Restructured Ascent megadeal, B&G price to break primary drought; new notes firm smartly; oils up

By Paul Deckelman and Paul A. Harris

New York, March 29 – The high-yield primary market’s three-session vacation from pricing any new dollar-denominated junk bonds came to an abrupt, but not unexpected, end on Wednesday.

High-yield syndicate sources said that $2 billion of new dollar fully junk-rated paper got done – the first such pricings seen in Junkbondland since last Wednesday, when an upsized $2.68 billion of new notes priced in two tranches.

The big deal of the day was energy operator Ascent Resources Utica Holdings, LLC’s $1.5 billion of five-year notes. The deal had been expected to price possibly as early as this past Monday, but got hung up for another two days before finally emerging at a far fatter yield than originally expected, with certain covenant changes agreed to and a planned second tranche of eight-year notes ultimately abandoned.

B&G Foods, Inc. – known for such iconic brands of packaged-food products as Green Giant, Cream of Wheat and its eponymous line of jarred pickles – did $500 million of eight-year notes.

Traders said that the new Ascent Resources notes shot up by several points when they hit the aftermarket, on decent-sized initial volume.

They also quoted the new B&G bonds having moved up as well.

And there was continued investor interest in some of the recently priced new issues, including the two-part transactions from containers manufacturer BWAY Holding Co. and from precious and industrial metals miner First Quantum Minerals Ltd.

Away from the issues which have already priced, primaryside sources were looking ahead to a likely pricing of eight-year notes Thursday by Exterran Corp., a provider of equipment and services to the energy industry.

Outside of the new-deal realm, some of the names from that energy sector, such as California Resources Corp., MEG Energy Corp. and EP Energy Corp., were solidly higher on Wednesday, in line with a sharp rise in crude oil prices.

Statistical market performance measures were stronger for a second consecutive session on Wednesday; they had turned higher on Tuesday after having been lower on Monday and higher last Friday.

Ascent restructures

Two issuers brought a combined three dollar-denominated tranches on Wednesday, raising an overall total of $2 billion.

Ascent Resources Utica Holdings, LLC priced $1.5 billion of five-year senior notes (B3/B-) at par to yield 10%.

Previously in the market as a two-tranche debt refinancing deal, a proposed tranche of eight-year notes was withdrawn, and the entire $1.5 billion amount was consolidated into the single tranche.

The yield printed on top of final yield talk. However talk on the five-year notes widened steadily and significantly from early guidance of 7½% to 7¾%, sources said.

There are also covenant changes, sources said.

JP Morgan, Barclays, BMO, Credit Suisse, Goldman Sachs and Natixis were the joint bookrunners.

B&G Foods prices tight

B&G Foods, Inc. priced a $500 million issue of eight-year senior notes (B3/B+) at par to yield 5¼%.

The yield printed at the tight end of the 5¼% to 5½% yield talk.

Barclays was the lead left bookrunner. BofA Merrill Lynch, RBC, BMO, Credit Suisse and Deutsche Bank were the joint bookrunners for the debt refinancing deal.

Exterran talk 8% to 8¼%

Exterran Corp. talked a $300 million offering of eight-year senior notes (B3/B+) to yield 8% to 8¼%.

Books were scheduled to close Wednesday, Thursday morning for West Coast accounts, and the deal is set to price thereafter.

Wells Fargo is the left bookrunner. Credit Agricole, Citigroup and RBC are the joint bookrunners.

Loxam upsizes, restructures

In the European primary market Paris-based equipment rental company Loxam SAS launched and priced an upsized €850 million amount of high-yield notes in a restructured three-part deal.

The deal, upsized from €810 million, was restructured with the addition of a second tranche of secured notes.

It included €300 million of five-year senior secured notes, introduced in the restructuring, which priced at par to yield 3½%.

In addition, €300 million of seven-year notes priced at par to yield 4¼%.

As originally structured the deal had a single seven-year secure tranche sized at €560 million, with early guidance of 4¼% to 4¾%.

Away from the secured portions of the deal, a €250 million tranche of eight-year senior unsecured notes priced at par to yield 6%. Initial guidance on the unsecured notes was 6¼% to 6¾%.

Joint bookrunner Deutsche Bank will bill and deliver. Credit Agricole, Natixis and SG were also joint bookrunners.

Proceeds will be used to repay the bridge facility related to the acquisition of England-based equipment rental company Lavendon Group and to pay directly for the remaining shares of Lavendon, plus costs related to the acquisition.

Saipem prints at 2¾%

Italian oilfield services provider Saipem SpA priced a €500 million issue of five-year fixed-rate notes (Ba1/BB+) at par to yield 2¾%.

