Upsized Endo megadeal, CyrusOne add-on, Univar price; new Endo jumps in heavy trading

By Paul A. Harris and Paul Deckelman

New York, June 24 – Endo International plc brought an upsized $1.64 billion eight-year note issue to market on Wednesday, syndicate sources said, clearly the most notable transaction of the session.

The much-anticipated regularly scheduled forward calendar offering from the Irish pharmaceutical company, which is issuing the notes via a trio of financing subsidiaries, was heard by traders to have shot up in price almost from the moment the big deal hit the aftermarket, going out several points over its issue price in very heavy trading.

Endo was the star performer of a session that saw $2.14 billion of new dollar-denominated and fully junk-rated paper come from domestic or industrialized-country issuers in three tranches, more than doubling the $923 million of such paper that had gotten done on Tuesday in two tranches, according to data compiled by Prospect News.

Besides Endo, the syndicate sources said that specialty chemicals distributor Univar Inc. priced $400 million of eight-year notes in a regularly scheduled offering that came too late in the session for much of an aftermarket.

There was also a $100 million add-on to its existing 2022 notes from data centers operator CyrusOne Inc. via a pair of its subsidiaries. The offering was not seen in the aftermarket.

However, there was substantial post-pricing trading activity in some of the other deals that have come to market this week, including the new issues from global heavy equipment manufacturer CNH Industrial NV and metal beverage container manufacturer Ball Corp., as well as last week’s new deal from energy operator Eclipse Resources Corp.

Away from new or recently priced deals, one of the big movers on the session was Getty Images Inc., whose bonds fell in active dealings, on the news that a major provider of photographic images to the picture-distribution company is choosing to end its content-distribution agreement with Getty and will instead sign with one of the latter’s rivals.

Statistical indicators of junk market performance turned mixed on Wednesday for the second time in the past four sessions after having been mostly lower on Tuesday.

Endo upsized and tight

Three issuers priced single-tranche deals amid a steady news flow during Wednesday's primary market session.

The combined take was $2.14 billion.

One of the three deals came as a drive-by.

One deal was both upsized and priced at the tight end of talk. One priced on top of talk. And one came cheap to talk.

Endo International priced an upsized $1,635,000,000 issue of eight-year senior notes (B1/B) at par to yield 6%.

The deal was upsized by $200 million from $1,435,000,000.

The yield printed at the tight end of the 6% to 6¼% yield talk.

Initial guidance had the notes coming with a yield in the low-to-mid 6% context, according to a trader.

The deal, which played to between $9 billion and $10 billion of orders, finished the Wednesday session wrapped around 102, according to a trader who spotted the new Endo 6% notes due 2023 at 101 7/8 bid, 102 1/8 offered.

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

Proceeds, together with the proceeds from new senior secured credit facilities and cash on hand, will be used to fund the acquisition of Woodcliff, N.J.-based Par Pharmaceutical Holdings, Inc., as well as for the repayment of Par’s debt, with any remaining proceeds to be used for general corporate purposes, including acquisitions and debt repayment.

Endo also upsized its concurrent term loan B by $300 million, to $2.8 billion.

The additional proceeds resulting from the upsizings of the notes offer and term loan will be used to redeem the company's 7% senior notes due 2019.

Univar atop talk

Univar priced a $400 million issue of eight-year senior notes (Caa1/B) at par to yield 6¾%.

The yield printed on top of yield talk.

BofA Merrill Lynch, Deutsche Bank, Goldman Sachs, J.P. Morgan, Wells Fargo, HSBC, SunTrust, Morgan Stanley, Barclays, Citigroup and Credit Suisse were the joint bookrunners for the debt refinancing deal.

CyrusOne taps 6 3/8% notes

CyrusOne LP and CyrusOne Finance Corp. priced a $100 million add-on to their 6 3/8% senior notes due 2022 (B1/B+) at 103 to yield 5.717%.

The reoffer price came cheap to price talk in the 104 area.

Joint bookrunner Barclays will bill and deliver. RBC, TD, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan, KeyBanc, Morgan Stanley and SunTrust were also joint bookrunners.

Proceeds will be used to fund the acquisition of Norwalk, Conn.-based data center operator Cervalis Holdings LLC and for general corporate purposes.

TI Automotive downsizes, sets talk

TI Group Automotive Systems, LLC downsized its offering of eight-year senior notes (Caa1/B) to $450 million from $550 million as it shifted $100 million of proceeds to its term loan.

At the same time, the notes were talked to yield 8½% to 8¾%.

Official talk comes well wide of the 7¾% to 8% early guidance, according to a trader.

Books were scheduled to close late Wednesday, and the deal is set to price on Thursday.

Citigroup, JPMorgan, Barclays, Mizuho, Goldman Sachs, Nomura, RBC and UBS are the joint bookrunners.

Upsized Endo dominates market

In the secondary market, the big name of the day was Endo.

