Genesis Energy, upsized Dynegy and Post deals drive by, trade busily; new Murphy Oil tops actives list

By Paul Deckelman and Paul A. Harris

New York, Aug. 7 – Fresh off last week’s more than $7.5 billion of new issuance – Junkbondland’s biggest primary week seen since the end of May, according to data compiled by Prospect News – the high-yield new deal machine continued to churn onward on Monday, with an additional nearly $2.2 billion of new dollar-denominated paper priced.

Primaryside sources said that all of the day’s new issuance came in the form of opportunistically timed and quickly shopped drive-by transactions brought by issuers seizing the moment to take advantage of favorable market conditions.

Power generating company Dynegy Inc. had the big deal of the day, an upsized $850 million of 8.5-year paper.

Post Holdings, Inc. also upsized its $750 million add-on to its existing 2027 notes that the packaged consumer foods company had sold back in February.

And Genesis Energy LP, a midstream energy pipeline and refining company, capped the day’s new-deal action with $550 million of eight-year notes, the day’s sole deal that was not upsized.

Traders said that all three of the day’s new deals traded actively when they hit the aftermarket, each staying right around their respective issue price. However, the Post offering was well down from where the existing bonds had been trading before the new deal was announced.

Dynegy’s existing paper was meantime mixed in the aftermath of the new deal.

The traders also noted continued heavy volume in the new Murphy Oil Corp. eight-year issue which had priced on Friday, with the notes off slightly on the session.

Several other recent deals – from Charter Communications, Inc., Cornerstone Chemical Co. and United States Steel Corp. – were also seen busy, as new and recently priced issues continued to dominate the junk market’s Most Actives list.

Statistical market performance measures turned mixed on Monday, after having been lower across the board on Thursday and again on Friday, which in turn had followed two consecutive sessions on the upside.

Dynegy upsizes

Three issuers drove through the high-yield new issue market on Monday, as the Aug. 7 week got off with a bang.

Two of the three deals were upsized.

Executions varied, with one deal pricing at the tight end of talk, one coming on top of talk and one pricing at the cheap, or wide end of talk.

Dynegy Inc. priced an upsized $850 million issue of 8 1/8% senior notes due Jan. 30, 2026 (B3/B+) at 99.259 to yield 8¼%.

The deal come on top of talk that specified an 8¼% all-in yield factoring in an original issue discount.

Goldman Sachs was the sole bookrunner.

The Houston-based producer and marketer of electric energy plans to use the proceeds, together with $480 million from sale of Troy and Armstrong plants and $195 million cash on hand, to repay debt. Of the incremental proceeds resulting from the $250 million upsizing of the deal, $200 million will be used to pay down the company's term loan, and $50 million will be used to upsize a concurrent tender offer for notes maturing in 2019.

Post upsizes

Post Holdings, Inc. priced an upsized $750 million add-on to its 5¾% senior notes due March 1, 2027 (B3/B) at 105.5 to yield 4.871%.

The issue size was increased from $500 million.

The reoffer price came at the cheap end of the 105.5 to 106 price talk.

Morgan Stanley, Barclays, BofA Merrill Lynch, Credit Suisse, Goldman Sachs and UBS were the joint bookrunners.

The St. Louis-based consumer packaged goods holding company plans to use the proceeds for general corporate purposes, which could include, among other things, acquisitions, debt repayment, working capital, and capital expenditures. The incremental proceeds resulting from the $250 million upsizing of the deal will be used for general corporate purposes.

Genesis Energy prices tight

Genesis Energy, LP and Genesis Energy Finance Corp. priced $550 million of eight-year senior notes (B1/BB-) at par to yield 6½%.

The yield printed at the tight end of the 6½% to 6¾% yield talk.

Wells Fargo was the left bookrunner. BMO, Deutsche Bank, SMBC Nikko, ABN Amro, BNP Paribas, BofA Merrill Lynch, Capital One, Citigroup, RBC, Scotia and DNB were the joint bookrunners for the acquisition financing.

Tesla starts roadshow

The active forward calendar, nearly empty heading into the past weekend, ballooned to $3.5 billion on Monday as issuers came forward with deals to be marketed by means of roadshows

Tesla, Inc. started a roadshow for a $1.5 billion offering of eight-year senior notes.

The deal comes with initial guidance of 5¼%, according to a trader who added that in addition to traditional high-yield accounts some convertible securities accounts are expected to participate in the deal.

Morgan Stanley, Barclays, BofA Merrill Lynch, Citigroup, Deutsche Bank and RBC are the joint bookrunners.

The Palo Alto, Calif.-based automaker, energy storage company, and solar panel manufacturer plans to use the proceeds to further strengthen its balance sheet during this period of rapid scaling with the launch of its Model 3, and for general corporate purposes.

Parexel pricing this week

Parexel International Corp. is expected to price $720 million of senior notes due 2025 before the end of the present week.

BofA Merrill Lynch is leading the offer, with other syndicate names expected to surface.

Proceeds will be used with $2,365,000,000 of senior secured credit facilities and $2.7 billion of equity to fund the buyout of the company by Pamplona Capital Management LLP and refinance existing debt. Parexel is being bought for $88.10 per share in cash in a transaction valued at about $5 billion, including net debt.

ClubCorp starts roadshow

ClubCorp Holdings Inc. began a roadshow on Monday for a $475 million offering of eight-year senior notes.

The deal is expected to price on Monday, Aug. 14.

