Upsized Energy Transfer mega-deal leads primary, CHC Helicopter slates big sale; new bonds up

By Paul Deckelman and Paul A. Harris

New York, Sept. 15 - Energy Transfer Equity, LP announced plans for a $1 billion bond offering early Wednesday - but by the time the dust settled later in the day, the Dallas-based natural gas company's already big deal had nearly doubled in size to $1.8 billion as it priced at par.

Traders said that after the 10-year drive-by offering was freed for secondary dealings the bonds shot up by between 3 and 4 points in brisk trading.

Big as it was, the deal by no means monopolized the attention of primaryside players, who saw a total of five domestic offerings carrying a collective face value of $3.3 billion price. All but Energy Transfer were eight-year notes, including Celanese Corp.'s upsized $600 million transaction, and familiar junk issuer Graphic Packaging International, Inc., with a quickly shopped $250 million tranche. Universal Health Services, Inc. also priced $250 million of 2018 bonds, while Alere, Inc. upsized its deal to $400 million. All except the late-pricing Alere moved up smartly in the aftermarket.

Besides those U.S. dollar-denominated pricings, Canadian manufacturer Armtec Holdings, Ltd. came to market with C$150 million of seven-year notes. Two other Canadian borrowers were meantime heard shopping senior secured U.S. dollar deals around to investors - Newfoundland-based CHC Helicopter SA launching a 10-year, billion-dollar-plus behemoth and Montreal-based papermaker AbitibiBowater Inc. with a $750 million offering of eight-year bonds; both are expected to price next week.

More immediately, price talk was heard Wednesday on several other deals thought likely to price on Thursday or Friday - helicopter operator PHI Inc.'s $300 million of eight-year notes, wine and spirits distributor Beverages & More Inc.'s $125 million serving of four-year senior secured notes and Raam Global Energy Co.'s $150 million issue, also secured.

Energy Transfer sells $1.8 billion

The torrid high-yield primary market saw five issuers, each bringing a single tranche of junk-rated dollar-denominated notes, combine to price $3.3 billion, on Wednesday.

All five tranches priced at par.

Three of the five were upsized.

The most massively upsized deal came from Energy Transfer Equity, which priced a $1.8 billion issue of 10-year senior notes (Ba2/BB-) at par to yield 7½%, on top of the price talk. The size was increased from the original $1 billion.

Credit Suisse, Morgan Stanley, Wells Fargo Securities, Bank of America Merrill Lynch, Citigroup and UBS Investment Bank were the joint bookrunners for the quick-to-market issue.

The Dallas-based oil and gas pipeline company will use the proceeds to repay bank debt.

Celanese upsizes by $200 million

Meanwhile, Celanese US Holdings LLC priced an upsized $600 million issue of eight-year senior notes (Ba3/BB-) at par to yield 6 5/8%, at the tight end of the 6¾% area price talk. It was increased from $400 million.

Bank of America Merrill Lynch and Deutsche Bank Securities were the joint bookrunners for the quick-to-market deal.

The Dallas-based chemical company will use the proceeds for general corporate purposes, including the repayment of debt under its senior credit agreement.

Alere upsizes, tight to talk

Elsewhere, Alere priced an upsized $400 million issue of eight-year senior subordinated notes (B3/B-) at par to yield 8 5/8%, at the tight end of the 8¾% area price talk.

The timing of the transaction was moved ahead by one day. The deal was originally expected to price on Thursday. It was raised from $350 million.

Jefferies & Co., Goldman Sachs & Co. and Citigroup Global Markets Inc. were the joint bookrunners for the deal.

Proceeds will be used for working capital and for general corporate purposes.

Graphic Packaging brings $250 million

Graphic Packaging International priced a $250 million issue of eight-year senior notes (B3/B) at par to yield 7 7/8%, on top of the price talk.

Bank of America Merrill Lynch, JP Morgan, Goldman Sachs & Co. and Deutsche Bank Securities were the joint bookrunners for the quick-to-market debt refinancing deal.

