Western Digital megadeal prices, existing notes active; new Viking bonds busy; Wynn fall continues

By Paul Deckelman and Paul A. Harris

New York, Jan. 30 – The high-yield primary market saw another big deal get done on Tuesday, as Western Digital Corp. priced some $2.3 billion of eight-year notes – one of the largest junk offerings of the nascent new year so far.

While that new issue from the high-tech company came to market fairly late in the day, traders meantime said that they saw active dealings in its existing 2024 notes, which are to be taken out via a tender offer being financed with the new-deal proceeds.

The company also announced plans to call another issue of its existing bonds, but there was far less activity in that credit.

Elsewhere, terms emerged on late Monday’s $950 million two-part issue from passenger ship operator Viking Cruises Ltd., with both tranches seen active, but trading not far off from their respective issue levels.

Among upcoming new deals, syndicate sources oilfield service company Oceaneering International, Inc. ready to bring a $300 million split-rated offering of 10-year notes to market on Wednesday.

And they heard that oil and natural gas operator EnVen Energy Corp. would be shopping around a $325 million issue of five-year secured notes during the latter part of the week.

Away from the new deals, Wynn Las Vegas LLC bonds were once again in retreat on Wednesday amid the sexual abuse allegations dogging company founder and CEO Steve Wynn, although the decline was considerably less than Tuesday’s sharp drop, and on lesser volume.

Statistical market performance measures were lower across the board for a second consecutive session on Tuesday; those indicators had turned weaker on Monday after having been mixed on Friday and lower all around on Thursday.

Western Digital $2.3 billion

In Tuesday's primary market Western Digital Corp. priced a $2.3 billion of issue of non-callable eight-year senior notes (Baa3/BB+/BB+) at par to yield 4¾%.

The yield printed at the wide end of yield talk in the 4 5/8% area.

Initial price talk had the deal coming with a yield in the high 4% area, a trader said, adding that the book was said to be around $2 billion early Tuesday afternoon.

BofA Merrill Lynch was the left bookrunner.

The San Jose, Calif.-based data solutions provider plans to use the proceeds, together with cash on hand, to fund its concurrent tender offer.

Oceaneering to price Wednesday

Oceaneering International, Inc. plans to conduct a one-day roadshow in New York on Tuesday for its $300 million offering of split-rated 10-year bullet notes (Ba1/BBB).

The public offer is set to price on Wednesday.

Credit Suisse Securities (USA) LLC is the lead left bookrunner. Wells Fargo Securities LLC, JP Morgan Securities LLC, DNB Markets, HSBC and BofA Merrill Lynch are the joint bookrunners.

The Houston-based provider of engineered services and products to the offshore oil and gas industry plans to use the proceeds to repay its term loan and for general corporate purposes.

EnVen second lien deal

Heading into midweek the active forward calendar – something of a yawner, year-to-date – has come alive with $5 billion equivalent of deals that could price before Friday's close.

That calendar was steering into formidable headwinds on Tuesday, a trader said, noting that the Dow Jones Industrial Average fell 1.37% and crude oil was 71 cents lower on the day.

Still the calendar built on Tuesday.

EnVen Energy Corp. plans to price $325 million of five-year senior secured second lien notes (Caa1/BB-) before the end of the Jan. 29 week.

Initial guidance has the deal shaping up to yield 9½% to 10%, according to traders.

JP Morgan Securities LLC is leading the Rule 144A and Regulation S offer.

The Houston-based independent oil and natural gas company plans to use the proceeds to pay off its revolving credit facility and second lien term loan, with any remaining proceeds to be used for general corporate purposes.

In connection with the notes offering EnVen Energy intends to amend its revolving credit facility to increase its borrowing base to $231.25 million and extend the maturity date to 2022.

Meanwhile, Algeco Scotsman has been running a full international roadshow for a €1,415,000,000 equivalent five-part offering of high yield notes, in an effort to refinance bond and bank debt.

There may still be some wood to chop, a trader said on Tuesday, noting that the bonds the company means to take out with the proceeds of the new deal have been among the most actively traded, in recent days.

The new deal is expected to include €1.12 billion equivalent in three tranches of senior secured notes (B2/B-/B+) from affiliate Algeco Scotsman Global Finance plc. They include dollar- and euro-denominated fixed rate notes which become callable after two years at par plus 50% of the respective coupons, and euro-denominated floating-rate notes which become callable after one year at 101.

It is also expected to include €295,000,000 equivalent of 5.5-year senior unsecured fixed-rate notes (Caa1/CCC/CCC+) from affiliate Algeco Scotsman Global Finance 2 plc. The notes in both unsecured tranches become callable after two year at par plus 50% of coupons.

