Momentive, Ardagh mega-deals pace nearly $4 billion session; hospital names firm on flu concerns

By Paul Deckelman and Paul A. Harris

New York, Jan. 16 - After two relatively restrained sessions on Monday and Tuesday, the high-yield primary market revved up at mid-week, with nearly $4 billion principal amount of new U.S. dollar-denominated and purely junk-rated paper heard by syndicate sources as having priced in seven tranches.

It was the busiest primaryside session of the new year so far, according to data compiled by Prospect News. The session eclipsed the $3.75 billion principal amount that priced in five tranches exactly a week earlier.

A pair of billion-dollar-plus offerings led the way. Irish container company Ardagh Packaging Finance plc did an upsized $1.6 billion equivalent three-part offering of secured dollar- and euro-denominated 2022 bonds and unsecured dollar-denominated 2026 paper. The latter tranche - upsized to $850 million - traded up more than 2 points when it hit the aftermarket.

Momentive Specialty Chemicals Inc. meantime brought a quickly shopped single-tranche $1.1 billion offering to market; those bonds were also firmer when they began trading.

And it was a similar story for the dollar-denominated portion of DuPont Performance Coatings' big two-part, dual-currency deal; those eight-year notes zoomed by more than 3 points on the break.

Others bringing dollar-denominated deals to fruition on Wednesday including Atlas Energy Holdings Operating Co. LLC and Oxford Finance LLC; both of those, like the DuPont Coatings deal, were regularly scheduled transactions pricing off the forward calendar.

Brocade Communications Systems, Inc. and TPC Group Inc. each did an opportunistically timed same-day transaction.

German cable operator Unitymedia chimed in with a quickly-shopped €500 million of 10-year notes.

With so many new issues, as well as other deals which priced on Tuesday, Monday or last week, traders said the secondary sphere was dominated by new-issue trading.

Among the relatively few existing bonds that caused much interest were names like HCA Inc. and Iasis Healthcare Corp. A trader suggested that the current nationwide alarm over the flu and flu-like illnesses was benefitting such hospital operators, boosting their bonds.

Statistical market performance indicators were generally firmer.

Momentive brings $1.1 billion

A massive Wednesday in the primary market saw issuers raise $4 billion in dollar-denominated debt and €1 billion in euros.

Momentive Specialty Chemicals priced the session's biggest tranche, a $1.1 billion add-on to its 6 5/8% first-priority senior secured notes due 2020 (B1/B-) which came at 100.75 to yield 6.45%.

The reoffer price came toward the cheap end of the 100.5 to 101.5 price talk.

J.P. Morgan, Citigroup, Deutsche Bank, Goldman Sachs, UBS, Bank of America Merrill Lynch, Credit Suisse and Morgan Stanley were the joint bookrunners.

Proceeds will be used to repay the company's $913 million term loan, to purchase any and all of its outstanding $120 million second-priority senior secured floating-rate notes due 2014 and for general corporate purposes.

Ardagh upsizes

Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. priced an upsized $1.6 billion equivalent amount of notes in three tranches.

The deal was increased from $1.45 billion equivalent.

Citigroup was the bookrunner.

The deal included $750 million equivalent of senior secured notes due Nov. 15, 2022 (Ba3/B+) in dollar- and euro-denominated tranches.

A $420 million tranche priced at par to yield 4 7/8%, on top of yield talk that was revised lower from previous talk of 5% to 5¼%.

In the euro-denominated secured notes tranche, the company priced €250 million of the notes at par to yield 5%, on top of revised price talk. Earlier talk had the euro-denominated secured notes coming 25 basis points behind the dollar-denominated notes.

Ardagh also priced an upsized $850 million tranche of senior unsecured notes due Nov. 15, 2020 (B3/CCC+) at par to yield 7%, on top of price talk that was revised from earlier talk of 7% to 7¼%.

The unsecured tranche was upsized from $700 million. A proposed euro-denominated tranche of unsecured notes was withdrawn.

Proceeds will be used to finance the acquisition of the Verallia North America glass container manufacturing operations from Cie. de Saint-Gobain SA. The additional $150 million of proceeds resulting from the upsizing will be used for general corporate purposes.

