Ball Corp., AerCap megadeals drive by; Williams, Energy Transfer gyrate on takeover offer

By Paul A. Harris and Paul Deckelman

New York, June 22 – The high-yield primary market opened a new week on Monday with a pair of quick-to-market megadeals.

Metal packaging producer Ball Corp. priced $1 billion of 10-year notes; the new bonds were actively traded in the aftermarket around their issue price.

Later on in the session, Netherlands-based aircraft leasing company AerCap Holdings NV did a $1 billion two-part offering consisting of five- and seven-year notes, which did not see any immediate aftermarket action.

In the secondary market, traders saw generally firm levels, though no huge volume, on some of the new issues that priced last week, including the bonds from Eclipse Resources Corp., Hologic Inc. and Tribune Media Co.

Away from the deals that have already priced, primary market sources said more concrete information about pharmaceuticals company Endo International plc’s upcoming $1.435 billion bond deal emerged.

Perhaps inspired by the big AerCap bond deal, sector peer Intrepid Aviation Group Holdings, LLC began shopping a $125 million two-year issue around to potential investors.

In other news, traders saw sizeable price movements in the split-rated notes of energy pipeline and infrastructure operators Williams Cos., Inc. and Energy Transfer Equity, LP after Energy Transfer made a takeover offer for Williams, which the latter company rejected.

Statistical indicators of junk market performance were higher across the board on Monday after having been mixed on Friday.

AerCap upsizes

Two drive-by issuers brought a combined three tranches of notes, raising an overall total of $2 billion during Monday's session in the high-yield primary market.

One of the two issuers upsized its offering.

Two tranches priced at the tight ends of talk, while the third priced on top of talk.

Amsterdam-based AerCap Holdings priced an upsized $1 billion amount of non-callable senior notes (Ba2/BB+/BB+).

A $500 million tranche of five-year notes priced at par to yield 4¼%, at the tight end of yield talk in the 4 3/8% area; early guidance was 4 3/8%.

A $500 million tranche of seven-year notes priced at par to yield 4 5/8%, at the tight end of yield talk in the 4¾% area; early guidance was in the 4 7/8% area.

The deal was upsized from $800 million.

Joint physical bookrunner Deutsche Bank will bill and deliver. Credit Suisse and Goldman Sachs were also joint physical bookrunners.

Barclays, BofA Merrill Lynch, Citigroup, Credit Agricole, J.P. Morgan, Mizuho, Morgan Stanley, RBC, UBS and Wells Fargo were passive bookrunners.

The aircraft leasing company plans to use the proceeds for general corporate purposes.

Ball Corp. drive-by

Ball Corp. priced $1 billion of non-callable 10-year senior notes (Ba1/BB+/BB+) at par to yield 5¼%.

The yield printed on top of yield talk, and also on top of preliminary guidance, market sources said.

BofA Merrill Lynch was the left bookrunner. Deutsche Bank, Goldman Sachs, KeyBanc, Mizuho and Rabo were the joint bookrunners.

The Broomfield, Colo.-based packaging company plans to use the proceeds to repay borrowings under its revolver, with any remaining proceeds to be used for general corporate purposes.

Endo details

Endo International set an eight-year maturity, with three years of call protection, for its $1,435,000,000 offering of senior notes (B1/B).

Early guidance has the acquisition deal coming together with a yield in the low-to-mid 6s, according to a trader.

A roadshow was scheduled to begin on Monday in New York.

Joint bookrunner Barclays will bill and deliver. Deutsche Bank, Credit Suisse and Citigroup are also joint bookrunners.

Intrepid Aviation two-year deal

Intrepid Aviation Group Holdings is roadshowing a $125 million offering of non-rated two-year senior notes that are expected to price during the present week via Jefferies.

The Stamford, Conn.-based commercial aircraft leasing company plans to use the proceeds for general corporate purposes including the purchase of aircraft.

Mixed flows

Cash flows of the dedicated high-yield funds were mixed on Friday, the most recent session for which data was available at press time, according to a market source.

High-yield exchange-traded funds saw a sizable $474 million inflow. Asset managers, meanwhile, saw $15 million of outflows.

Dedicated loan funds saw $5 million of outflows on Friday, the source added.

On Monday, a trader speculated that “ETFs must have had some inflows, because they were all-in buying this morning.

“Obviously, all of the ETFs are up today with the stock market up.