The yield printed on top of final yield talk, which was tightened from earlier guidance in the 3% area.

The deal was priced on the investment grade desk.

Barclays, BNP Paribas, Citigroup, HSBC, JP Morgan and UniCredit managed the sale.

Nexans prints at 2¾%

Nexans SA priced a €200 million issue of non-callable seven-year fixed notes (BB) at par to yield 2¾%.

The yield printed inside of the 3% initial guidance.

Joint bookrunners HSBC and SG CIB were the global coordinators. BNP Paribas and Santander were also joint bookrunners.

The Paris-based manufacturer of copper and optical fiber cable products plans to use the proceeds to refinance debt.

Mixed Tuesday flows

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

High-yield ETFs saw $159 million of inflows on the day, according to an investor.

However actively managed funds sustained $135 million of outflows on Tuesday.

And in a rare occurrence, dedicated bank loan funds saw negative daily flows on Tuesday.

The loan funds saw $35 million of outflows on the day.

New notes move up

When the new Ascent Resources 10% notes due 2022 were freed for secondary dealings, traders saw the new bonds up sharply from their par issue price – a function of both their fat coupon and the lack of any new paper over the previous several sessions.

One trader saw the new notes finishing at 102 bid, without initially seeing any offered levels.

A second said that over $23 million of those new notes had changed hands, getting as good as 103¼ bid before going out somewhat below that peak level, at a 102½ to 102¾ bid context.

Another source pegged the Oklahoma City-based oil and natural gas producer’s bonds around 102¾ bid, 103¼ offered.

A trader meantime saw Parsippany, N.J.-based food products producer B&G’s new 5¼% notes due 2025 at a mid-point of 100¾ bid.

However, later in the session, he saw those notes as having improved to 101¼ bid.

Recent deals stay busy

Wednesday’s market saw continued brisk activity in some of the recent new issues.

One was last week’s $2.68 billion two-part offering from BWAY Holding, an Atlanta-based producer of rigid metal and plastic containers.

A trader said that its 5½% senior secured notes due 2024 was up 1/16 point, at 100 25/32 bid, with over $12 million traded.

The other half of that deal – its 7 ¼% senior unsecured notes due 2025 – firmed by ½ point, to an even par level, on volume of over $13 million.

That regularly scheduled forward calendar deal was enlarged from an originally planned $2.63 billion, with both tranches – the $1.48 billion secured piece and the $1.2 billion unsecured tranche – pricing at par last Wednesday.

Going back a little further, a trader saw Toronto-based copper, nickel, gold and zinc miner First Quantum Minerals’ 7¼% notes due 2023 ½ point better at 100½ bid, with over $14 million traded, while its 7½% notes due 2025 were also ½ point better, at par bid, with over $13 million having changed hands.

That $2.2 billion deal was enlarged from $1.6 billion originally, as both $1.1 billion tranches priced at par back on March 16.

Energy names gain

A surge in oil prices was seen pushing energy names up on Wednesday.

California Resources’ 8% notes due 2022 ended up a deuce on the day at 81 bid, a trader said, while Canada’s MEG Energy 6 3/8% notes due 2023 were 1½ points better, at 87¾ bid.

EP Energy’s 8% notes due 2025 gained more than 1¾ points to close at just under 92¼ bid.

Indicators stay higher

Statistical market performance measures were stronger for a second consecutive session on Wednesday; they had turned higher on Tuesday after having been lower on Monday and higher last Friday.

The KDP High Yield Daily index jumped by 16 basis points on Wednesday to end at 71.56, its second straight gain. It had also risen by 4 bps on Tuesday, after having been unchanged on Monday. The index had been lower for most of last week, including four straight losses.

Its yield came in by 4 bps, to 5.38%, its fourth consecutive tightening, including Tuesday’s 2 bps narrowing.

The Markit CDX Series 27 High Yield index was better for a second day in a row in Tuesday, ending at 107 1/16 bid, 107 3/32 offered, a gain of nearly 9/32 point on the session. On Tuesday, it had moved up by more than 5/16 point. On Monday, it had turned southward after two straight sessions on the upside before that.

The Merrill Lynch High Yield index also rose for a second successive session on Wednesday, ending up 0.365%, on top of Tuesday’s 0.272% upturn. The index had retreated by 0.85% on Monday.

The latest improvement lifted the index’s year-to-date return to 2.363% from Tuesday’s 1.946%.

It was the index’s first time back above the psychologically potent 2% level since March 8, when it closed at 2.156%, only to slide below 2% subsequently.

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