Universal Health at the tight end

Finally, Universal Health Services priced a $250 million issue of eight-year senior notes (B1/B+) at par to yield 7%, at the tight end of the 7% to 7¼% price talk.

JPMorgan and Deutsche Bank Securities were the joint bookrunners for the quick-to-market acquisition financing deal.

Armtec sells C$150 million

Apart from the dollar-denominated market, Canada's Armtec Holdings, Ltd. priced a C$150 million issue of seven-year senior unsecured notes (/B//DBRS BB) at par to yield 8 7/8%, on top of the price talk.

Scotia Capital and TD Securities were the joint bookrunners.

Proceeds will be used for general corporate purposes and to repay Armtec group debt, including a portion of its senior secured debt.

Wyndham brings split-rated $250 million

Meanwhile from the crossover sector, Wyndham Worldwide Corp. priced $250 million of 5¾% split-rated eight-year senior unsecured notes (Ba1/BBB-) at 99.949 to yield 5.76%.

Bank of America Merrill Lynch, Deutsche Bank Securities, J.P. Morgan Securities and RBS Securities ran the books for the debt refinancing deal.

Talking the deals

Apart from the transactions which were completed on Wednesday, the stage was set for a busy Thursday in the primary market.

PHI, Inc. talked its $300 million offering of eight-year senior unsecured notes (B2/) with an 8¾% area yield.

UBS Investment Bank is the bookrunner.

Elsewhere Beverages & More, Inc. talked its $125 million offering of four-year senior secured notes (expected ratings Caa1/B-) with a 9¾% area yield.

Meanwhile timing on the deal was moved ahead. The books close at 8 a.m. ET Thursday, and the deal is expected to price shortly after. Initial timing had the roadshow wrapping up on Monday.

Jefferies & Co. is the bookrunner.

And RAAM Global Energy Co. talked its $150 million offering of senior secured notes with a 12¼% coupon, at a reoffer price of 99.291, and a 12½% yield.

Global Hunter Securities and Knight Capital Markets are the joint bookrunners.

The deal initially hit the market in mid-August as a senior unsecured notes offer, sized at $200 million and talked at the 12½% area.

CHC Helicopter plans $1.1 billion

The forward calendar saw a substantial build out on Wednesday.

CHC Helicopter SA began marketing a $1.1 billion offering of 10-year first-lien senior secured notes (B1//).

An investor call is set for 11 a.m. ET on Thursday.

The offering is expected to price during the Sept. 20 week.

Morgan Stanley, HSBC, RBC Capital Markets and UBS Investment Bank are the joint bookrunners for the debt refinancing.

Evertec roadshow starts Thursday

Meanwhile, Evertec, Inc. will start a roadshow on Thursday for its $220 million offering of seven-year senior notes (expected ratings Caa1/B-).

The deal is expected to price during the week ahead.

Bank of America Merrill Lynch and Morgan Stanley are joint bookrunners for the acquisition financing.

Liberty Tire starts roadshow

Finally, Liberty Tire Recycling began a roadshow on Wednesday for their $200 million offering of six-year senior notes.

The offering is set to price during the week ahead.

Bank of America Merrill Lynch is the bookrunner for the debt refinancing and general corporate purposes deal.

Energy Transfer trades way up

A secondary trader said that "a bunch of new issues broke" in Wednesday's hectic session, and all of them moved up.

The aftermarket star of the session was easily Energy Transfer Equity's $1.8 billion of 7½% notes due 2020. One trader saw the massively upsized mega-deal trading as high as 104 bid, well up from the bonds' par issue price seen earlier in the day.

A second trader exclaimed "wow! That's a big move" in seeing the bonds trading at 103 5/8 bid, 103 7/8 offered, while at another desk, a trader had them doing almost as well, at 103½ bid, 104 offered.

