Plains Exploration leads as energy dominates nearly $5 billion primary session; secondary off

By Paul Deckelman and Paul A. Harris

New York, Oct. 23 - The energy sector grabbed the spotlight in Junkbondland on Tuesday, accounting for almost all of the $4.7 billion of new dollar-denominated, purely junk-rated bonds from domestic or developed-country issuers that came to market on Tuesday, high-yield syndicate sources said.

Most of that paper came from one issuer. Plains Exploration & Production Co. priced a massively upsized $3 billion two-part deal, consisting of eight-year and 10.5-year notes.

Another oil & natural gas operator, Halcon Resources Corp., did an upsized $750 million of 8.5-year bonds. The quick-to-market issue was heard by several traders to have firmed smartly when it was freed for secondary dealings.

Stone Energy Corp. priced a quickly shopped $300 million of 10-year notes, although that deal priced too late in the day for any kind of aftermarket dealings.

Sidewinder Drilling Inc. brought in an upsized $250 million of seven-year notes, which firmed slightly when it hit the aftermarket.

The day's lone non-energy pricing came from TransUnion Holding Co., a provider of information- and risk-management services. The company did $400 million of six-year PIK toggle notes, which came too late in the day to trade around.

Away from the deals that actually priced, market participants heard of changes being made in several upcoming deals. Timing was moved up on Warner Music Group Corp.'s $635 million of secured eight-year paper. That dollar- and euro-denominated transaction is now expected to price on Wednesday.

BWAY Parent Co. Inc.'s offering of five-year PIK toggle notes was downsized to $335 million. Price talk emerged on the issue, which is expected to price on Wednesday.

Price talk also came out on another deal that's expected to come on Wednesday - the $215 million seven-year offering from snack food maker Shearer's Foods Inc. That deal was also heard to have been slightly upsized.

In the secondary market, traders saw issues down a quarter-point to half-point pretty much across the board. Radio Shack Corp. lost ground after a poor earnings report.

Statistical market performance measures were all pointing lower.

Plains massively upsizes

Plains Exploration priced a massively upsized $3 billion two-part senior notes transaction (expected ratings B2/B).

The deal included a $1.5 billion tranche of notes due Nov. 15, 2020, which was priced at par to yield 6½%. The yield printed on top of price talk.

The company also placed a $1.5 billion tranche of notes due Feb. 15, 2023, which was priced at par to yield 6 7/8%. The yield printed on top of price talk, which had the notes due 2023 coming 3/8% behind the notes due in 2020.

The deal was upsized from $2.25 billion.

J.P. Morgan, Barclays, BMO, Citigroup and Wells Fargo were the joint bookrunners.

Proceeds will be used to fund a portion of the acquisition of oil and natural gas interests in the Gulf of Mexico from BP Exploration & Production Inc. and, pending that use of proceeds, to repay debt under the company's revolver.

Halcon at the tight end

Halcon Resources priced an upsized $750 million issue of 8 7/8% senior notes due May 15, 2021 (B3/CCC+) at 99.247 to yield 9%, at the tight end of the 9% to 9¼% yield talk.

Wells Fargo was the left bookrunner for the quick-to-market deal, which was upsized from $700 million.

J.P. Morgan, Barclays and Goldman Sachs were the joint bookrunners.

The Houston-based oil and gas exploration and production company plans to use $700 million of the net proceeds to fund the cash portion of the consideration for the Williston Basin assets acquisition and the remainder for general corporate purposes, including acquisitions and capital expenditures.

TransUnion PIK toggle deal

TransUnion Holding priced a $400 million issue of senior PIK toggle notes due June 15, 2018 (Caa1/B-).

The notes printed with an 8 1/8% cash coupon and an 8 7/8% PIK coupon at a reoffer price of 99.5 and with a cash yield of 8.232%

The cash coupon came in the middle of the 8% to 8¼% coupon talk. The reoffer price came at the rich end of the 99 to 99.5 price talk.

Early Tuesday, right after it was announced, the deal was two-times oversubscribed, according to a buyside source who added that it was heavily driven by reverse inquiry.

Goldman Sachs was the left bookrunner for the quick-to-market dividend-funding deal. Deutsche Bank was the joint bookrunner.

