Upsized Cheniere tops busy day; Ryerson, LifePoint, Performance Food price; funds out $1.9 billion

By Paul Deckelman and Paul A. Harris

New York, May 12 – The high-yield primary market saw its busiest session in more than a week, as four issuers priced $2.75 billion of new dollar-denominated, junk-rated paper.

Liquid natural gas company Cheniere Energy, Inc., had the big deal of the day, an upsized $1.25 billion eight-year secured offering that priced off the forward calendar via a subsidiary.

The session also saw a trio of more moderately sized offerings.

Metals processing company Ryerson Holding Corp. came to market with a regularly scheduled $650 million six-year secured deal. Traders saw the new Ryerson paper notching solid gains when the new bonds moved into the aftermarket.

Foodservice distributor Performance Food Group Co. priced $350 million of eight-year notes via a subsidiary in another regularly scheduled offering that also did well when the bonds were freed to trade.

The day’s lone drive-by transaction came from healthcare services provider LifePoint Health, Inc., which brought an upsized $500 million of eight-year paper to market. It traded a little above issue price, though on active volume, traders said.

The day’s total of new paper was the most seen in Junkbondland during a single session since March 3, when $3.05 billion got done in four tranches, according to data compiled by Prospect News.

Among recently priced offerings, traders saw brisk trading in the trio of new issues that priced on Wednesday from AES Corp., Penske Automotive Group, Inc. and Teleflex, Inc., with power producer AES’ new paper doing particularly well in the aftermarket.

Statistical market performance measures turned higher across the board on Thursday, after having been mixed on Wednesday. It was the second stronger session in the last three trading days.

Meanwhile, another numerical indicator – flows of investor money into or out of high yield mutual funds and exchange-traded funds, considered a reliable barometer of overall junk market liquidity trends – posted its second large net outflow in as many weeks, with $1.905 billion leaving those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the week ended Wednesday.

That followed on the heels of the $1.807 billion outflow reported last Thursday for the week ended May 4, which, in turn, had snapped a four-week inflow streak that saw the funds gain a cumulative net of $1.972 billion (see related story elsewhere in this issue)

Cheniere grows to $1.25 billion

The primary market saw a $2.75 billion burst of issuance on Thursday as four issuers completed single-tranche deals.

Only one of the four came as a drive-by.

Two were upsized.

Executions appeared solid since two of the deals came in the middle of talk, one came at the tight end and one priced well inside of talk.

Cheniere Corpus Christi Holdings, LLC priced an upsized $1.25 billion issue of eight-year senior secured bullet notes (Ba3/BB-) at par to yield 7%.

The issue size was increased from $1 billion.

The yield printed on top of final yield talk. However the deal came well inside of the earlier 7¼% to 7½% guidance.

A trader, who saw the new bonds at 101¼ bid, 101¾ offered late Thursday, said that there had not been a lot of trading, and added that Cheniere may have priced a bit before the market was expecting it to.

Morgan Stanley, BofA Merrill Lynch, BNP Paribas, Credit Suisse, Goldman Sachs, HSBC, ING, J.P. Morgan, Lloyds, MUFG, Mizuho, RBC, Scotia, SG, SMBC Nikko and Standard Chartered were the joint bookrunners.

The Houston-based LNG company plans to use the proceeds, including those resulting from the $250 million upsizing of the deal, to repay debt.

Ryerson prices inside talk

Ryerson Holding priced a $650 million issue of six-year senior secured notes (Caa1/B-) at par to yield 11%.

The yield printed 25 basis points below the tight end of the 11¼% to 11½% yield talk. However the yield did come more in line with early guidance in the low 11% yield context.

The deal was heard to have ultimately been structured by a small circle of investors and allocations to investors outside of that circle were believed to be poor, a trader said.

The new Ryerson 11% notes traded as high as 103 in the secondary market, the source added.

BofA Merrill Lynch was the left bookrunner. Deutsche Bank, JP Morgan, BMO and Goldman Sachs were the joint bookrunners for the debt refinancing deal.

LifePoint upsizes

LifePoint Health priced the session’s sole drive-by deal, an upsized $500 million issue of eight-year senior notes (Ba2/BB-) that came at par to yield 5 3/8%.

The issue was increased from $400 million.

The yield printed in the middle of the 5¼% to 5½% yield talk. Early guidance was 5½%.

Goldman Sachs was the left bookrunner. BofA Merrill Lynch, Barclays, Citigroup, JP Morgan and UBS were the joint bookrunners.

The Brentwood, Tenn.-based health care services provider plans to use the proceeds, together with cash on hand, to redeem the entire $400 million of its outstanding 6 5/8% senior notes due 2020. The additional proceeds resulting from the $100 million upsizing of the deal will be used for general corporate purposes.

Performance Food prices tight

Performance Food Group priced a $350 million issue of eight-year senior notes (B2/BB-) at par to yield 5½%.

The yield printed at the tight end of the 5½% to 5¾% yield talk. Earlier guidance was 5¾% to 6¼%.

Credit Suisse, Barclays, Wells Fargo, BMO, Blackstone, J.P. Morgan and Morgan Stanley were the joint bookrunners for the debt refinancing.

Thin calendar

In the wake of Thursday’s action, the active forward calendar is thin heading into Friday’s session.