DuPont Performance atop talk

DuPont Performance Coatings completed a dual-currency deal, with both tranches coming atop downwardly revised price talk.

The transaction included an upsized €250 million issue of senior secured notes due Feb. 1, 2021 (B1/B+) which priced at par to yield 5¾%.

The yield printed on top of yield talk which had been revised from earlier talk in the 5 7/8% area. The secured notes tranche was upsized from €230 million.

DuPont also priced a downsized $750 million issue of senior unsecured notes due May 1, 2021 (Caa1/B-) at par to yield 7 3/8%.

The yield printed on top of yield talk that was revised from earlier talk of 7½% to 7¾%. The unsecured tranche was downsized from $1.1 billion.

Credit Suisse, Barclays, Citigroup, Deutsche Bank, Morgan Stanley, UBS, Jefferies and SMBC were the joint bookrunners for the LBO deal.

Brocade at the tight end

Brocade Communications Systems priced a $300 million issue of 10-year notes (B1/BB+) at par to yield 4 5/8%.

The yield printed at the tight end of yield talk set in the 4¾% area.

A source close to the deal said that Brocade's 4 5/8% yield is the tightest three-B (B1/BB+) rated 10-year print in the history of the high-yield market.

Morgan Stanley and J.P. Morgan were the joint bookrunners for the quick-to-market debt refinancing deal.

Atlas upsizes

Atlas Energy Holdings Operating Co., LLC and Atlas Resource Finance Corp. priced an upsized $275 million issue of eight-year senior notes (Caa1/B-) at par to yield 7¾%, at the wide end of the 7½% to 7¾% yield talk.

The amount was increased from $250 million.

J.P. Morgan, Citigroup, Wells Fargo, Deutsche Bank and Merrill Lynch were the joint bookrunners for the debt refinancing deal.

TPC taps 8¾% notes

TPC Group priced a $100 million add-on to its 8¾% senior secured notes due Dec. 15, 2020 (B3/B) at 101 to yield 8.528%.

The reoffer price came on top of price talk.

Merrill Lynch, Jefferies and Morgan Stanley were joint bookrunners for the quick-to-market deal.

Proceeds will be used for general corporate purposes, including for strategic capital projects.

Unitymedia drives by

German cable operator Unitymedia priced a €500 million issue of 10-year senior secured notes (B3/BB-) at par to yield 5 1/8%.

The yield printed in the middle of the 5% to 5¼% yield talk.

Deutsche Bank, Barclays, BNP, Citigroup, Goldman Sachs, ING, Morgan Stanley and UBS managed the sale.

The Koln, Germany-based company plans to use the proceeds to refinance debt.

Voyage Care's two-part deal

Voyage Care Bondco plc priced £272 million of high-yield notes in a two-part transaction.

The senior tranche was an upsized £222 million issue of senior secured notes due Aug. 1, 2018 (B2/B+/BB) which priced at par to yield 6½%.

The yield printed 12.5 basis points inside of price talk that had been set in the 6¾% area. The senior secured tranche was upsized from £210 million.

J.P. Morgan, Goldman Sachs, Royal Bank of Scotland, Commerzbank and Lloyds managed the sale of the senior tranche.

In addition, Voyage Care priced a downsized £50 million issue of 11% second lien notes due Feb. 1, 2019 (Caa1/CCC+/CCC+) at 98.5 to yield 11.35%.

The coupon and reoffer price came on top of price talk. The second lien tranche was downsized from £62 million.

Goldman Sachs and J.P. Morgan were the joint bookrunners for the second lien tranche.

Proceeds will be used to refinance debt.

SunCoke sets price talk

SunCoke Energy, Inc. talked its $150 million offering of seven-year senior notes (B1/BB-) with a yield in the 7½% area.

J.P. Morgan, Barclays and RBC are the joint bookrunners.

The Lisle, Ill.-based producer of metallurgical coke plans to use the proceeds from the notes and units to repay a portion of its term loan, fund a distribution and to put cash on the balance sheet at the master limited partnership level in order to prefund obligations.

Gibraltar starts roadshow

Gibraltar Industries, Inc. began a roadshow on Wednesday for a $210 million offering of eight-year senior subordinated notes (existing ratings B2/BB-).