The Dublin-based pharmaceuticals manufacturer’s new 6% notes due 2023 – brought to market via the company’s Endo Ltd., Endo Finance LLC and Endo Finco Inc. subsidiaries – “shot up right out of the gate,” one of the traders said, seeing the new issue jump to 101¾ bid just minutes after it had been freed for trading soon after pricing at par.

“It was wrapped around 102,” another trader said, “and volume was active.”

Another trader saw the new bonds move up to a 102-to-102¼ bid context soon after pricing.

By the time the dust had settled, over $191 million of the new notes had changed hands, said a market source, who pegged the issue up by a deuce on the day.

Endo’s existing 5 3/8% notes due 2023 were meantime seen up by ¾ point to 98½ bid on more than $10 million.

Univar, CyrusOne no-shows

The Endo excitement pretty much overshadowed the day’s other two pricings.

Traders did not see Dallas-based data centers operator CyrusOne’s quickly shopped add-on to its 6 3/8% notes due 2022 trading around, likely due to its relatively smallish size of $100 million.

They also didn’t see Univar’s $400 million of 6¾% notes due 2023.

They noted that the Downers Grove, Ill.-based specialty chemical company’s new deal had priced too late in the session for any kind of secondary action.

Recent deals trade actively

While CyrusOne and Univar didn’t immediately make an aftermarket splash, other recently priced issues were seen actively trading around – although at nowhere near the huge volume generated by the new Endo deal.

Tuesday’s new issue from CNH Industrial Capital LLC saw more than $33 million of those 3 7/8% notes due 2018 traded, with one market source seeing them at 100¼ bid, and another at 100 1/8.

That was up from the 99.642 level at which the company – the captive U.S. finance arm of London-based global heavy machinery maker CNH Industrial NV – had priced its quickly shopped $600 million of the notes, yielding 4%. The bonds had come to market too late in the day Tuesday for any trading at that time.

A trader saw Tuesday’s other deal – Summit Materials LLC’s 6 1/8% notes due 2023 – at 101 bid.

The Denver-based building materials company had priced $325 million of those notes at par late in the day Tuesday, after the quick-to-market offering had been upsized from an originally planned $275 million.

A trader saw “a lot” of Ball Corp.’s new 5¼% notes due 2025 trading, the third straight session that those bonds have been on the high-yield Most Actives list.

He saw the notes trading at 99¾ bid, 100 offered.

A second trader saw the Broomfield, Colo.-based beverage can manufacturer’s new notes anchored right at their par issue price, with over $35 million traded.

Ball had priced $1 billion of the notes in a drive-by transaction on Monday.

When they hit the aftermarket, the new bonds were busily traded, with over $56 million of turnover late Tuesday and another $43 million on Tuesday.

Eclipse Resources’ new 8 7/8% notes due 2023 were seen down 5/8 point on Wednesday, at 97 bid, on volume of over $26 million.

The State College, Pa.-based oil and natural gas exploration and production company had priced $550 million of the notes on Friday at 97.905 to yield 9¼% in a regularly scheduled forward calendar offering, after it was downsized from an originally announced $650 million.

Getty gets clobbered

Apart from the new deals, a trader saw Getty Images’ 7% notes due 2020 plunge 8 points on the day to 45 bid, with more than $18 million traded.

He suggested that the bonds of the Seattle-based company – which distributes news photos to print, television and digital media – might be sliding on the news that the prominent entertainment industry daily newspaper Variety has chosen to end the agreement under which it had supplied Getty with photographs from movies, TV shows and other forms of entertainment for re-distribution to other media outlets.

Instead, Variety signed a content-provider deal with Getty competitor Shutterstock Inc.

Indicators turn mixed

Statistical indicators of junk market performance turned mixed on Wednesday for the second time in the past four sessions; they had also been mixed on Friday, then were higher across the board on Monday, followed by a mostly lower session on Tuesday.

The KDP High Yield Daily index fell by 8 basis points on Wednesday to 70.69 after having been unchanged on Tuesday; before that, it had risen over four consecutive sessions.

Its yield, meanwhile, was unchanged for a second straight session, holding steady at 5.6%; on Monday, it had come in by 2 bps, its fourth straight narrowing.

The recently choppy Markit Series 24 CDX North American High Yield index continued to zig zag on Wednesday between gains and losses, as it has been doing for the whole of the past week.

It finished out Wednesday up by 9/16 point at 106 31/32 bid, 107 offered, after having dipped by 3/32 point on Tuesday. Wednesday’s gain was the second such advance in the last three sessions and the third in the last five trading days.

The Merrill Lynch North American Master II High Yield index lost 0.055% on Wednesday, its second successive setback; it had also been down by 0.059% on Tuesday, its first downturn after four straight gains, including Monday’s 0.138% improvement.

The loss lowered its year-to-date return to 3.182% from 3.239% on Tuesday. It also moved further down from the 4.062% reading recorded on May 29, the index’s peak level for the year so far.

© 2015 Prospect News.
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