Canadian drug manufacturer.

Statistical market-performance indicators were stronger across the board for a second straight session on Tuesday; they had improved on Monday after having been mixed for two consecutive sessions last Thursday and Friday.

CNH yields 4½%

Primary market volume scaled back on Tuesday, trailing Monday's torrid $4.35 billion – all of which came in the form of drive-by business.

Tuesday saw a pair of issuers raise a combined $1.1 billion.

One of Tuesday's two deals was a drive-by, and the other was in the market overnight.

One was upsized.

One priced at the tight end of talk, and the other priced on top of talk.

CNH Industrial Capital LLC priced a $600 million issue of five-year senior bullet notes (Ba1/BB) at 99.446 to yield 4½% on Tuesday afternoon.

The yield printed on top of yield talk and on top of initial guidance.

The quick-to-market deal, which was introduced at benchmark size on Tuesday morning, was marketed by means of an internet roadshow. There was no investor call.

Joint bookrunner Barclays will bill and deliver. Credit Agricole CIB, Deutsche Bank Securities Inc. and RBS Securities Inc. were also joint bookrunners.

Proceeds will be used for working capital and other general corporate purposes, which may include the purchase of receivables or other assets, and to repay debt.

Platform, upsized and tight

Platform Specialty Products priced an upsized $500 million issue of senior notes due May 1, 2021 (Caa1/B+) at par to yield 10 3/8%.

The issue size was increased from $400 million.

The yield printed at the tight end of yield talk in the 10½% area.

The order book was three-times oversubscribed at one point, according to a trader, who added that people liked the specialty chemical company and perceived it as being cheap at 10½%.

There were better buyers in high yield, in general, on Tuesday, the trader remarked.

Credit Suisse Securities (USA) LLC and Barclays were the joint bookrunners for the Platform Specialty deal.

Proceeds will be used to help fund the acquisition of Alent plc, a U.K. supplier of specialty chemicals and engineered materials, in a transaction valued at about $2.1 billion.

The additional $100 million of proceeds resulting from the upsizing of the deal will be used to reduce the term loan.

Veritas plans roadshow

Veritas Technologies LLC outlined a $2,275,000,000 equivalent four-part offering of high-yield notes on Tuesday.

The deal includes $500 million equivalent of seven-year senior secured notes (B1/B+) coming in dollar- and euro-denominated tranches and $1,775,000,000 equivalent of eight-year senior unsecured notes (Caa1/CCC+) also coming in dollar- and euro-denominated tranches.

Tranche sizes remain to be determined.

A New York group lunch and investor conference call are set to get underway at 12:30 p.m. ET on Friday.

An investor group breakfast in Boston is scheduled for 8 a.m. ET on Tuesday, Nov. 10.

The buyout deal is set to price during the week of Nov. 9.

Morgan Stanley, & Co. LLC BofA Merrill Lynch, UBS Securities, Jefferies, Citigroup Global Markets Inc. and Goldman Sachs & Co. are the joint bookrunners.

Perform Group's debut

Perform Group Financing plc plans to make its debut in the high-yield bond market when it begins a roadshow on Wednesday for a £200 million offering of five-year senior secured notes (expected ratings B3/B).

The roadshow wraps up on Nov. 10.

Credit Suisse is the lead left bookrunner. Barclays, HSBC and Lloyds are joint bookrunners.

The London-based digital sports media company plans to use the proceeds to fund the launch of direct-to-consumer media products, to repay the amounts drawn under its revolver and to fund contractual commitments to pay contingent consideration in respect of past acquisitions.

Inflows on Monday

The cash flows of the dedicated high-yield funds were positive on Monday, the most recent session for which data was available at press time, a trader said.

High-yield exchange-traded funds saw $224 million of inflows on Monday.

Asset managers saw $10 million of inflows on the session.

Platform Specialty rises

In the secondary arena, a trader quoted the new Platform Specialty Products 2021 notes in the 102½-to-103 bid area.

That was well up from the par level at which the West Palm Beach, Fla.-based specialty chemical manufacturer’s upsized deal had come to market earlier in the afternoon [ET] via special-purpose funding vehicle PSPC Escrow II Corp.

Another trader meantime saw the company’s existing 6½% notes due 2022 gain 1 1/8 point to end at 87¾ bid, on volume of over $14 million.

One of the traders said that he had seen no immediate secondary activity in the new CNH Industrial Capital 4 3/8% notes due 2020.

The Racine, Wis.-based company – the captive financing subsidiary of CNH Industrial North America and the latter’s ultimate parent, London-based CNH Industrial NV – had priced its quick-to-market issue at 99.446 to yield 4½%.

Monday deals mostly move up

Traders said that the four new drive-by deals that had come to market during Monday’s $4.35 billion primary pricing parade had mostly firmed by at least 1 point or more from their respective issue prices.

