Four issuers price $1.6 billion; new Allison, Callon, IMS better; funds plunge $2.45 billion

By Paul Deckelman and Paul A. Harris

New York, Sept. 15 – The high-yield primary market continued to churn out new deals on Thursday, with four issuers bringing modestly sized single-tranche offerings, all as regularly scheduled forward calendar transactions.

Some $1.6 billion of new U.S. dollar-denominated and fully junk-rated paper came to market from domestic or industrialized-country borrowers during the session, syndicate sources said.

Holding company Camelot Finance SA had the big deal of the day, a $500 million offering of eight-year notes. Proceeds will be used to help fund the leveraged acquisition of Thomson Reuters Corp.’s Intellectual Property and Science (IP&S) business.

A pair of energy operators combined for $700 million of new paper – Callon Petroleum Co.’s $400 million of eight-year bonds and Great Western Petroleum LLC’s $300 million of five-year notes.

Communications satellite company Inmarsat plc sent a $400 million eight-year deal aloft.

Traders said that the new Callon Petroleum paper was among the day’s most active Junkbondland issues, and saw those bonds up at least 1 point from their issue price.

Other new notes seen doing well in the aftermarket, in busy trading, included both of Wednesday’s new issues – automotive drive-train components maker Allison Transmission Inc.’s $1 billion of eight-year notes and medical industry oriented information technology company IMS Health, Inc.’s $1.75 billion of 10-year notes.

Statistical market performance measures turned mixed on Thursday, after having been lower across the board for a second straight session on Wednesday. Thursday marked the second mixed session in the last four trading days.

Another numerical indicator – flows of investor cash into or out of high-yield mutual funds and exchange-traded funds, which are considered a reliable barometer of overall junk market liquidity trends – turned sharply negative this week, more than completely offsetting the modest-sized cash gain recorded last week.

Some $2.453 billion more left those weekly-reporting-only domestic funds in the form of investor redemptions than came into them during the reporting week ended Wednesday—a sharp deterioration from the $610 million net inflow reported last Thursday for the seven-day period ended Sept. 7 (see related story elsewhere in this issue).

Camelot oversubscribed

In Thursday’s primary market Camelot Finance priced a $500 million issue of eight-year senior notes (Caa2/B-) at par to yield 7 7/8%.

The yield on the acquisition-related deal printed 12.5 bps inside of the 8% to 8¼% yield talk.

The deal was said to be three- to four-times oversubscribed, a trader said.

BofA Merrill Lynch, Credit Suisse, Citigroup, Barclays, Goldman Sachs and Guggenheim were the joint bookrunners.

Inmarsat at the wide end

Inmarsat priced a $400 million issue of eight-year senior notes (Ba2/BB+) at par to yield 6½%.

The yield printed at the wide end of the 6¼% to 6½% yield talk, a market source said.

BofA Merrill Lynch, Credit Suisse and JP Morgan were the lead bookrunners.

The London-based mobile satellite communications company plans to use the proceeds to repay approximately $107 million of borrowings on its European Investment Bank and for general corporate purposes.

Callon upsizes

Callon Petroleum priced an upsized $400 million issue of eight-year senior notes (B3/B+) at par to yield 6 1/8%.

The issue size was increased from $350 million.

The yield printed at the tight end of the 6 1/8% to 6 3/8% yield talk.

J.P. Morgan was the lead bookrunner.

The Natchez, Miss.-based independent energy company plans to use the proceeds to repay its second-lien term loan and for general corporate purposes, including for a potential increase in drilling activity.

Great Western comes wide

Great Western Petroleum and Great Western Finance Inc. priced a $300 million issue of 9% five-year senior notes (Caa1/CCC+) at 99 to yield 9.252%.

The yield printed 38 basis points beyond the wide end of yield talk in the 8¾% area.

Credit Suisse, MUFG, Citigroup and RBC were the joint bookrunners.

The Missoula, Mont.-based energy exploration and production company plans to use the proceeds to refinance bank debt and for general corporate purposes.

Ziggo talks €3.14 billion

Netherlands-based Ziggo set price talk on its €3.14 billion equivalent three-part offering of 10-year notes.

The offering features €2,575,000,000 equivalent of senior secured notes (Ba3/BB-) in tranches of dollar-denominated notes talked at 5¼% to 5½% and euro-denominated notes talked at 4% to 4¼%. The secured notes will be issued by Ziggo Secured Finance BV.

Meanwhile Ziggo Bond Finance BV is offering $625 million of senior unsecured notes (B2/B) talked to yield 6% to 6 1/8%.

The deal is set to price Friday, New York time.

The dollar-denominated secured tranche is said to be more than two-times oversubscribed, a trader said, adding that the book on the unsecured tranche is slightly less than two-times over.

