Charter, Terex, William Lyon Homes drive by; new Silversea surges; Clayton Williams busy on acquisition news

By Paul Deckelman and Paul A. Harris

New York, Jan. 17 – The high yield market got back to work on Tuesday without missing a beat after a long holiday weekend

Primary activity – which had been intense last week – continued at a healthy clip, as more than $2 billion of new U.S.-dollar-denominated and fully junk-rated paper came to market from a trio of domestic issuers doing opportunistically timed and quickly shopped transactions.

Cable and broadband provider Charter Communications, Inc. had the big deal of the day, a $1 billion offering of 10-year notes via a pair of financing subsidiaries.

Traders said those new Charter notes moved slightly above their par issue price in initial aftermarket dealings.

Terex Corp., a manufacturer of construction cranes and vehicles and other materials handling equipment, priced an upsized $600 million of eight-year notes.

Builder William Lyon Homes, Inc. rounded out the day’s new-deal action with a $450 million offering of eight-year notes.

In the secondary market, traders saw considerable activity in the new eight-year secured notes that luxury cruise ship operator Silversea Cruise Holding Ltd. had priced in an upsized transaction on Friday.

They also saw continued busy dealings in Thursday’s deals from diversified holding company Icahn Enterprises LP, Canadian oil-sands producer MEG Energy Corp. and communications infrastructure provider Zayo Group, LLC.

Away from the new issues, market sources said that oil and natural gas producer Clayton Williams Energy Inc.’s bonds were busy on the news that the company will be acquired by larger sector peer Noble Energy, Inc., although they said the notes were already trading around their expected takeout level.

Statistical market performance measures turned lower across the board on Tuesday after having been higher all around on Friday; it was the indicators’ third downside session in the last four trading days, including two straight weaker sessions last week, which had been the first such overall negative performances in a month, since Dec. 14.

Charter $1 billion drive-by

The primary market got to its feet quickly following the extended holiday weekend in the United States.

Three issuers came with drive-by deals, raising a total face amount of $2.01 billion.

Charter Communications, Inc. priced a $1 billion issue of senior notes due May 1, 2027 (B1/BB+/BB+) at par to yield 5 1/8%.

The yield came on top of both price talk and initial guidance.

BofA Merrill Lynch was the left bookrunner for the debt refinancing deal. Citigroup, Wells Fargo, Credit Suisse, Deutsche Bank, UBS and Goldman Sachs were the joint bookrunners.

Terex upsizes

Terex Corp. priced an upsized $600 million issue of eight-year senior notes (BB) at par to yield 5 5/8%.

The issue size was increased from $550 million.

The yield printed at the tight end of yield talk in the 5¾% area.

Deutsche Bank, Barclays, Commerzbank, Credit Agricole, Credit Suisse, HSBC and Morgan Stanley managed the sale for the debt refinancing and general corporate purposes deal.

William Lyon at a discount

William Lyon Homes, Inc. priced a $450 million issue of 5 7/8% eight-year senior notes (B3/B-) at 99.215 to yield 6%.

The yield came tight to initial guidance in the low 6% area.

Citigroup, JP Morgan and Credit Suisse were the joint bookrunners for the debt refinancing deal.

Pattern Energy roadshow

Pattern Energy Group Inc. began a roadshow on Tuesday in New York for a $350 million offering of seven-year senior notes.

Morgan Stanley, BofA Merrill Lynch, BMO, Citigroup and RBC are the joint bookrunners.

The San Francisco-based independent power company plans to use the proceeds to partially fund its acquisition of the Broadview Wind power facility in New Mexico and to pay down revolver borrowings related to the acquisition of the Armow Wind power facility in Ontario, with any balance to be used to finance other green projects.

Smurfit prints at 2 3/8%

In Europe, Smurfit Kappa Group plc priced a €500 million issue of seven-year senior notes (Ba1/BB+/BB+) at par to yield 2 3/8%.

Credit Agricole, Danske Bank, HSBC and NatWest managed the sale.

The paper-based packaging company, which has headquarters in Dublin and New York, plans to use the proceeds to repay debt, including using about €260 million to reduce borrowings under its term loan facilities and €220 million to repay borrowings under its existing securitization facilities, with any remaining proceeds to be used for general corporate purposes.

Groupama tier 2 deal

France-based insurance company Groupama SA priced €117 million of new money non-callable 10-year tier 2 senior subordinated notes (Fitch: BB+) at par to yield 6%.

The new money notes were part of the €650 million of the notes that came in an exchange for Groupama's deeply subordinated notes issued in 2007 and a portion of its senior subordinated notes issued in 2009.

Citigroup, Credit Agricole, HSBC, J.P. Morgan (bill and deliver), Morgan Stanley and SG were the joint lead managers.

Hapag-Lloyd eurobonds

Hapag-Lloyd AG announced in a Monday press release that it intends to sell €150 million of five-year eurobonds.

Berenberg, Deutsche Bank and Credit Suisse are managing the sale, according to a market source.

The notes (Caa1/B-) come with two years of call protection, the source said.

The Hamburg, Germany-based container shipping company plans to use the proceeds to fund the early redemption of its dollar-denominated notes due in autumn 2017 and for general corporate purposes including further repayment of debt.