The deal is expected to price on Jan. 23.

J.P. Morgan and KeyBanc are the joint bookrunners for the debt refinancing deal.

DuPont dominates aftermarket

When the new 7 3/8% notes due 2021 from DuPont Performance Coatings were freed for aftermarket dealings, a trader saw the Wilmington, Del.-based chemical coatings manufacturer's new issue having zoomed to 103 3/8 bid, 103¾ offered, well up from its par issue price.

A second trader pegged the bonds at 103½ bid, 103¾ offered.

"A lot of participants weren't happy with their allocations, but [there were] better buyers," the first trader said.

Out of that same chemicals sector, a trader quoted Momentive Specialty Chemicals' $1.1 billion add-on to its 6 5/8% notes due 2020 at 101 1/8 bid, while a second located the bonds at 101 bid, 101 3/8 offered.

The Columbus, Ohio-based company's big drive-by deal had priced at 100.75 bid.

Ardagh moves up

Dublin, Ireland-based container company Ardagh Packaging also saw strength in the aftermarket, the traders said.

Its 7% senior unsecured notes due 2020 traded at 102 1/8 bid, 102 5/8 offered, a trader said, while a second saw the bonds at 102¼ bid, 102¾ offered. He also saw its 4 7/8% senior secured notes due 2022 at 101½ bid, 102 offered. Both tranches had priced at par, along with a euro-denominated tranche of nine-year secured notes.

Day's deals trade firmer

Among the other issues that priced during Wednesday's whirlwind session, a trader saw Brocade Communications Systems' 4 5/8% notes due 2023 trading at 100¾ bid, 101¼ offered. That was up from the par level where the San Jose, Calif.-based company's quickly-shopped deal had priced.

Atlas Energy Holdings' 7¾% notes due 2021 hit the aftermarket trading at 101¾ bid, 102¼ offered - up from the Pittsburgh-based oil and gas exploration and production company's par issue price.

TPC Group's add-on to its 8¾% senior secured notes due 2026 was quoted at 101 3/8 bid, 102¼ offered, versus the 101 bid level at which the Houston-based petrochemical products producer's deal had priced.

Traders did not see an immediate aftermarket in Oxford Finance's 7¼ notes, which had priced at par.

Wells does well

A trader saw Wells Enterprises Inc.'s 6¾% notes due 2020 continuing to trade around 103½ bid, 104 offered on Wednesday.

That's around the level where the Le Mars, Iowa-based ice cream maker's $235 million issue had wound up after pricing at par.

Hospitals are healthy

Traders said that new issues were the main focus of the session - but they also saw some other things trading around also.

One noted that bonds of hospital operators like HCA and Iasis Heathcare have recently been strong, and suggested the current flu epidemic - which has caused many people to seek out hospitals on order to get preventive shots or to seek treatment - was helping the institutions' business model, reflected by strength in the bonds.

Iasis' 8 3/8% notes due 2019 were up ¼ point on Wednesday on top of the ¾ point gain seen Tuesday, ending at 115¼ bid. Over $10 million of the bonds changed hands, one of the busiest Junkbondland issues.

HCA's 8% notes due 2018 were hovering above the 117 bid mark, while its 4¾% notes due 2023 had floated up to 105 bid.

Market measures mixed

Statistical junk market performance indicators were generally better on Wednesday after having been mixed on the day three straight sessions before that.

The Markit Series 19 CDX North American High Yield index was about unchanged on the day at 102 1/8 bid, 102 3/8 offered. On Tuesday, it had posted its first gain after two straight losses, edging up about 3/16.

The KDP High Yield Daily Index rose 3 basis points to 75.86. On Tuesday, it lost 1 bp, its second consecutive loss. But its yield tightened by 2 bps on Wednesday to 5.48%.

The widely followed Merrill Lynch U.S. High Yield Master II Index was back in the black on Wednesday after having suffered its first loss in 11 sessions on Tuesday. It rose by 0.026% on Wednesday, after dropping by 0,068%.

Wednesday's gain lifted its year-to-date return to 1.328%, up from Tuesday's 1.301%, although it remained down from Monday's 1.37%, the new peak level for the year so far.

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