Existing Western Digital active

Traders noted that the Western Digital deal came to market late in the session and also pointed out that the regularly scheduled forward calendar offering was one of the biggest deals seen so far this year.

It lagged behind only Bellevue, Wash.-based wireless operator T-Mobile USA, Inc.’s $2.5 billion two-part offering, which priced last Monday, and surpassed the $2.2 billion three-part offering that Dallas-based gasoline and petroleum products distributor Sunoco LP did back on Jan. 9.

The traders did not immediately report initial aftermarket activity, if any, in the new Western Digital deal.

However one trader said the company’s existing 10½% notes due 2024 were “pretty active,” seeing those notes up about 1 point.

A second trader called them up 1 3/32 points, trading just below the 117 mark, with more than $56 million having changed hands.

Western Digital announced a tender offer for those notes, to be financed via the bond deal proceeds (see related story elsewhere in this issue).

The company separately announced plans to call all of its existing 7 3/8% notes due 2023, but offered fewer details on that upcoming redemption.

A market source said those bonds were also up, by nearly ½ point, trading above the 109 bid level – but on only a handful of sizable round-lot trades.

New Viking deal anchored near issue

Traders saw pretty active dealings in the new Viking Cruises two part offering that priced late Monday – but relatively little movement in the actual bond prices.

A trader said there was “more volume” in the Los Angeles-based cruise ship operator’s new stand-alone 5% senior secured notes due 2028 than there was in the other part of that two-part transaction, the add-on to its existing 5 7/8% senior notes due Sept. 15, 2027.

Indeed, a trader at another desk saw $59 million of the 5% notes; he said they had traded during the day between 99 7/8 and 101 bid, but were last seen in a par-to-100½ bid range.

The company had priced $675 million of those notes Monday at par via a funding subsidiary, VOC Escrow Ltd.

Meanwhile, the second trader saw the add-on notes trading between 101 and 101½ bid, earlier in the day, but said that by the end of the session, they had come back in to around a 100½-to-100¾ bid context.

Volume was “a decent amount,” he said, estimating activity at over $22 million.

Viking had priced a $275 million tap of those notes – the original $550 million had been sold last September – with the add-on coming to market at 100.5, for a yield-to-worst of 5.791% and a yield to maturity of 5.805%.

Hunt Cos. easier

Among other recently priced issues, a trader said the new Hunt Cos., Inc. 6¼% senior secured notes due 2026 were “off a little,” quoting them at 99 3/8 bid, down 5/8 point on the day, with over $20 million traded.

The privately held El Paso, Texas-based company, which invests in businesses focused on the real estate and infrastructure markets, priced $600 million of those notes at par on Friday in a regularly scheduled forward calendar offering that was upsized from an originally announced $550 million.

The new paper was heard to have firmed by around 5/8-to-¾ point in initial aftermarket trading of some $78 million, topping the junk market’s Most Actives list that session.

On Monday, volume dwindled to around 1/10 of that, and the bonds finished the session at par, setting the stage for Tuesday’s continued retreat.

Wynn continues to lose

Away from the new deals, gaming operator Wynn Las Vegas continued to retreat for a second straight session, the company rocked by allegations of sexual abuse leveled against its 76-year-old founder and CEO Steve Wynn, who has vehemently denied those claims.

Its 5½% notes due 2025 were down by ¾ point, to 99½ bid, after having plunged by 1¾ points on Monday.

And its 5½% notes due 2025 lost ¼ point to end at 101¾ bid, after nosediving more than 2 points on Monday.

Volume on each was around $20 million, well below Monday’s levels.

Indicators stay lower

Statistical market performance measures were lower across the board for a second consecutive session on Tuesday; those indicators had turned weaker on Monday after having been mixed on Friday and lower all around on Thursday.

The KDP High Yield Daily Index plunged by 24 basis points Tuesday to end at 71.62, its third straight loss; it had dropped by 11 bps on Monday and had eased by 2 bps on Friday, its first loss after two straight gains before that.

Its yield widened out for a second straight session, ballooning up 9 bps to 5.38%, after having risen by 5 bps on Monday. It had been unchanged for two sessions before that.

The Markit CDX Series 29 index came down by 7/32 point, closing at 108 11/32 bid, 108 3/8 offered, as it exactly matched the size of Monday’s loss. That was in contrast to Friday’s 5/32 rise, which had been its second straight improvement.

The Merrill Lynch High Yield Index fell back by 0.294% on Tuesday, its second loss after five straight gains. It had been off by 0.121% on Monday, versus Friday’s 0.03% rise.

That latest loss dropped the index’s year-to-date return to 0.518% from Monday’s close at 0.815%. Those levels were down from 0.936% on Friday, which had been the third consecutive new peak YTD level for the year so far.

© 2015 Prospect News.
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