Ally, Rackspace, split-rated PBF deals price; Veritas out; new Qorvo jumps; TerraForm falls

By Paul Deckelman and Paul A. Harris

New York, Nov. 17 – After taking a one-day hiatus on Monday, the high-yield primary sphere got back into full swing on Tuesday, pricing a trio of deals totaling nearly $1.75 billion.

Lender Ally Financial, Inc. had the big deal of the day, a quickly shopped $750 million offering of 10-year senior subordinated notes, which firmed slightly in the aftermarket from their discounted issue price.

There was also a pair of $500 million transactions, petroleum refiner PBF Holding Co., LLC’s split-rated, quick-to-market eight-year secured notes and cloud computing company Rackspace Hosting, Inc.’s upsized 8.25-year notes, a regularly scheduled forward calendar offering. PBF’s notes were quoted solidly higher in initial aftermarket dealings.

While those three deals got done, another name dropped off the forward calendar. Syndicate sources heard that high tech firm Veritas Technologies Corp.’s planned $2.53 billion multi-tranche, dual-currency deal had been postponed.

Among recently priced issues, Team Health, Inc.’s eight-year notes hung onto the hefty gains they’ve notched since pricing Friday, while Qorvo Inc.’s two tranches of notes, which also priced Friday, shot solidly higher, although on not much volume.

Away from the new deals, alternative energy producers TerraForm Power, Inc. and TerraForm Global, Inc.’s bonds and shares tumbled badly, along with the shares and convertible notes of parent SunEdison, Inc., which fell on the news that several hedge funds have dumped or will dump their SunEdison stakes after disappointing results.

Statistical measures of junk market performance were higher across the board on Tuesday after being mixed on Monday and lower across the board on Friday and Thursday.

Ally prices subordinated deal

The primary market saw three issuers complete single-tranche deals to raise a combined total of $1.74 billion on Tuesday.

Two of the three deals came as drive-bys.

One was upsized.

Two priced at the tight end of talk, while the third – the upsized issue – priced at the wide end.

Ally Financial priced a $750 million issue of 5¾% non-callable 10-year subordinated holdco notes (/BB-/BB) at 99.065 to yield 5 7/8%.

The yield printed at the tight end of the 5 7/8% to 6% yield talk and inside of initial guidance in the 6¼% area, sources said.

The deal size came in at the targeted amount.

The deal was heard to be three-times oversubscribed at one point, a trader said.

Joint bookrunner Deutsche Bank Securities Inc. will bill and deliver for the debt refinancing deal, which priced on the investment-grade desk. Barclays, BofA Merrill Lynch, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were also joint bookrunners.

PBF prices tight

PBF Holding and PBF Finance Corp. priced a $500 million issue of split-rated eight-year senior secured notes (B1/BBB-) at par to yield 7%.

The yield printed at the tight end of the 7% to 7¼% yield talk. Initial guidance was 7¼%, according to a trader.

The quick-to-market deal was marketed by means of one-on-one meetings with investors that took place on Tuesday morning in New York as well as on an investor conference call on Tuesday morning.

Joint global bookrunner UBS Investment Bank was lead left. Deutsche Bank was also a joint global bookrunner.

Barclays, Citigroup, Credit Agricole CIB and Credit Suisse Securities (USA) LLC were joint bookrunners.

The Parsippany, N.J.-based independent petroleum refiner plans to use the proceeds for general corporate purposes including a portion of the purchase price for Exxon Mobil Corp.'s refinery in Torrance, Calif.

Rackspace upsizes

Following the conclusion of its roadshow, Rackspace Hosting priced an upsized $500 million issue of senior notes due Jan. 15, 2024 (Ba1/BB+) at par to yield 6½% on Tuesday.

The deal size was increased from $350 million.

The yield printed at the wide end of the 6¼% to 6½% yield talk.

Morgan Stanley & Co. LLC, Goldman Sachs & Co. and JPMorgan were the joint bookrunners.

The San Antonio-based managed cloud computing company plans to use $140 million of the proceeds to repay all outstanding amounts under its senior revolving credit facility. The remainder of the proceeds will be used for general corporate purposes, which may include share repurchases under its previously announced $1 billion share buyback authorization.

Elsewhere on Tuesday, Veritas Technologies decided to postpone its proposed credit facility and notes offerings due to market conditions.

It is currently anticipated that the debt financing may return to market sometime in the first quarter of 2016.

Mixed flows on Monday

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

High-yield exchange-traded funds saw $27 million of inflows on Monday, the source said, relating information reported by Lipper-AMG.

However, the daily flows of the actively managed funds were negative on Monday at $25 million of outflows.

PBF pops in secondary

In the secondary arena, PBF Holding’s 7% senior secured notes due 2023 were seen by a trader to have moved up to a 100¼-to-101 context after having priced at par earlier in the session.

A second trader pegged the bonds at 100¾ bid, 101 offered.

Ally levels improve

One of the traders quoted Ally Financial’s 5¾% senior subordinated notes due 2025 at 99¼ bid, up from the 99.065 level at which the Detroit-based online banking and auto loan company’s offering had priced.

Another trader saw the bonds at first in a 99-to-99 5/8 bid context before settling in around 99½, but he groused, “How can you make any money doing that?”

The traders meanwhile did not see any immediate aftermarket activity in Rackspace Hosting’s 6½% notes due January 2024.

Qorvo bonds better

Looking at the deals that priced on Friday, a trader said that the new bonds from Qorvo “were trading up pretty good” on Tuesday.