The clear leader remained the Huntington Ingalls Industries 5% notes due 2025, which had shot up by around 2 points in heavy aftermarket trading of over $70 million after the $600 million deal had priced at par.

On Tuesday, a trader saw the Newport News, Va.-based government naval contractor’s new issue just below that level, quoting them at 101 15/16 bid – down 1/16 point – on more than $36 million of volume.

But another market source saw them unchanged at 102.

Easily the busiest deal of the session was T-Mobile USA’s 6½% notes due January 2026. The $2 billion offering had priced at par on Monday after doubling in size from the originally announced $1 billion.

On Tuesday, a trader saw the new bonds at 101¾ bid, with over $125 million having changed hands.

A second trader also pegged the bonds at that level, noting that such volume was not unusual “on such a big issue.”

The Bellevue, Wash.-based wireless provider’s existing 6 3/8% notes due 2025 were meantime seen up ¾ point on the day at around 102 1/8 bid, with over $10 million traded.

Goodyear Tire’s 5 1/8% notes due 2023 were also going home around 101¾ bid on Tuesday, one of the traders said.

That too was up from the par level at which the Akron, Ohio-based tire manufacturing giant had priced its $1 billion issue on Monday.

A trader said Ally Financial’s 3¼% notes due 2018 finished “right around par,” which was not too much higher than the 99.858 level at which the Detroit-based banking and auto loan company had priced its $750 million issue on Monday to yield 3.3%.

He noted that the coupon was sparse by junk-market standard and the tenor short – only three years – in theorizing why there didn’t seem to be more investor interest in the Ally issue.

But generally, he said, “the new deals have been the focus for sure for the accounts,” with most everything else pushed to the back burner.

Valeant up, again

That having been said, there was still considerable activity in Valeant Pharmaceuticals International’s bonds, which pushed up for a second straight session on Tuesday, regaining some of the ground that the bonds had lost over the past two weeks, ever since Citron Research, a California-based short-seller firm, had put out a scathingly critical analysis of the company’s activities alleging fraudulent conduct on Valeant’s part – accusations that the Laval, Quebec-based drug maker heatedly denied.

A trader said that Valeant’s 6 1/8% notes due 2025 were up 1¼ point on Tuesday, going out at 86 bid, after having gained around ¾ point on Monday in heavy trading of more than $47 million. Over $33 million of the bonds traded on Tuesday.

Valeant’s 5 7/8% notes due 2023 gained 1 1/8 point Tuesday to also end at 86 bid, with over $25 million having traded. On Monday, they had risen by 5/8 point to end at 84 7/8 bid, with over $30 million traded.

The rise in the bonds was attributed at least in part to the Citron’s failure to follow up its initial allegations of fraudulent sales with new information when the company released a long-awaited second report on Monday – one which broke no new ground.

While Valeant remained well bid-for on the bond side, equity investor pulled back after notching hefty gains of more than 7% on three times the normal volume on Monday. Tuesday saw its New York Stock Exchange-traded shares fall by $2.61, or 2.60%, to $97.86. Volume of 15.5 million shares was around double the usual handle.

Indicators stay strong

Statistical measures of junk market performance were higher for a second straight session on Tuesday; they had turned higher on Monday after having been mixed on Thursday and again on Friday.

Tuesday’s session was thus its third higher session out of the last five trading days.

The KDP High Yield Daily index gained 10 basis points on Tuesday to close at 67.40, its second straight rise; on Monday it had finished up by 8 bps after having declined by 4 bps on Thursday and by another 3 bps on Friday, making Tuesday’s advance its third in the last five sessions.

Its yield, however, atypically rose by 3 bps to close at 6.46%, even though the yield normally moves inversely to the index reading, usually falling when the index reading rises and vice versa.

It was its first widening after two straight sessions in which it had narrowed including Monday, when it had come in by 3 bps, on top of Friday’s 1 bp tightening. Before that, it had also been unchanged on Thursday and having lessened by 8 bps last Wednesday – making Tuesday’s narrowing the first in a week, since Tuesday, Oct. 27.

The Markit Series 25 CDX North American High Yield index moved up by 3/32 point on Tuesday to close at 103 9/16 bid, 103 11/16 offered, its third consecutive gain and its fourth in the last five sessions, including Monday, when it had risen by 3/8 point, on top of Friday’s 1/8 point strengthening.

The Merrill Lynch North American Master II High Yield index finished up by 0.15% on Tuesday after having risen by 0.164% on Monday.

Tuesday marked its fourth gain in the last five sessions – a positive trend interrupted only by Friday’s 0.007% loss, which had followed two straight advances before that.

The gain raised the index’s year-to-date return to 0.444% from 0.294% on Monday.

© 2015 Prospect News.
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