NFP, Melco add-on, Aker price; upsized and revamped Exela deal ahead; new Sirius tranches hugely busy

By Paul Deckelman and Paul A. Harris

New York, June 27 – High-yield issuance continued on Tuesday as a trio of borrowers priced a combined $1.25 billion of new paper.

The sole domestic issuer, insurance brokerage company NFP Corp., priced an unscheduled $500 million of eight-year notes. Traders later heard that new paper quoted a little higher.

Norway’s Aker BP, an energy company, did a $400 million issue of five-year notes, while Hong Kong-based gaming operator Melco Resorts & Entertainment Ltd. brought a $350 million add-on issue to its existing 2025 notes, which had been sold last month.

Both tranches of Monday’s two-part megadeal from satellite broadcaster Sirius XM Radio Inc. were actively traded on Tuesday, and there was some volume as well in Monday’s other new issue, from oilfield services company Weatherford International Ltd.

Apart from the credits that have actually priced, primaryside sources said the three companies combining to form the new transaction processing and tech services company Exela Technologies did some tinkering around with that upcoming secured note issue, dropping a planned tranche of unsecured paper and enlarging the whole package to $1 billion, which could price after the order books close at midday ET on Wednesday.

Away from the new deals, it was another upside day for energy names such as California Resources Corp., EP Energy Corp. and Whiting Petroleum Corp., in line with a fourth consecutive day of gains in world crude oil prices.

Statistical market performance measures turned mixed on Tuesday, after having been higher across the board on Friday and Monday. Before that, the indicators had been mixed last Thursday, following two straight downside sessions.

NFP prices $500 million

In Tuesday's dollar-denominated junk market three issuers priced single-tranche deals to raise a combined total of $1.25 billion.

NFP Corp. priced a $500 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 6 7/8%.

BofA Merrill Lynch, Barclays, JP Morgan Securities LLC, Morgan Stanley & Co., KKR Capital Markets and Jefferies LLC were the joint bookrunners.

The insurance broker plans to use the proceeds, together with proceeds from its incremental senior secured term loan, to prepay $575 million of senior unsecured notes due in 2021 and fund near-term acquisitions.

Aker BP five-year deal

Norwegian energy company Aker BP priced a $400 million issue of five-year senior notes (Ba3/BB+) at par to yield 6%.

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

JP Morgan, Barclays, BNP Paribas, Citigroup, Deutsche Bank and DNB were the bookrunners for the debt refinancing deal.

Melco taps 4 7/8% notes

In a deal with at least one foot planted in emerging markets Melco Resorts & Entertainment Ltd. priced a $350 million add-on to its 4 7/8% senior notes due June 6, 2025 (Ba3/BB-) at 100.75 to yield 4.728%.

The reoffer price came on top of price talk. Early guidance was in the 100.25 area.

Joint bookrunners ANZ and Deutsche Bank were the global coordinators. BOC International, ICBC (Asia) and ICBC Macau were also joint bookrunners.

The Hong Kong-based developer of casinos in Macau and the Philippines plans to use the proceeds to repay in full a $350 million drawdown from its revolving credit facility under the amended and restated credit facilities entered into by Melco Crown (Macau) Ltd., a subsidiary of Melco Resorts Finance, in 2015.

The original $650 million priced at par on May 26.

Exela revamps, hikes talk

Exela Technologies overhauled the bond and bank loan portions of debt financing being put in place for the creation of the company through the merger of Quinpario Acquisition Corp. 2, SourceHOV LLC and Novitex Holdings Inc.

Changes in the debt package have the senior secured notes due 2023 (B2/B+) upsized to $1 billion from $525 million.

Talk on the secured notes increased to the 9% area from previous yield talk of 7¼% to 7½%.

Books close at noon ET on Wednesday, a shift in timing that has the deal in the market one extra day; the previous scheduled close of books was Tuesday morning.

A proposed $300 million tranche of seven-year unsecured notes is withdrawn, with proceeds shifted to the secured notes.

RBC is the left bookrunner for the notes offering. Credit Suisse, Natixis and KKR are the joint bookrunners.

The concurrent bank loan is also downsized to $350 million from $525 million. As with the pulled unsecured notes, proceeds are shifted to the upsized secured notes tranche.

Charter crossover deal

A week after withdrawing its unsecured junk bond deal because the market would not accommodate its price point, Charter Communications, Inc. took its business to the high-grade market, sources say.

Late Tuesday, in a deal run on the investment grade desk, the Stamford, Conn.-based broadband communications firm priced $1.5 billion of senior secured notes in two tranches (Ba1/BBB-/BBB-).

The deal included $1 billion of new long 10-year notes which priced at Treasuries plus 165 basis points, according to a market source. The deal came tight to final spread talk in the 170 bps area and inside of initial guidance in the 180 bps area.

In addition Charter priced a $500 million add-on to its 5 3/8% senior secured notes due 2047 at a 220 bps spread, tight to final talk in the 225 bps area and inside of guidance in the 235 bps area.

The latter issue came in an upsized $1.25 billion deal (from $750 million) on March 30, pricing at 30-year Treasuries plus 235 basis points.

BofA Merrill Lynch and Deutsche Bank Securities Inc. were the active bookrunners.

As with last week's pulled unsecured deal, Charter intends to use the proceeds from the secured notes for general corporate purposes including potential buybacks of the Class A common stock of Charter or common units of Charter Communications Holdings, LLC (see related story in this issue).

Belden upsizes euro deal

St. Louis-based Belden Inc. joined the throng of U.S.-based issuers raising cash in the euro-denominated high-yield market thus far in 2017.

