Upsized Restaurant Brands megadeal, Triumph and WPX price; new Dynegy paper busy; Valeant jumps

By Paul Deckelman and Paul A. Harris

New York, Aug. 8 – It was another busy day in Junkbondland on Tuesday, with high-yield syndicate sources seeing a trio of issuers bring $1.95 billion of new dollar-denominated paper to market, on top of the $2.15 billion which had priced on Monday, also in three tranches.

Fast-food eatery operator Restaurant Brands International Inc. had the big deal of the day – an upsized, quick-to-market $1.3 billion offering of secured eight-year notes.

Triumph Group, Inc., a maker of aircraft structures and components, did a regularly scheduled $500 million eight-year forward calendar offering.

And natural gas and oil exploration and production operator WPX Energy, Inc. priced a quickly shopped $150 million add-on to its existing $500 million of 2024 notes.

Traders reported active aftermarket dealings in the new Restaurant Brands and Triumph issues, with not much price movement in the former but solid gains in the latter.

They also saw considerable activity in other recently priced issues, with Monday’s big deal from power generator Dynegy Inc. as the single busiest issue. Monday’s other two new deals, from Genesis Energy LP and Post Holdings, Inc., were also among the day’s Most Active credits, along with names from last week such as Charter Communications, Inc. and Murphy Oil, Inc.

Away from the new deals, Canadian drugmaker Valeant Pharmaceuticals International, Inc.’s bonds were solidly higher across that company’s capital structure, after it reported favorable quarterly results, including continued progress in trying to chop down its sizable debt load.

Statistical market performance measures turned lower across the board on Tuesday after having been mixed on Monday; it was the third lower session in the last four trading days.

Restaurant Brands upsizes

Three issuers priced single-tranche deals on Tuesday, to raise $1.95 billion of proceeds.

Two of the three deals were drive-bys.

One was upsized.

The executions tended to be somewhat less than razor sharp, as two of the deals priced on top of talk while the third came at the wide end.

Restaurant Brands International Inc. priced an upsized $1.3 billion issue of eight-year second lien senior secured notes (B3/B-) at par to yield 5%.

The issue size was increased from $1 billion.

The yield printed at the wide end of the 4 7/8% to 5% yield talk, and on top of initial guidance.

The drive-by debt refinancing deal was playing to $200 million of reverse inquiry, an investor said on Tuesday morning.

JP Morgan, Wells Fargo, Morgan Stanley, RBC and BofA Merrill Lynch were joint bookrunners.

Triumph prices $500 million

Triumph Group, Inc. priced a $500 million issue of eight-year senior notes (B3/B-) at par to yield 7¾%.

The yield printed on top of yield talk in the 7¾% area.

J.P. Morgan and Citigroup were the joint bookrunners for the debt refinancing deal.

WPX Energy tap

WPX Energy, Inc. priced a $150 million add-on to its 5¼% senior bullet notes due Sept. 15, 2024 (B3/B+) at 98.50 to yield 5.509%.

The reoffer price came on top of price talk in the 98.5 area.

The debt refinancing deal, which came as a drive-by, was marketed without a lender call.

Wells Fargo was the left bookrunner. BofA Merrill Lynch, MUFG, Citigroup, Goldman Sachs, J.P. Morgan and RBC were the joint bookrunners.

The Tulsa, Okla.-based natural gas and oil exploration and production company plans to use the proceeds to fund tender offers for portions of the outstanding senior notes due 2020, 2022 and 2023.

TMS talk 7¼% area

Looking ahead, TMS International Corp. talked its $250 million offering of eight-year senior notes (Caa1/B) to yield in the 7¼% area.

Books close at noon ET on Wednesday, and the deal is set to price thereafter.

Credit Suisse, BofA Merrill Lynch and J.P. Morgan are the joint bookrunners.

Cable & Wireless 10-year deal

London-based Cable & Wireless Communications plc plans to price a $700 million offering of senior notes due September 2027 following a Wednesday investor conference call.

Goldman Sachs is the left bookrunner. Barclays, BNP Paribas, BofA Merrill Lynch and Scotia are the joint bookrunners.

Proceeds will be used to refinance debt of subsidiary Columbus International Group Inc. and for general corporate purposes.

Big River Steel starts roadshow

Big River Steel LLC began a roadshow on Tuesday in New York for a $500 million offering of eight-year senior notes (B3/B).

Goldman Sachs is the sole bookrunner.

The roadshow is set to run into the week ahead.

The Osceola, Ark.-based owner and operator of a flat-rolled steel mini-mill plans to use the proceeds, along with a $500 million term loan, an equity contribution and certain other funds, to refinance the substantial majority of its outstanding debt, as well as for general corporate purposes and working capital.

Mixed Monday flows

The daily cash flows of the dedicated high-yield bond funds were mixed on Monday, the most recent session for which data was available at press time, an investor said.

High-yield ETFs sustained $98 million of outflows on the day.

However asset managers saw $30 million of inflows on Monday.

A big win for Triumph

In the secondary arena, traders said that Triumph Group’s new 7¾% notes due 2025 were the standout performers among the day’s new deals, with one trader pegging the new bonds in a 101-to-101½ bid context, while a second also seeing them finish as high as 101½ bid, up from their par issue price.

More than $29 million of the Berwyn, Pa.-based aircraft structures and components manufacturer’s notes changed hands.

