Upsized Exela megadeal prices, as do CSVC, Ascend and Kinross; Hecla, Venator on tap

By Paul Deckelman and Paul A. Harris

New York, June 28 – For a second consecutive session, a trio of junk issuers priced new deals on Wednesday, syndicate sources said.

A total of $1.815 billion of such paper got done, up from the $1.2 billion that had priced during Tuesday’s session.

Exela Technologies had the big deal of the day, pricing $1 billion of six-year secured notes after that deal was upsized and underwent other revisions.

Capital Services did $515 million of eight-year notes, while Ascend Learning, LLC had a $300 million eight-year transaction.

Canada’s Kinross Gold Corp. priced an upsized and split-rated $500 million of 10-year notes. That issue was heard to have actively traded in the secondary realm.

The sources meantime were looking forward to pricings on Thursday from the likes of Hecla Mining Co., Venator Materials plc and Commercial Metals Co.

Secondary market traders meantime saw dealings in Tuesday’s issues from NFP Corp., Aker BP and Melco Resorts & Entertainment Ltd.

And they saw oil and natural gas credits like California Resources Corp. once again firmer, as crude prices rose for a fifth straight session Wednesday.

Statistical market performance measures were mixed for a second consecutive session on Wednesday; they had turned mixed on Tuesday, after having been higher across the board on Friday and again on Monday. Before that, the indicators had been mixed last Thursday, following two straight downside sessions.

Exela prices $1 billion

Three issuers brought straight-out junk deals on Wednesday. All three priced at the conclusions of roadshows.

Exela Technologies priced an upsized $1 billion issue of six-year first priority senior secured notes (B3/B+) at par to yield 10%.

The issue size was increased from $525 million, as proceeds were shifted to it from a withdrawn $300 million offering of seven-year unsecured notes and a downsizing of the concurrent bank loan to $350 million from $525 million.

The yield printed 87.5 basis points beyond the wide end of final yield talk in the 9% area. That talk had been upwardly revised from earlier yield talk of 7¼% to 7½%.

RBC was the left bookrunner. Credit Suisse, Natixis and KKR were the joint bookrunners.

Proceeds will be used for the creation of the company through the merger of Quinpario Acquisition Corp. 2, SourceHOV LLC and Novitex Holdings Inc.

Capital Services atop talk

Capital Services (CSVC Acquisition Corp.) priced a $515 million issue of eight-year senior secured notes (B3/B) at par to yield 7¾%.

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

UBS was the lead left bookrunner. Barclays and Goldman Sachs were the joint bookrunners.

Proceeds, along with borrowings under an asset-based loan facility and letters of credit issued under the ABL, plus equity contributions, will be used to fund the acquisition of international engineering, procurement and construction conglomerate Chicago Bridge & Iron Corp.’s Capital Services Group by Veritas Capital.

Ascend Learning prices tight

Ascend Learning, LLC priced a $300 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 6 7/8%.

The yield printed at the tight end of yield talk in the 7% area.

Barclays was the lead left bookrunner for the acquisition financing deal. BofA Merrill Lynch, Deutsche Bank, Morgan Stanley and RBC were the joint bookrunners.

Kinross upsizes

In a deal that came with one investment grade rating, Canadian gold and silver miner Kinross Gold Corp. priced an upsized $500 million issue of 10-year senior bullet notes (Ba1/BB+/BBB-) at par to yield 4½%.

The issue size was increased from $400 million.

The yield printed at the tight end of the 4½% to 4¾% yield talk. Early guidance was 4¾% to 5%.

With the expectation that the company could become an investment grade credit, the Kinross debt refinancing deal attracted a healthy cross-section of investors including high yield and investment grade accounts, crossover accounts and hedge funds, a trader said, adding that allocations were tough but not horrible.

The deal appeared to be headed out at par ¼ bid, par ½ offered, the source added.

JP Morgan, HSBC, RBC and BofA Merrill Lynch were the joint bookrunners.

The Toronto-based gold and silver mining company plans to use the proceeds, along with available cash on hand, to repay its term loan due August 2020.

Hecla Mining for Thursday

Hecla Mining Co. plans to price a $500 million offering of eight-year senior notes on Thursday, trailing a morning investor call.

BofA Merrill Lynch, ING and Scotia are the joint bookrunners for the debt refinancing deal.

Also expected to price Thursday are a pair of deals that have been on the road through the present week.

Venator Materials plc is in the market with a $350 million offering of eight-year senior notes (B2/BB-), a spinoff deal via left bookrunner Citigroup.

Also from left bookrunner Citigroup, Commercial Metals Co. is expected to price its $300 million offering of 10-year senior notes (Ba2/BB+) on Thursday.

Carrizo for Friday

Carrizo Oil & Gas, Inc. plans to price a $250 million offering of eight-year senior notes on Friday morning.

Again Citigroup is the left bookrunner. BofA Merrill Lynch is the joint bookrunner.

The Houston-based oil and gas exploration, development and production company plans to use the proceeds to partially fund the acquisition of Delaware Basin properties from ExL Petroleum Management, LLC and for general corporate purposes.