Charter bonds slightly firmer

Traders said that Charter Communications’ new 5 1/8% notes due 2027 – which came to market via subsidiaries CCO Holdings, LLC and CCO Holdings Capital Corp. – moved up slightly in initial aftermarket dealings from the par level at which the Stamford, Conn.-based cable and broadband provider’s quick-to-market megadeal had priced.

Two traders at separate shops saw the notes trading in a par to 100¼ bid context.

A third trader said the new Charter bonds were “not going anywhere,” pegging them between par and 100 3/8 bid.

William Lyon edges up

A market source said that the new William Lyon Homes 5 7/8% notes due 2025 had moved slightly higher once the Newport Beach, Calif.-based builder’s bonds were freed for secondary dealings.

He placed the notes at 99 5/8 bid, versus their 99.215 issue price.

Volume was more than $12 million.

Smooth sailing for Silversea

Friday’s offering of 7¼% senior secured notes due 2025 from Monaco-based luxury cruise line operator Silversea Cruise Holding Ltd. was seen motoring merrily along at considerably higher levels on Tuesday.

A trader saw the bonds between 101¾ and 102¾ bid during the day, but said they were going home at the higher end of that range, quoting their final prints in a 102 3/8 to 102¾ bid context.

Another trader quoted the bonds at 102½ bid, which he said was “up around 1¼ points or so.”

A market source said that more than $24 million of those notes had changed hands during Tuesday’s session, on top of the more than $20 million that had traded on Friday.

The source said that the new notes had moved up to around the 101½ mark on Friday when the paper began trading after that $550 million regularly scheduled forward calendar offering – doubled in size from an originally announced $275 million – had priced at par.

Recent deals stay busy

Going back a little further, the traders saw continued brisk activity in some of the new issues that had priced during Thursday’s $4 billion-plus bond barrage, the biggest new-deal session in more than two months.

That session’s biggest offering – the upsized $1.195 billion two-parter from New York-based diversified holding company Icahn Enterprises and its Icahn Enterprises Finance Corp. subsidiary – continued to trade actively on Tuesday.

A trader said that Icahn’s 6¾% notes due 2024 were little changed at 99 7/8 bid, with over $26 million traded, putting the credit high up on the day’s Most Actives list.

Icahn’s new 6¼% notes due 2022 were likewise steady at 100½ bid, on volume of over $16 million.

The company had priced $500 million of the former notes and $695 million of the latter notes at par in a regularly scheduled transaction.

Zayo Group’s 5¾% notes due 2027 eased by 1/8 point on the day, but their 101¾ bid close remained well up from the par level at which the Boulder, Colo.-based telecom infrastructure provider had priced its quickly shopped $800 million offering on Thursday.

Tuesday’s trading volume was more than $17 million.

And MEG Energy’s 6½% senior secured notes due 2025 gained ¼ point to end at 101 7/8 bid Tuesday, with over $14 million traded.

The Calgary, Alta-based oil sands energy producer had priced a $750 million drive-by deal at par Thursday to yield 6.501%.

Clayton Williams active on acquisition

Away from the new deals, the news that Noble Energy will acquire Clayton Williams Energy in a $2.7 billion cash-and stock deal caused some activity in Midland, Texas-based Clayton Williams’ 7¾% notes due 2019, with around $15 million having traded.

But a trader, who saw the bonds in a 101¼ to 101 5/8 bid context, opined that “the price didn’t change much – they were already trading above par,” suggesting that investors had figured the company for a takeover candidate, sooner or later, and had priced that in.

A second trader called the bonds unchanged at just over 101½ bid.

The deal calls for Houston-based Noble to assume some $500 million of Clayton Williams net debt, valuing the transaction at some $3.2 billion.

Indicators move lower

Statistical market performance measures turned lower across the board on Tuesday after having been higher all around on Friday; it was the indicators’ third downside session in the last four trading days, including two straight weaker sessions last week, which had been the first such overall negative performances in a month, since Dec. 14.

The KDP High Yield index was unchanged on the day, ending at 72.07, right where it had finished on Friday, when it had improved by 5 bps – its first gain after four straight losses. The index was not published on Monday due to the market close for the Martin Luther King Jr. holiday.

For a second consecutive session, its yield was unchanged at 5.14%, marking its third unchanged session in the last five trading days. On Thursday, it had come in by 2 bps.

The Markit Series 27 CDX index saw its second straight loss, ending down 3/32 point at 106 7/32 bid, 106 ¼ loss. On Monday, when the index had published despite the market close, it had declined marginally. On Friday, it had snapped a six-session losing streak, firming by more than1/16 point.

And the Merrill Lynch High Yield index posted its first loss on Tuesday after two straight gains, easing by 0.001%. It had risen by 0.069% on Friday, bouncing back from two straight losses, and had firmed by 0.053% on Monday, when it published despite the market close.

Tuesday’s loss cut its year-to-date return to 1.126% from Monday’s 1.127% – its new peak level for the year so far, surpassing the former zenith of 1.081% set last Tuesday.

© 2015 Prospect News.
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