Belden launched and priced an upsized €450 million issue of 10-year senior subordinated notes (Ba3/BB-) at par to yield 3 3/8%.

The issue size was increased from €400 million.

The yield printed tight to the 3½% yield talk.

Deutsche Bank, JP Morgan and Wells Fargo managed the sale.

Proceeds, along with cash on hand if necessary, will be used to fund a concurrent tender offer for any and all of Belden's 5½% senior subordinated notes due 2022, with any remaining proceeds to be used for general corporate purposes.

WFS taps 9½% notes

WFS Global Holding SAS priced a €50 million add-on to its 9½% senior secured notes due July 15, 2022 (B3/B-) at 108.75 to yield 7.389%.

The reoffer price came at the rich end of the 108.5 to 108.75 price talk.

BofA Merrill Lynch and ING managed the sale.

The Paris-based air cargo handler plans to use the proceeds to pay down its credit facility. At the same time, the revolving credit facility is expected to be increased to €95 million from €85 million.

Wagamama talks 4¼% area

Looking to the Wednesday session, Wagamama Ltd. talked its £225 million offering of five-year senior secured notes to yield in the 4¼% area.

The deal is expected to price Wednesday.

Morgan Stanley and KKR are managing the offer.

NFP quoted better

In the secondary market, a market source said that he had seen New York-based insurance brokerage company NFP’s new 6 7/8% notes due 2025 quoted at 101 bid.

That was up from the par level at which those bonds had priced.

Sirius tops Most Actives list

Monday’s big deal from New York-based satellite broadcaster Sirius XM Radio was easily the busiest name of the day, a trader said, noting that its 5% notes due 2027 racked up more than $105 million of volume on Tuesday, while more than $45 million of its 3 7/8% notes due 2022 also changed hands during the day.

He saw the 10-year notes at 100 5/8 bid, calling them up ½ point on the day, while the five-year piece of paper was unchanged at 100¼ bid.

Another trader said that the Sirius bonds “did a little better than they were priced, but didn’t really move up too much, seeing the five-years in a 100 to 100 ¼ bid context, while the 10-years moved around between 100 3/8 and 100½ bid.

Sirius priced $750 million of the five-year paper, upsized from $500 million, and $1.25 billion of the 10-year notes, upsized from $1 billion, in a quick-to-market transaction on Monday.

Weatherford moves up

A trader saw Monday’s other deal – Houston-based oilfield services concern Weatherford International’s $250 million add-on to its existing 9 7/8% notes due in February 2024 – having pushed up to 102¾ bid, 103½ offered in morning trading.

That was up from the 101 level at which that quickly shopped add-on to the existing $540 million of the notes had priced on Monday, yielding 9.657%.

Another trader opined that Weatherford “did well,’ trading as high as around 103 bid in the morning before settling in between 102¾ and 103 bid later on.

He said he did not really see much trading in the issue in the afternoon.

Yet another trader quoted the notes going out at 103, which he called up 1¼ point on the day from initial gains notched in light trading on Monday.

He said Tuesday’s round-lot volume in the credit topped the $23 million mark.

Energy climb continues

A trader noted the “recurring story” from the end of last week and so far this week of mostly firmer oil and gas issues, in line with a continued surge in crude prices on world commodity markets.

He said the bellwether energy sector credit – Los Angeles-based exploration and production company California Resources’ 8% notes due 2022 – had pushed up by 1¾ points on the day to end at 62¼ bid, on more than $29 million of turnover.

Houston-based sector peer EP Energy’s 8% notes due 2025 jumped by 2½ points on the session to 73½ bid, with over $21 million traded, while its 9 3/8 % notes due 2020 were up by just under 1½ points to end at 76 bid, with over $20 million traded.

Denver-based oiler Whiting Petroleum’s 5¾% notes due 2021 gained 1 point to close at 93 bid, on volume of over $10 million.

West Texas Intermediate crude for August delivery rose by 86 cents on the NYMEX on Tuesday, its fourth consecutive gain, settling at $44.24 per barrel, while North Sea Brent crude for August delivery improved by 82 cents in London to end at $46.65 per barrel.

Indicators turn mixed

A trader said that overall, “the day started out with a pretty good tone – but then sort of weakened as things went on.”

Statistical market performance measures meantime turned mixed on Tuesday, after having been higher across the board on Friday and Monday. Before that, the indicators had been mixed last Thursday, following two straight downside sessions.

The KDP High Yield Daily index posted its third straight advance on Tuesday, matching three consecutive losses before that. It shot up by 11 basis points to end at 72.19, after having gained 7 bps on Monday and edging up by 1 bp during Friday’s session. Those gains followed a 16 bps swoon on Thursday.

Its yield came in by 3 bps for a second straight session on Tuesday, matching Monday’s tightening to close at 4.97%. The yield had been unchanged on Friday and before that, had risen over three straight sessions, including Thursday’s 6 bps widening out.

But the Markit CDX Series 28 High Yield index, up for the past three sessions, failed to make it four successes in a row, declining by 3/8 point on Tuesday to go out at 106 25/32 bid, 106 13/16 offered; on Monday, it had risen by more than 3/32 point.

However, the Merrill Lynch North American High Yield index remained on the upside for a third successive session Tuesday, after three sessions in a row before that on the downside. It advanced by 0.078%, on top of improvements of 0.152% on Monday and 0.071% on Friday.

Tuesday’s upturn raised the index’s year-to-date return to 4.841% from 4.759% on Monday, although it remained below its high point for the year to date of 5.173%, recorded on June 14.

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