Also on Wednesday, Global Ship Lease, Inc. announced that it has launched a $400 million offering of senior secured notes.

The containership charter owner, which is headquartered in the Marshall Islands, plans to use the proceeds to fully redeem its 10% first priority secured notes due 2019 and to repay and terminate its revolving credit facility.

Wagamama prices tight

In the European primary market Wagamama Ltd. priced a £225 million issue of five-year senior secured notes (B2/B) at par to yield 4 1/8%.

The yield printed at the tight end of yield talk in the 4¼% area.

Joint bookrunner Morgan Stanley will bill and deliver. KKR was also a joint bookrunner.

The London-based restaurant chain specializing in Asian cuisine plans to use the proceeds to redeem all of Wagamama Finance plc’s £150 million of outstanding senior secured notes and to pay deferred interest on loan notes.

Tuesday inflows

The daily cash flows of the dedicated high yield bond funds were positive on Tuesday, the most recent session for which data was available at press time, according to a trader.

High yield ETFS saw $193 million of inflows on the day.

Actively managed funds were flat, with $5 million of inflows on Tuesday.

However the dedicated bank loan funds saw outflows, negative-$30 million, on Tuesday.

Exela off highs

In the secondary market, a trader said that the new Exela Technologies 10% first priority senior secured notes due 2023 saw “quite a bit” of trading after having priced at par.

The newly formed transaction processing and technical services company’s paper initially traded in a 100-to-100¼ bid context, he said, “then moved below par” to end trading at 99¾ to 99 7/8 bid.

A second trader also saw them between 99¾ and 99 7/8.

Kinross trades actively

The traders saw brisk activity in the new Kinross Gold 4½% notes due 2027, with one market source estimating that more than $84 million of those bonds had changed hands after the issue priced at par.

He said that bid levels ranged from par to 101, but “the bulk of the trades went off in a narrower context between par and 100 3/8.

A second source saw the bonds between par and 100¼ bid.

NFP holds gains

Among the issues that priced on Tuesday, a trader said that NFP Corp.’s 6 7/8% notes due 2025 traded in a 100 1/8 to 101¼ bid context on Wednesday, on volume of over $28 million.

He said that the New York-based insurance brokerage company’s $500 million deal, a quick-to-market transaction, later narrowed to a range of 100 5/8 to 101 bid.

The notes had firmed to 101 bid in initial trading Tuesday after their par pricing.

Another trader saw the bonds on Wednesday at 100¾ bid.

Among other names which priced during Tuesday’s session, Norwegian energy company AKER BP’s $400 million issue of 6% notes due 2022 firmed to 101 1/8 bid, 101 5/8 offered from their par pricing level.

Hong Kong-based gaming company Melco Resorts’ 4 7/8% notes due 2025 were at 100¾ to 101 bid, after that $350 million add-on to its existing 2025 notes priced back in May had priced on Tuesday at 100¾ bid.

Sirius above issue price

New York-based satellite broadcaster Sirius XM Radio Inc.’s two tranches of new notes continued to trade slightly above the par level at which both tranches had priced on Monday.

Its 3 7/8% notes due 2022 were in a 100 3/8-to-100¾ bid context, with about $6 million traded, while its 5% notes due 2027 ended at 100 7/8 to 101 bid, with over $26 million having moved around.

Energy names firm

A fifth straight day of crude oil priced gains helped high yield oil and natural gas names, traders said.

California Resources Corp.’s sector bellwether 8% notes due 2022 were up around ¼ point at 62 bid, 63 offered, a trader said, with other sector names following similar trajectories.

West Texas Intermediate crude for August delivery rose by 50 cents in NYMEX trading to settle at $44.74 per barrel on Wednesday.

Indicators stay mixed

Statistical market performance measures were mixed for a second consecutive session on Wednesday; they had turned mixed on Tuesday, after having been higher across the board on Friday and again on Monday. Before that, the indicators had been mixed last Thursday, following two straight downside sessions.

The KDP High Yield Daily index saw its first setback Wednesday after three straight advances, retreating by 3 basis points to end at 72.16. The index had jumped by 11 bps on Tuesday, after having gained 7 bps on Monday and 1 bp on Friday. Those gains followed three successive losses, including a 16 bps swoon last Thursday.

Its yield, though, came in for a third session in a row, tightening by 1 bp to finish at 4.96%. It had also declined by 3 bps on Monday and again on Tuesday. The yield had been unchanged on Friday and before that had risen over three straight sessions, including Thursday’s 6 bps widening out.

The Markit CDX Series 28 High Yield index, however, moved up by 5/16 point on Wednesday to go out at 107 3/32 bid, 1087 1/8 offered. It had declined by 3/8 point on Tuesday after three straight sessions before that on the upside including Monday, when it had gained more than 3/32 point.

The Merrill Lynch North American High Yield index posted its fourth successive advance on Wednesday, gaining 0.025%, on top of Tuesday’s 0.078% upturn.

Wednesday’s improvement raised the index’s year-to-date return to 4.867% from 4.841% on Tuesday, although it remained below its high point for the year to date of 5.173%, recorded on June 14.

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