Stone Energy drives by

In an a.m.-to-p.m. drive-by deal, Stone Energy priced a $300 million issue of 7½% 10-year senior notes (B3/B-) at 98.277 to yield 7¾%.

The yield printed 12.5 bps beyond the wide end of price talk set in the 7½% area.

Bank of America and Barclays were the joint bookrunners.

The Lafayette, La.-based independent oil and gas exploration and production company plans to use the proceeds to fund the tender offer for its 6¾% notes due 2014 and for general corporate purposes.

Sidewinder upsizes

Sidewinder Drilling priced an upsized $250 million issue of seven-year senior notes (B3/B-) at par to yield 9¾%, at the wide end of the 9½% to 9¾% yield talk.

Jefferies was the bookrunner for the acquisition deal, which was upsized from $225 million.

Proceeds will be used to fund the acquisition of Union Drilling, Inc. Additional proceeds resulting from the upsizing of the deal will be used for general corporate purposes.

Talking the deals

Looking to the Wednesday session, BWAY Parent downsized its offering of five-year senior PIK Toggle notes (/CCC+/) to $335 million from $375 million, shifting the $40 million of proceeds to its term loan B. The issuer talked the deal with a cash yield of 9½% to 9¾% at par.

The PIK yield will come 75 basis points behind the cash yield.

The deal is in good shape, according to a buyside source.

Bank of America, Deutsche Bank and Goldman Sachs are the joint bookrunners.

Shearer's Foods slightly upsized its offering of seven-year senior secured notes (B3/expected B) to $215 million from $210 million and revised the yield talk, tightening it to the 9% area from the 9¼% area.

The deal is going well, an investor said.

BMO, Barclays and KeyBanc are the leads.

Warner Music Group Corp. moved up timing on its $635 million dual-currency offering of eight-year senior secured notes.

Price talk will circulate on Wednesday, and the deal will also price on Wednesday, the source said.

Previously, the offering, which is expected to include notes in dollar and euro denominations, was expected to price late this week.

Credit Suisse, Barclays, UBS, Macquarie and Nomura are the joint bookrunners.

Halcon higher, but off peak

When Halcon Resources' new 8 7/8% notes due 2021 were freed for secondary market dealings, a trader saw the Houston-based onshore energy exploration and production company's $750 million get as good as 102 bid, 102½ offered, after having priced at 99.247 after upsizing from the originally announced $700 million. However, he later saw the bonds offered at 102.

A second trader saw the same trajectory, quoting the bonds at 102 bid, 102½ offered initially, only to later see them having come down to 101½ bid 102 offered. A third quoted them going home at 101 3/8 bid, 101 7/8 offered.

But at another desk, a trader had them still straddling 102, at 101¾ bid, 102¼ offered.

Sidewinder up, then down

Houston-based energy drilling concern Sidewinder's 9¾% notes due 2019 traded up to 100¾ bid, a trader said, but then he said the notes "came back in" to 100 3/8 bid.

Several other traders also saw the new bonds going home in a 1001/4-to-100¾ bid context.

The $250 million deal had pieced at par, after upsizing from the original $225 million.

Plains pops a little

The biggest deal of the day, Plains Exploration's $3 billion two-part behemoth, came to market fairly late in the day.

Nonetheless, traders did see a few levels in the Houston-based oil and gas company's hugely upsized mega-deal.

One quoted both the $1.5 billion of 6½% notes due 2020 and the $1.5 billion of 6¾% notes due 2023 having retreated from their par issue price to as low as a 991/2-to-99¾ context.

On the other hand, a trader at a different shop saw both tranches of the bonds going out at 100¼ bid, 100¾ offered.

Existing Plains paper off

Several traders saw Plains Exploration's existing paper trading lower in response to the company's huge new deal.

One saw the 6¾% notes due 2022 down 1 point, at 102½ bid.

However, another had then going home lower than that, at 101 11/16, down 1 7/8 on the day.

A market source at another desk said that the bonds were down 1¾ points ending at 1013/4. He pegged volume at a busy $12 million-plus.

TransUnion, Stone no-shows

Owing to the lateness of the hour at which they priced, traders saw no activity in the new bonds of either TransUnion Holding or Stone Energy.

One secondary source did see the latter's existing 8 7/8% notes due 2017 down a half point at 1063/4, though volume was only a modest $4 million.

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