He saw its 6¾% notes due 2023 having moved up to a closing level of 101¾ bid from Monday’s close at par bid, 100½ offered while seeing its 7% notes due 2025 having gotten as good as 102 bid, up from 101 late Monday.

A second trader also saw the 6¾% notes gain 1¼ points on the day to end at 101¾, though he said that volume was light at just $5 million.

He likewise saw the 7% notes up by 1¼ points at 102, with around $4 million having traded.

Qorvo, a Greensboro, N.C.-based technology company, came to market on Friday with $1 billion of new junk paper in a regularly scheduled forward calendar offering, pricing $450 million of the eight-year notes and $550 million of the 10-year notes, both at par.

They had firmed modestly when they were freed for trading on Monday.

Team Health holds gains

Traders also saw some upside activity in Friday’s other new deal, the $545 million of 7¼% notes due 2023 that Team Health had gotten done.

But the gains were small since those bonds had already firmed smartly immediately after pricing on Friday and had added slightly to those gains on Monday.

One of the traders saw the bonds at 102 bid, 102¼ offered.

A second saw them going out at 102 bid, calling that a 1/16 point gain on the session, on volume of $14 million.

The Knoxville, Tenn.-based provider of outsourced physician staffing solutions for hospitals had priced its notes at par Friday in a regularly scheduled forward calendar deals, and the new paper shot right up, gaining almost 2 points in heavy trading of over $53 million, making it the busiest issue that session.

On Monday, the bonds crept up a little from those lofty levels to around 101 15/16 bid, with over $27 million trading hands, once again putting them at the top of the Most Actives list.

TerraForm trades terribly

Away from activity in the new or recently priced deals, one of the traders noted the sharp fall in TerraForm Power’s bonds, with its 5 7/8% notes due 2023 falling by 7½ points to 77½ bid, on volume of over $29 million.

Its 6 1/8% notes due 2025 slid by more than 9 points on the session, closing at 76 bid, on volume of about $10 million.

Sister company TerraForm Global’s 9¾% notes due 2022 were seen off nearly 6 points, ending at 79, though volume in the credit was a light $4 million.

“Those names got hit pretty good,” the trader opined.

The Nasdaq-traded shares of the two Bethesda, Md.-based alternative power producers also got beaten down, with TerraForm Power seen off by $2.81, or 21.40%, ending at $10.32, on volume of 11.4 million shares, or over four times the norm.

TerraForm Global’s stock fell by 88 cents, or 12.94%, closing at $5.92. Volume of 988,000 shares was actually slightly below normal.

The bonds and shares took a nosedive on the news that hedge fund managers were voting with their feet and deserting their common parent company, SunEdison, after the latter’s recent disappointing earnings results. The Maryland Heights, Mo.-based company reported a quarterly loss of 91 cents per share on Nov. 10 – far wider than the roughly 70 cents per share of red ink Wall Street had been expecting.

Hedge fund manager Daniel Loeb's Third Point LLC said in a regulatory filing Friday that it had completely liquidated its position in the company in the third quarter, selling 12.4 million SunEdison shares for $370.9 million.

Hedge fund Greenlight Capital – SunEdison’s biggest single shareholder – said in a regulatory filing that it plans to cut its stake in the underperforming solar power technology company by 25%, or 6.2 million shares, reducing that stake down to 18.6 million shares.

SunEdison’s New York Stock Exchange-traded shares fell by $1.54, or 33.77%, ending at $3.02, on volume of 166.9 million, over four times the usual handle. That in turn hammered down its convertible bonds – such as the 2.75% convertibles due 2021, which fell into the mid-30s from prior levels in the mid-40s.

Firmer tone seen

One of the traders said that “some of the high-beta names such as Frontier Communications Corp. or First Data Corp. were up by about a point or so, generically speaking.”

Stamford, Conn.-based wireline telecom provider Frontier’s 11% notes due 2025 improved by ¾ point on the day, heading home at 99¼ bid, with its volume of $30 million tops in Junkbondland.

Atlanta-based electronic transaction processor First Data’s 7% notes due 2023 finished at 99 7/8 bid, up around ½ point on the day, with over $28 million having traded. Its 5¾% notes due 2024 did even better than that, finishing up 1¼ points on the day at 98½ bid, with over $9 million having changed hands.

But apart from those kind of big names, the trader said, “overall, the market was unchanged to up maybe ¼ point.”

However, he added that “we did see some of the names that had been punished lately catch a bid today.”

Indicators get better

Statistical measures of junk market performance were higher across the board on Tuesday after having turned mixed on Monday and been lower all around on Thursday and again on Friday. It was the second higher session for the indicators in the last five trading days.

The KDP High Yield Daily index snapped a seven-session losing streak on Tuesday, rising by 15 basis points to go home at 66.08, its first gain since Nov. 3. It had dropped by 12 bps on Monday, 27 bps on Friday and 33 bps on Thursday.

Its yield came in by 5 bps on Tuesday to end at 6.84%, its first narrowing after seven straight sessions during which it had widened, including Monday, when it had edged up by 2 bp.

The Markit Series 25 CDX North American High Yield index posted its second straight gain, firming by 3/32 point to finish at 101 27/32 bid, 101 7/8 offered, after having gained 15/32 point on Monday, its first advance after two straight losing sessions, one unchanged day and five more losses.

The Merrill Lynch North American Master II High Yield index gained 0.354% on Tuesday, its first such rise after three straight setbacks, including Monday’s 0.198% retreat, which had also been its eighth such downturn in the last nine trading days.

The index’s year-to-date loss declined to 1.467% from Monday’s 1.815% deficit.

Stephanie N. Rotondo contributed to this review

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