Energizer, TDC price; Calpine active; Intelsat backs off gains; $232 million exits funds

By Paul A. Harris and Abigail W. Adams

Portland, Me., June 21 – A busy Thursday session in the high-yield new issue market saw a pair of high profile dual-currency deals price.

Energizer Holdings Inc. priced $1.25 billion equivalent of eight-year senior notes (B2/BB-) in two tranches.

Copenhagen-based TDC A/S priced about €1.4 billion equivalent of five-year senior notes (B3/B-/B-) in two tranches.

Both were heard to have gone well, a New York-based bond trader said.

Energizer’s dollar-denominated tranche dominated trading activity in the secondary space with the notes seen almost 2 points above their issue price.

While not as active, TDC’s dollar-denominated notes were also performing well in the secondary market and were seen more than 1 point above their issue price.

In the European market, Telecom Italia Mobile priced a €750 million issue, International Game Technology plc priced a €500 million issue and Caixa Geral de Depositos SA priced a €500 million issue.

Friday also promises to be a busy day of new issue activity with dollar-denominated deals from Baffinland Iron Mines Corp., Teekay Offshore Partners LP and PHI, Inc. expected to price as well as a dual-currency deal from Spain’s Cirsa Gaming Corp. SA.

LGI Homes, Inc. announced plans to start a roadshow on Friday for a $400 million offering of eight-year senior notes (S&P: BB-), which is expected to run through June 28.

Meanwhile in trading, Calpine Corp.’s 5¼% senior notes due 2026 were active and up about ½ point on Thursday.

Intelsat Luxembourg SA’s 8 1/8% senior notes due 2023 remained active in the secondary space although the notes were down slightly after a more than 4 point gain on Wednesday.

Even with the price of West Texas intermediate crude oil for August delivery largely flat on Thursday, California Resources Corp.’s 8% senior notes due 2022 dropped 1 point.

It was unclear whether the drop was in anticipation of OPEC’s pending decision regarding oil production levels or due to a general heaviness in the market, a source said.

High-yield mutual funds and exchange-traded funds – considered a reliable barometer of overall junk market liquidity trends – saw $232 million of cash exit in the week to June 20, according to fund-flow statistics generated by AMG Data Services Inc.

Energizer prices tight

Energizer Holdings priced $1.25 billion equivalent of eight-year senior notes (B2/BB-) in two tranches.

Issuing vehicle Energizer Gamma Acquisition, Inc. priced $500 million of notes at par to yield 6 3/8%. The yield printed at the tight end of yield talk announced in the 6½% area and at the tight end of initial guidance of 6½% to 6¾%.

Energizer Gamma Acquisition BV priced €650 million of notes at par to yield 4 5/8%. The yield printed at the tight end of yield talk that was set in the 4¾% area and tighter than initial guidance of 4¾% to 5%.

Joint bookrunner Barclays will bill and deliver for the acquisition financing deal.

TDC prices dollars, euros

Copenhagen-based TDC priced €1.4 billion equivalent of five-year senior notes (B3/B-/B-) in two tranches.

The buyout deal featured €1.05 billion of notes which priced at par to yield 7%. The yield printed in the middle of the 7% area yield talk.

In addition, TDC priced $410 million of notes at par to yield 9 3/8%. The yield printed in the middle of yield talk and slightly wide of initial talk in the low 9% area.

Joint global coordinator Deutsche Bank will bill and deliver.

TIM prints at 2 7/8%

Telecom Italia Mobile priced a €750 million issue of 2 7/8% long seven-year senior notes (Ba1/BB+/BBB-) at par to yield 2.876%, or a 226.1 basis points spread to mid-swaps.

The yield printed at the tight end of initial price talk in the 3% area. The spread to mid-swaps came tight to spread talk in the 237 bps area.

The quick-to-market deal played to €1.2 billion of orders.

Joint bookrunner Banca IMI will bill and deliver. Barclays, BNP Paribas, HSBC, SG CIB and UniCredit were also joint bookrunners.

International Game prices

International Game Technology priced a €500 million issue of senior secured bullet notes due July 15, 2024 (Ba2/BB+) at par to yield 3½%.

The yield printed inside of initial price talk set in the 3¾% area.

Joint lead bookrunner BNP Paribas will bill and deliver. Banca IMI, Mediobanca and UniCredit were also joint lead bookrunners. Credit Suisse and ING were joint bookrunners.

The London-based manufacturer of gaming machines plans to use the proceeds to fund tender offers for its 4 1/8% senior secured notes due 2020 and its 4¾% senior secured notes due 2020.

Caixa Geral’s 10-year deal

Also in a Thursday drive-by, Portugal’s Caixa Geral priced a €500 million issue of 5¾% 10-year senior subordinated tier 2 notes (expected ratings B2/B+).

Final price talk was 5¾% to 5 7/8%. Initial price talk was in the high 5% area.

Orders for the deal were in excess of €750 million, a source said.