Celanese improves handily

Another Dallas-based issuer, chemical manufacturer Celanese, also got a good reception when its new bonds were freed for secondary action. That $600 million of 6 5/8% notes due 2018 - upsized from the originally envisioned $400 million - was "up a lot" at 101¾ bid, 101 7/8 offered, after having priced at par.

A second market source said the bonds were "up and down," before coming to rest around 102 bid.

Yet another trader saw the bonds break around 101¼ bid but later move up to 101 5/8 bid, 102 offered.

Universal Health levels healthy

A trader saw Universal Health Services' 7% notes due 2018, the first issue to price during the session, trading in the morning around 101 bid, 101½ offered. That was up from the par level at which the King of Prussia, Pa.-based hospital and behavioral health centers operator had priced its $250 million deal.

Later on in the day, he saw those bonds having firmed from the break to around 101 3/8 bid, 102 offered.

A second trader saw the new issue late in the day having tightened to around 101¾ bid, 102 offered.

Graphic Packaging pops up

Late in the session, a trader saw that Graphic Packaging International had priced its $250 million of 7 7/8% notes due 2018 drive-by style, just hours after that transaction had been announced.

He saw the Marietta, Ga.-based packaging maker's new bonds having pushed up to 101 bid, 102 offered, versus their par issue price earlier in the day.

New Ford Credit firms smartly

Tuesday's $1 billion drive-by offering of 5 5/8% notes due 2015 from Ford Motor Credit Co. was "up a boatload," a trader said, quoting those bonds as having "traded up significantly" to a bid level at 100 3/8 - versus the 99.466 at which the Dearborn, Mich.-based automotive lending arm of Number-Two domestic carmaker Ford Motor Co. had priced to yield 5¾%.

He said that "for a $1 billion issue, that's a pretty nice ½ point to 5/8 or ¾ point" rise.

A second trader saw the Ford Credit bonds even better, at levels as high as 101 bid, up as much as 1½ points from Tuesday's pricing.

Yet another, though, had the bonds going out with a more modest gain, at 100¼ bid, 100½ offered.

A market source meantime saw Ford Credit's existing issues mixed the day after that enormous deal.

He saw Ford Credit's 6 5/8% notes due 2017 gyrating around before coming to rest around 106 bid, a gain of 1 3/8 points, on fairly brisk trading. Ford Credit's 7% notes due 2015 were likewise seen ½ point higher, trading above the 106 level. However, the car lender's 7 3/8% notes due 2011 eased by a fraction of a point to finish just under 102 bid.

Parent Ford's issue of 7.45% bonds due 2031 meantime "is something that keeps moving up," a trader declared, seeing them ending at par bid at the end of the day.

Another trader saw those long bonds unchanged on the day at 99½ bid, 100½ offered, and saw Ford domestic arch-rival General Motors Corp.'s benchmark 8 3/8% bonds due 2033 down 3/8 point at 30½ bid, 31½ offered.

Huntsman hangs in at higher levels

A trader said that another Tuesday deal, Huntsman International LLC's 8 5/8% senior subordinated notes due 2021, were trading on Wednesday at 102¾ bid, 103 offered

That was up slightly from Tuesday's aftermarket levels around 102½ bid that the Salt Lake City, Utah-based chemical manufacturer's $350 million issue had risen to after pricing earlier that session at par.

Huntsman's existing 7 3/8% notes due 2015 were seen up a touch at 101 bid.

In that same chemicals space, the trader called PolyOne Corp.'s 7 3/8% notes due 2020 "up a solid 2 points" around the 102 bid level, from the par level at which the Cleveland-based polymer materials manufacturer's $360 million deal - upsized from the originally announced $320 million - had priced on Monday.

He added that "everything is up," including other recent new-deal names like Continental Resources, Inc., Chaparral Energy, Inc., B/E Aerospace, Inc. and Inergy, LP/Inergy Finance Corp., each of which had priced on Monday and had then moved up at least a point, or in the case of energy operators Continental Resources and Chaparral, more than 2 points from issue.