“We saw some small selling from managed accounts.”

Ball bonds busy

Among specific credits, Ball Corp.’s new 5¼% notes due 2025 were the busiest purely junk-rated issue trading around on Monday, a trader said. He saw the metal soda, juice and beer can maker’s new paper at par, right where they had priced, with over $56 million of the notes changing hands.

Another trader quoted the bonds right around the par level, “right around issue,” going home around 99 7/8 bid, 100 1/8 offered.

He added that with Treasury notes taking a pounding on investor optimism over a possible solution – temporary or otherwise – to Greece's debt crisis, coupled with better-than-expected U.S. existing home-sales data, “the 10-year notes had a huge move today, down over 1 point. So I think that’s pretty good pricing for these guys [i.e., Ball] – and we’ll probably get a little bit of a bounce tomorrow and it will be par bid.”

AerCap a secondary no-show

Traders did not see any immediate aftermarket activity in either of the two new tranches of notes from AerCorp due to the lateness of the hour at which the bonds priced.

Recent deals holding their own

Among recently priced junk issues, a trader saw Eclipse Resources’ 8 7/8% notes due 2023 off ¼ point at 97¾ bid, with volume a busy $35 million plus.

At another desk, a trader pegged the bonds around 97¼ bid, 98 offered.

Yet another trader saw the bonds in that same zone, asserting that “those traded a little better today” after having been offered at 97¾ going out on Friday.

“And they firmed up a little bit this morning, with the market a little bit better.”

The State College, Pa.-based oil and natural gas exploration and production company priced a downsized $550 million of the notes on Friday at 97.903, yielding 9¼%. The notes priced as a regularly scheduled forward calendar offering after the issue was downsized from $650 million originally.

Hologic’s 5¼% notes due 2022 were “trading a little better,” one of the market sources said, seeing them going home at a 101 3/8-to-101 5/8 bid context, up from 101 1/8 to 101¼ on Friday, “so it’s a little better.”

The Bedford, Mass.-based medical products company priced $1 billion of the notes at par on Thursday in a regularly scheduled deal.

And that trader also said that Tribune Media’s 5 7/8% notes due 2022 were sticking in a 101¼-to-101¾ bid context, “and that probably covers it.”

The Chicago-based television broadcasting and digital media company priced $1.1 billion of the notes on Wednesday at par in a scheduled forward calendar deal – though not before the transaction was restructured, with a planned 10-year tranche dropped in favor of just the seven-year paper. It was also upsized from an originally announced $1 billion.

Williams, ETE bonds move around

A trader said that apart from new or recently priced issues, the Junkbondland secondary market was fairly quiet on Monday.

However, there was considerable activity seen in the bonds of Williams Cos. and Energy Transfer Equity, after Energy Transfer made an unsolicited $48 billion bid for fellow pipeline operator Williams, which the latter company rejected. Williams said it would explore other possible strategic options.

Tulsa, Okla.-based Williams’ split-rated (Baa3/BB+/BBB-) 5¾% bonds due 2044 tumbled more than 5 points on the day, a trader said, falling to just under 94 bid, on volume of more than $48 million.

Its 4.45% notes due 2024 slid by 2 3/8 points to 97½ bid, with over $34 million traded.

Dallas-based Energy Transfer’s 5½% notes due 2027, however, gained 1 1/8 points to end at 101½ bid, with over $16 million having changed hands.

Indicators turn better

Statistical indicators of junk market performance were higher across the board on Monday after having been mixed on Friday for the third time the previous four trading days.

The KDP High Yield Daily index was up by 6 basis points on Monday to end at 70.77, its fourth consecutive gain. On Friday, it had jumped by 12 bps.

Its yield came in by 2 bps, ending at 5.6%. It was the fourth straight narrowing, on top of Friday’s 4 bps yield decline.

The Markit Series 24 CDX North American High Yield index gained 17/32 point on Monday to finish at 106 7/16 bid, 106 9/16 offered. That was its first gain after a loss, with the index down by 1/32 point on Friday. It was also the index’s second gain in three sessions and third gain in the last five.

The Merrill Lynch North American Master II High Yield index improved by 0.138% on Monday, on top of a 0.153% rise on Friday. Monday’s improvement was its fourth straight advance, and lifted its year-to-date return to 3.3% from 3.157% on Friday. However, it remained well down from the 4.062% reading, the index’s peak level for the year so far, recorded on May 29.

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