Joint bookrunner Credit Suisse will bill and deliver. BNP Paribas, BofA Merrill Lynch, CaixaBI, Credit Agricole CIB and UniCredit were also joint bookrunners.

Busy Friday

Five tranches – four dollar deals and one euro tranche – are expected to clear before the weekend.

On Thursday, Baffinland Iron Mines talked a $550 million offering of eight-year senior secured notes (Caa1/B-) to yield 8¾% to 9%.

Official talk comes in line with initial price talk in the high 8% area to 9%, a trader said.

Books close at 10 a.m. ET Friday and the deal is set to price thereafter.

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

Also on Friday, one more high-profile dual-currency deal is expected to price.

Spain’s Cirsa Gaming is in the market with a €1.56 billion equivalent three-part seven-year senior secured notes offer (B2/expected B+).

The deal features euro-denominated floating-rate notes with initial guidance of Euribor plus 525 bps, euro-denominated fixed-rate notes with initial guidance in the 6% area and dollar-denominated fixed-rate notes with initial guidance in the 8% area.

Elsewhere, Teekay Offshore Partners is in the market with a $500 million offering of five-year senior notes (Caa2/B/B). Initial guidance is in the low to mid 8% area.

PHI was expected to wrap up a roadshow on Wednesday for its $500 million offering of five-year senior secured notes (B3/B/B+). Initial talk is in the mid 8% area to 9%.

LGI Homes roadshow

LGI Homes plans to start a roadshow on Friday for a $400 million offering of eight-year senior notes (S&P: BB-).

An investor conference call is scheduled to take place on Monday.

The roadshow wraps up on Thursday, June 28.

Deutsche Bank is leading the debt refinancing deal.

And a save-the-date memo went out on Thursday for a euro-denominated deal from a credit from the chemicals sector. A European pre-deal roadshow starts Monday. Active bookrunner Barclays will bill and deliver. Citigroup is also an active bookrunner. HSBC is a passive bookrunner.

New paper

Energizer’s dollar-denominated tranche dominated activity in the secondary space after breaking for trade.

The new 6 3/8% notes due 2026 were seen trading between par ¼ and 102 on Thursday, a market source said.

The 6 3/8% notes were seen at 101 ¾ bid, 102 offered late in the afternoon with more than $129 million of the bonds on the tape.

“They’ve traded well,” a market source said.

TDC’s dollar-denominated tranche was less active after freeing for trade with only $13 million of the bonds on the tape.

However, TDC’s 9 3/8% notes due 2023 were also trading well above their issue price. The notes were changing hands between 101 and 101 3/8, a market source said.

The new paper was strong in a secondary market that has had no deals to trade this week prior to Thursday.

“It’s about time we had a couple of deals,” a market source said.

Intelsat backs off

Intelsat’s 8 1/8% senior notes due 2023 remained active in the secondary space. However, the notes were backing off their large gains from Wednesday.

The 8 1/8% notes were down about ½ point on Thursday to 81¼ after rising more than 4 points on Wednesday.

The other notes in the structure were largely unchanged, a market source said.

Intelsat “has been on a tear over the past two months,” a market source said.

After a steady rise, the 8 1/8% notes jumped 4½ points on Wednesday alone.

The pull-back on Thursday was most likely the result of holders cashing in on some profits, the source said.

Calpine active

Calpine’s 5¼% senior notes due 2026 were active in the secondary space with more than $27 million of the bonds on the tape by late afternoon.

The notes were up about ½ point to trade just south of 95, according to a market source.

Calpine is the largest generator of electricity from natural gas and geothermal resources in the United States and is integrating renewable energy sources such as wind farms into its power production capabilities.

California Resources drops

While Calpine was active and seeing gains, California Resources 8% senior notes due 2022 dropped about 1 point.

The notes closed the day at 89 after closing Wednesday at 90.

The market was heavy on Thursday and it was unclear if the drop was due to the general tone of the market or in anticipation of OPEC’s pending decision related to oil production levels, a market source said.

The price of West Texas intermediate crude oil for August delivery was largely flat on Thursday at $65 with no large price swings, the source said.

In terms of what the outcome of the OPEC meeting will mean for the energy sector, “there may be some increased volatility” if production levels increase, a market source said. “But we’ll just have to wait and see.”

Indexes down

Benchmarks for the high-yield secondary market were flat to down on Thursday after all saw gains on Wednesday.

The KDP High Yield index was flat on Thursday at 70.81 with the yield also flat at 5.75%. The index was up 3 basis points on Wednesday.

The Merrill Lynch High Yield index saw losses on Thursday. The index was down 7.1 bps with the year-to-date return now 0.601%. The index was up 10.6 bps on Wednesday.

The index broke into positive territory on June 5 for the first time since May 15 and has remained there since.

The CDX High Yield 30 index saw the most significant losses on Thursday. The index was down 25 bps to close the day at 106.47.

The index was up 4 bps on Wednesday after a 31 bps drop on Tuesday and a 10 bps drop on Monday.

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