Borrowing binge to continue

The trader said that overall, "a lot of the buyside is focused on new issues, seeing what's good and what's bad." He cited such anticipated names as Graham Packaging Co. Inc., which is shopping a somewhat downsized $250 million deal, "so that should be interesting, too."

Another offering which people will be interested in, he said, is PHI's $300 million deal.

"Everybody is focusing on the new issues, and that's where the theme seems to be."

Abitibi unaffected by new-deal news

The announcement that AbitibiBowater had launched its $750 million private offering of eight-year senior secured notes had little or no impact on the company's existing bonds, a trader said.

"That stuff is quoted," he said, "but I'm not seeing activity in that name."

He added that "by the amount [of quotes] I'm seeing here, I would be shocked if there was much trading in it - I'm not even seeing many quotes.

"When you only have a half a page [on Trace] of quotes, it's not an active name."

He said that "a bunch" of the outstanding bonds issued by the old Abitibi Consolidated Inc. before its merger in 2007 with what used to be Bowater Inc. were quoted around 9½ bid, 11½ offered, while the old Bowater bonds were seen around 23 bid, 25 offered.

At another desk, though, the latter's 6½% notes due 2013 were quoted up a point on the day at 23 bid.

Market indicators still strengthening

Away from the new-deal world, a trader saw the CDX North American HY Series 14 index unchanged for a second straight session on Wednesday, as it stayed put at 97 7/8 bid, 98 1/8 offered.

But the KDP High Yield Daily index meantime rose by 11 basis points on Wednesday to finish at 72.76, on top of the 13 bps gain seen on Tuesday. Its yield came in by 4 bps for a second straight session, to close at 7.84%.

The Merrill Lynch High Yield Master II index rose by 0.112% on Wednesday, after having improved by 0.189% on Tuesday. It continued to reach successive new year-to-date 2010 peak levels, ending the day at 10.51%, up from Tuesday's 10.387%, the previous high-water mark for the year.

Advancing issues led decliners for a tenth consecutive session on Wednesday, holding a roughly seven-to-five advantage for a second straight day.

Overall activity, represented by dollar-volume levels, fell nearly 17% on Wednesday from the particularly robust levels seen on Tuesday, when volume more than doubled from the session before.

"The market just felt firm today," a trader said, "with all of these new issues."

He said that there was 'not a ton of secondary trading going on out there, with a lot of buysiders focused on the new-issue market." Spreads, he said, "are continuing to grind tighter in here, and the market "definitely had a firmer tone to it today."

Although new-issuance "remains the most dominant factor in the market place," just as it was on Tuesday and, to a lesser extent, on Monday and last week," he noted the fact that "normally, with new issues, you would see a little bit of selling off in the secondary to make room for the new issues - but there's so much cash still out there that the secondary has not traded off."

Away from the new-issue realm, a trader said that "it seems like some of the stuff is better," but said overall. "it's pretty boring."

He summed up the session by characterizing it as "a lot of nothing."

Paper names pop

Among specific issues having no new-deal connections, NewPage Corp.'s 11 3/8% senior secured notes due 2014 were "up a little bit," a trader said, pegging the Miamisburg, Ohio-based coated-paper manufacturer's paper around 92 bid, "so they moved up a little bit today," - he said it was up as much as 1 point - "with a little more activity in that name."

At another desk, a market source meantime estimated the company's 10% bonds due 2012 had gained more than 2½ points to end just above 48 bid.

Memphis-based rival Verso Paper Co.'s 11 3/8% notes due 2016 were up by 1½ points to nearly the 89 level .

Another sector peer, Cascades Inc.'s 7¾% notes due 2017, were seen trading above 105 bid, up more than a point on the day.

But forest products manufacturer Georgia-Pacific Corp.'s 7.70% notes due 2015 eased by a point, finishing at 109.

Stephanie N. Rotondo contributed to this report

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.