Joint bookrunner RBC will bill and deliver for the buyout deal. Citigroup, Barclays, Credit Suisse, Deutsche Bank and Goldman Sachs are also joint bookrunners.

Weekly Homes roadshows $250 million

Weekley Homes, LLC and Weekley Finance Corp. plan to price $250 million of eight-senior senior notes in the middle part of the Aug. 7 week.

Credit Suisse, BofA Merrill Lynch and Wells Fargo are the joint bookrunners for the debt refinancing deal.

TMS starts eight-year deal

TMS International Corp. plans to price a $250 million offering of eight-year senior notes (Caa1/B) in the middle part of the Aug. 7 week.

Credit Suisse, BofA Merrill Lynch and JP Morgan are the joint bookrunners.

The Glassport, Pa.-based provider of mill services for steelmakers plans to use the proceeds to refinance its 7 5/8% senior notes due 2021.

Day’s deals trade actively

In the secondary market, traders saw brisk volume in all three of Monday’s quickly shopped new issues.

A market source said that Houston-based midstream energy master limited partnership Genesis’ 6½% notes due 2025, which had priced earlier in the session, was the most active name among the newbies, with over $45 million having changed hands by the close.

He saw the bonds going out at par, unchanged from their issue price.

The source also said that Post Holdings’ upsized add-on to its existing $750 million of 5¾% notes due in March of 2027 eased slightly from its 105.5 issue price, going home at 105 7/16 bid, on turnover of more than $25 million.

But he noted that such a trading level was down nearly 1¾ points from the levels that those existing notes, sold earlier this year, had been trading at before the add-on offering was announced.

At another desk, a trader said that Dynegy’s big new 8 1/8% notes due in January of 2026 had firmed to 99 5/8 bid, versus their 99.259 issue price.

He saw more than $32 million of those notes having traded.

Dynegy paper mixed

Traders said that the news that Dynegy was doing a big new issue helped to push the company’s existing 7 5/8% notes due 2024 down in active dealings.

“They were off by ¾ point, on decent volume,” one said, seeing the notes ending at 100 3/8 bid.

A second trader saw the paper trading in a par-to-100¾ bid range, which he contrasted to Friday’s 100¾-to-101¼ context, “so they were down about ½ to ¾ point.”

He said that volume in the issue topped $16 million.

However, Dynegy’s existing 7 3/8% notes due 2022 were seen going home up around 5/8 point, at 102 7/8, though on less volume.

Its 6¾%notes due 2019 ended at 103¾ bid, unchanged on the day, with around $2 million traded. The company separately announced that it would tender for up to $1.2 billion of the $2.1 billion currently outstanding (see related story elsewhere in this issue).

Recent deals stay busy

One of the traders opined that “the market was still mostly new-issue-driven. That’s where we’re seeing most of the interest.”

The most actively traded issue of the day was in Murphy Oil’s 5¾% notes due 2025, which he said was finishing “relatively unchanged” at 100¼ bid.

More than $50 million of that paper changed hands.

A second trader, also seeing the notes ending at 100¼, pegged them down ¼ point on the day.

The El Dorado, Ariz.-based independent oil and gas exploration and production company priced its $550 million of notes at par on Friday in a regularly scheduled forward calendar offering.

Thursday’s new deals from Charter Communications and Cornerstone Chemical Co. were also trading actively around.

Stamford, Conn.-based cable, broadband and phone service company Charter’s 5% notes due in January of 2028 gained 3/8 point on the session, a trader said, going home at 100 3/8 bid, while Waggaman, La.-based chemical producer Cornerstone’s 6¾% senior secured notes due 2024 eased by 3/8 point, to 99 7/8 bid, both on around $20 million of volume.

Charter’s quick-to-market $1.5 billion offering had priced at par after that 10.5-year deal was upsized from $1 billion originally.

Cornerstone’s regularly scheduled $450 million deal also priced at par after upsizing from $430 million originally.

Going back a little further, the traders saw U.S. Steel’s 6 7/8% notes due 2027 ease by 1/8 point on Monday to end at 100 7/8 bid, on volume of over $14 million.

The Pittsburgh-based steelmaking giant’s quickly shopped $750 million offering had priced at par last Tuesday.

Indicators turn mixed

Statistical market performance measures turned mixed on Monday, after having been lower across the board on Thursday and again on Friday, which in turn had followed two consecutive sessions on the upside.

The KDP High Yield Daily Index eased by 1 basis point on Monday to close 72.55, its third consecutive loss. It had also retreated by 3 bps on both Thursday and Friday, after having moved up on Tuesday and Wednesday.

Its yield rose by 1 bp to 5.07%, after having been unchanged on Friday; the yield had ballooned out by 9 bps on Thursday.

The Markit CDX Series 28 High Yield Index edged down by 1/32 point on Monday, its third straight setback, to close at 107½ bid, 107 9/16 offered. The index had also lost 1/16 point on Friday and nearly 5/32 point on Thursday; those losses followed three straight improvements.

But the Merrill Lynch North American High Yield Index firmed by 0.019% on Monday, its first climb after having backtracked by 0.032% on Friday and 0.045% on Thursday.

Monday’s firming raised the index’s year-to-date return to 6.171% from Friday’s 6.152% finish, although it was still down from Wednesday’s close at 6.233%, which had been its second straight new 2017 cumulative peak level.

© 2015 Prospect News.
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