Swiss chocolate-maker Barry Callebaut AG was scheduled to start a roadshow on Wednesday for a €350 million offering of senior fixed-rate notes with a maturity of eight years to 10 years, via Credit Suisse, ING, Rabobank and SG.

And British bookmaker William Hill is heard to be coming with a sterling-denominated deal that will be transacted on the investment-grade desk, according to a market source. Look for Barclays to be involved.

Meanwhile the dollar-denominated forward calendar is empty.

However there is a mountain of bond debt expected to top the horizon quite soon, as Dell Inc. prepares to sell as much as $25 billion in high-grade secured paper and unsecured junk bonds.

The high-grade deal is expected to roll out in the week ahead.

Ryerson rises in aftermarket

When the new Ryerson Holding Corp. 11% senior secured notes due 2022 were freed for aftermarket dealings, a trader saw the Chicago-based metals processing company’s new notes – brought to market via subsidiary Joseph T. Ryerson & Son, Inc. – trading at stronger levels.

“The first two prints were at 101 to 101½, he said, “but then the rest were from 102¼ to 103 1/8.”

He saw the bonds going home in the 102½ bid area.

Performance Food performs well

Also seen doing well was Performance Food Group’s 5½% notes due 2024.

A trader pegged the new issue at 102 bid near the end of the day, well up from the par level at which the Richmond, Va.-based food service distributor’s new issue had priced via its Performance Food Group, Inc. unit.

The trader said that more than $40 million of the notes had changed hands, making the new credit one of the day’s busiest in the junk market.

LifePoint busy, little changed

The trader also saw active dealings in LifePoint Health’s 5 3/8% notes due 2024.

He said that more than $40 million of those notes had traded by the market close.

However, unlike the Ryerson and Performance Food Group issues, he saw the new LifePoint bonds hovering not far from their par issue price, finishing with about a ¼ point gain on the session.

Traders meanwhile did not immediately report any initial aftermarket dealings in the new Cheniere 7% senior secured notes due 2024, which priced at par late in the session.

Wednesday deals trade actively

The traders said that Wednesday’s new issues were being actively traded, with AES’ 6% notes due 2026 doing particularly well.

The Arlington, Va.-based global power producer’s quickly shopped $500 million offering had priced late in the day on Wednesday and was not seen immediately trading around.

When it hey finally moved into the aftermarket on Thursday morning, a trader saw the bonds initially around 100 5/8 bid; he saw the notes get as good as 101 7/8 during the session, before falling back to a 100¾ to 101 bid range by the end of the day.

A second trader saw the bonds going out at 101, on volume of more than $40 million, putting the credit high up on the day’s Most Actives list.

Yet another trader quoted them at 100 7/8 bid, 101 ¼ offered.

Teleflex’s 4 7/8% notes due 2026 were trading between 100 3/8 and 101 bid, a trader said, although he noted that “most of the activity was in the morning.”

The Limerick, Pa.-based medical products and services provider’s $400 million of bonds had priced at par on Wednesday in a quick-to-market offering.

But while the bonds racked up more than $26 million of volume during the session on Thursday – on top of the more than $60 million that had changed hands in initial dealings on Wednesday – the trader said that only a couple of those large-sized transactions went off in the afternoon, in a 100½ to 100¾ bid context.

Another market source quoted them going home at 100 5/8 bid.

Wednesday’s other deal – the $500 million drive-by offering from Penske Automotive Group, a Bloomfield Hills, Mich.-based operator of numerous car and truck dealerships in the United States and overseas – was seen by a market source ending the day Thursday at 100¼ bid, which he called a gain of 1/8 point on the session, with around $23 million traded.

“The good news is they didn’t trade below par,” said another trader, who located the car dealerships’ bond parked in a narrow range around 100¼, up a little from their par pricing level.

Indicators move higher

A trader said that “my head is spinning from all the new-issues,” and added that trading in those new or recently priced names was pretty much the market focus on Thursday.

Statistical market performance measures turned higher across the board on Thursday, after being mixed on Wednesday. It was the second stronger session in the last three trading days.

The KDP High Yield Daily Index notched its third straight gain; rising by 14 basis points, exactly matching the size of Wednesday’s advance, to end at 67.43. That was the index’s sixth upturn in the last 11 sessions; on Tuesday, it had snapped a six-session losing streak with an 8 bps gain.

Its yield came in by 4 bps on Thursday to 6.23%, its third straight tightening; it had also come in by 6 bps on Wednesday, after having been unchanged on Monday and widening out for four consecutive sessions before that.

The Markit Series 26 CDX North American High Yield Index moved up by 3/32 bid to close at 102 13/32 bid, 102 7/16 offered, bouncing back after having lost 3/16 point on Wednesday. Thursday’s gain was the index’s third in the last four sessions.

The Merrill Lynch North American High Yield Master II Index posted its third straight winning session, advancing by 0.051%, following Wednesday’s 0.286% rise. Before those gains, it had suffered five successive losses.

Thursday’s upside move raised the index’s year-to-date return to 6.99%, up from 6.935% on Wednesday. The cumulative return still remains below last Monday’s close of 7.398%, the peak level for the year so far.

© 2015 Prospect News.
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