Elsewhere among the day’s new deals, a trader said that the big new offering of 5% senior secured notes due 2025 from Restaurant Brands International was active in the aftermarket, but little-changed, price-wise; he saw more than $44 million of the Oakville, Ont.-based Burger King, Popeye’s and Tim Hortons franchise operator’s bonds trading, quoting them at 100 1/8 bid, slightly above their par issue price.

A trader said that WPX Energy’s add-on to its existing 5¼% notes due Sept. 15, 2024 moved up to 99¼ bid, 99½ offered after pricing at 98.5, but he didn’t see too much in the way of volume.

At another desk, the oil and gas operator’s tap was seen trading in a 99¼-to-99¾ bid context.

Dynegy dominates Most Actives list

A market source said that Monday’s quick-to market offering from Houston-based power generating company Dynegy was clearly the day’s most active issue, with over $104 million of those 8 1/8% notes due in January 2026 having traded, nearly twice as much as the next most active credit on the day.

He saw those notes easing slightly to 99½ bid, down around ¼ point on the day.

Dynegy had priced its $850 million issue – upsized from and originally announced $600 million -- at 99.259 to yield 8¼%, and the new note had firmed to around the 99¾ bid neighborhood in active initial aftermarket dealings.

Post, Genesis offerings stay busy

Monday’s other two new deals were also seen actively trading around on Tuesday.

Post Holdings, Inc.’s 5¾% notes due March 1. 2027 were quoted by one trader at 105¼ bid, while a second saw those notes going home at 104 7/8 bid, calling them down 5/8 point on the session, on volume of more than $42 million.

Post, a St. Louis-based maker of breakfast cereals and other packaged consumer foods, had priced $750 million of those notes – upsized from $500 million originally – at 105.5 on Monday to yield 4.871%, in a quickly shopped add-on to its existing $750 million of those notes sold in February of this year.

The notes had traded around that issue price in initial aftermarket dealings – down some 1¾ points from prior levels north of 107 bid at which the original notes had been trading before new of the add-on deal hit the market.

Houston-based midstream limited partnership company Genesis Energy’s 6½% notes were seen unchanged at par on Tuesday, with more than $41 million traded.

A second trader, however, located the bonds in a 100 1/8-to100 3/8 bid context.

Genesis had priced $550 million of those notes at par Monday in a drive-by offering.

Murphy, Charter trade around

Going back a bit, Friday’s offering of 5¾% notes due 2025 from Murphy Oil were seen trading around par on Tuesday, off ¼ point on the day, with around $14 million having changed hands.

The El Dorado, Ariz.-based oil and natural gas E&P company had priced $550 million of those notes at par in a regularly scheduled forward calendar deal on Friday.

Charter Communications’ new 5% notes due in February of 2028 gained ¼ point on Tuesday, a trader said, going home at 100 5/8 point, on some $17 million of turnover.

Stamford, Conn.-based cable, broadband and phone service company Charter’s s quick-to-market $1.5 billion offering had priced at par on Thursday after that 10.5-year deal was upsized from $1 billion originally.

Valeant vaults upward

Away from the new issues, a trader noted that Valeant Pharmaceuticals International’s “earnings looked pretty good,” pushing the Laval, Que.-based drug manufacturer’s several series of bonds solidly higher on the day.

He saw its 6 1/8% notes due 2025 jump by 1¾ point on the day, to 85 ¾, with over $50 million having traded.

Valeant’s 5 7/8% notes due 2023 gained more than 1½ points on the day to close at 86 7/8 bid, on volume of more than $24 million, while its 6 3/8% notes due 2020 likewise firmed smartly to just under 98 bid, on volume of over $14 million.

On their conference call following the release of the quarterly results, company executives said that Valeant is continuing its efforts to chop away at its nearly $30 billion mountain of debt; its chairman and chief executive officer, Joseph D. Papa, declared that recent and anticipated upcoming debt paydowns actually put the company ahead of schedule in meeting its previously announced debt-reduction target of paying down some $5 billion of debt from divestiture proceeds and free cash flow before February 2018. (See related story elsewhere in this issue).

Indicators turn lower

Statistical market performance measures turned lower across the board on Tuesday after having been mixed on Monday; it was the third lower session in the last four trading days.

The KDP High Yield Daily Index nosedived by 11 basis points on Tuesday, ending at 72.44, its fourth straight loss; on Monday, it had eased by 1 bp, after having retreated by 3 bps on both Thursday and Friday.

Its yield rose by 3 bps, to 5.10%, its second consecutive widening; it had also risen by 1 bps on Monday, after having been unchanged on Friday. The yield had ballooned out by 9 bps on Thursday.

The Markit CDX Series 28 High Yield Index fell by nearly ¼ point on Tuesday, finishing at 107 9/32 bid, 107 5/16 offered, its fourth successive setback, having also edged downward by 1/32 point on Monday, by 1/16 point on Friday and losing nearly 5/32 point on Thursday; those losses followed three straight improvements.

And the Merrill Lynch North American High Yield Index retreated by 0.067% on Tuesday, in contrast to Monday’s 0.019% advance; Tuesday was its third downturn in the last four sessions.

That cut the index’s year-to-date return to 6.101% from Monday’s 6.171%. It also remained down from last Wednesday’s close at 6.233%, its 2017 year-to-date peak level.

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