Credit Suisse is the left lead bookrunner. ABN Amro, Barclays, BNP Paribas, BofA Merrill Lynch, Credit Agricole, Deutsche Bank, Goldman Sachs, HSBC, ING, JP Morgan, Mediobanca, Nomura, Rabobank and Scotia are joint bookrunners.

The cable operator, which is headquartered in Utrecht, plans to use the proceeds to partially refinance term loans and fund a distribution to shareholders.

Cincinnati Bell talk 7% to 7¼%

Also on deck for Friday, Cincinnati Bell Inc. talked a $425 million offering of eight-year senior notes (B3/B) at 7% to 7¼%.

Talk comes tight to the 7½% initial guidance.

Morgan Stanley, Citigroup and Goldman Sachs are the joint bookrunners.

Intralot

Greece’s Intralot SA is expected to wrap up an investor roadshow for its €250 million offering of five-year senior notes on Friday in Paris.

Presentations took place in London on Thursday, the source added.

J.P. Morgan, SG CIB, BofA Merrill Lynch, Morgan Stanley and Nomura are the joint global coordinators and joint bookrunners.

The Athens-based lottery operator plans to use the proceeds to fund the concurrent tender offer for Intralot Finance Luxembourg SA’s 9¾% senior notes due 2016.

eDreams launches €425 million

eDreams Odigeo announced in a Thursday press release that it has launched €425 million of senior secured notes due 2021.

The Barcelona-based online travel company plans to use the proceeds to redeem Geo Debt Finance SCA’s 7½% senior secured notes due 2018 issued on Jan. 31, 2013, and the Geo Travel Finance SCA 10 3/8% senior notes due 2019 issued on April 21, 2011.

Callon bonds climb

In the secondary market, Callon Petroleum’s 6 1/8% notes due 2024 were one of the standout issues of the day, traders said.

One opined that “they pushed right up” to a 101 to 101¼ bid context after the Natchez, Miss.-based independent oil and natural gas exploration and production company’s deal had priced at par.

A second trader said that more than $90 million of the Callon bonds traded around, pegging them at 101¼ bid.

Traders did not report any initial aftermarket activity on Thursday in the other deals which priced later in the session, from Great Western Petroleum, Inmarsat and Camelot Finance.

Allison trades actively

A trader said that “new issues is again the main theme of the session,” and added that Allison Transmission’s 5% notes due 2024 “had pretty big volume.”

He said that the Indianapolis-based automotive transmission manufacturer’s issue “stayed around 101¼ pretty much the entire day.”

That was up from the par level at which that quick-to-market $1 billion deal had priced on Wednesday after having been upsized from an originally announced $500 million.

A second trader saw the notes at 101 3/8 bid, calling that a gain of 7/8 point on the day.

He said that more than $109 million of the Allison notes had changed hands, topping the junk market’s Most Actives List.

IMS Health issue gains

One of the traders said that Wednesday’s other big deal – IMS Health’s $1.05 billion of 5% notes due 2026 – “were fairly busy,” with over $24 million traded.

He saw the notes move up to a 102¼ to 102¾ bid context, after having traded around 101½ to 102 bid on Wednesday after the regularly scheduled forward calendar issue had priced at par.

A second market source saw the Danbury, Conn.-based company’s new deal up 7/16 point on the day at 102½ bid.

PDC Energy continues rise

Elsewhere, the 6 1/8% notes due 2024 from PDC Energy, Inc. gained 1/8 point on the day for a second consecutive session on Thursday to end at 101 bid, with over $22 million traded.

The Denver-based independent oil and natural gas exploration and production company had priced $400 million of the notes at par in a quick-to-market offering Monday, with aftermarket levels as high as 101½ to 102 bid.

Indicators turn mixed

Statistical market performance measures turned mixed on Thursday after being lower across the board for a second straight session on Wednesday. Thursday marked the second mixed session in the last four trading days.

The KDP High Yield Index saw its fifth straight loss on Thursday, backtracking by 4 basis points to end at 70.11, after having lost 8 bps on Wednesday and nosediving by 22 bps on Tuesday.

The five-session slide left the index well down from last Thursday’s 70.78 close – its year-to-date and 52-week highs.

Its yield meantime rose by 2 bps for a second straight day, to close at 5.40%, its fifth consecutive increase.

But the Markit Series 26 CDX Index posted its first gain after two straight losses, improving by 19/32 to end Thursday at 103 13/32 bid, 103 15/32 offered. On Wednesday, it had lost 1/8 point.

And the Merrill Lynch High Yield Index also rebounded, after having lost four straight days, which followed five consecutive sessions on the upside. It gained 0.02% Thursday, versus Wednesday’s 0.028% downturn.

The gain raised its year-to-date return to 13.943% from 13.92% on Wednesday, although those levels were still well down from last Thursday’s 14.992%, which had been its fourth straight new 2016 peak cumulative level.

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