Transocean, DCP Midstream, Qorvo, Simmons Foods price; SFR Group active; Bombardier better

By Paul A. Harris and Abigail W. Adams

Portland, Me., July 10 – The domestic primary market hopped back into action on Tuesday after a week-long hiatus during the July 4th holiday week.

Four deals brought $1.85 billion into the market in quick-to-market trades.

Transocean Pontus Ltd. priced a $600 million issue of 6 1/8% seven-year senior secured notes (B1/BB-) at 99 to yield 6.39%.

DCP Midstream, LP priced a $500 million issue of seven-year senior bullet notes (Ba2/BB) at par to yield 5 3/8%.

Qorvo, Inc. priced an upsized $500 million issue of 5½% eight-year senior notes.

Simmons Foods, Inc. priced a $250 million issue of first-lien senior secured notes due Jan.15, 2024 (B1/BB-) at par to yield 7¾%.

The forward calendar was also filling in with Magnolia Oil & Gas Operating LLC and Magnolia Oil & Gas Finance Corp. beginning a roadshow in New York and New Jersey on Wednesday for a $400 million offering of eight-year senior notes.

While several of Tuesday’s deals priced late in the session and were not seen trading, DCP Midstream’s new 5 3/8% notes dominated secondary market activity with the notes making gains.

While trading volume picked up in the secondary space, there was little movement in terms of price, a market source said.

However, there have been better buyers over the past two days, the source said.

SFR Group’s junk bonds were again volume leaders in the secondary space although the notes were largely unchanged in the high-volume trading.

Bombardier Inc.’s junk bonds were also on the rise after news broke Jet Air had ordered 60 planes from the aerospace and transportation company.

Transocean drives by

Transocean Pontus Ltd. priced a $600 million issue of 6 1/8% seven-year senior secured notes (B1/BB-) at 99 to yield 6.39% in a quick-to-market Tuesday trade.

The coupon and issue price came on top of talk.

Goldman Sachs & Co. was the left bookrunner. Citigroup Global Markets Inc., Wells Fargo Securities LLC, DNB Markets and Morgan Stanley & Co. were the joint bookrunners.

The issuer, a wholly owned subsidiary of Steinhausen, Switzerland-based offshore driller Transocean Ltd., plans to use the proceeds to make one or more intercompany loans to subsidiary Transocean Inc. (TINC) or other non-Swiss affiliates of TINC, for the purpose of partially financing the construction or acquisition of the Deepwater Pontus, an ultra-deepwater drillship flagged in the Marshall Islands, and to fund the debt service reserve.

DCP Midstream bullet deal

DCP Midstream priced a $500 million issue of seven-year senior bullet notes (Ba2/BB) at par to yield 5 3/8% in a Tuesday drive-by.

The yield printed at the tight end of initial guidance in the 5½% area.

JP Morgan Securities LLC, Barclays, Citigroup Global Markets Inc., Mizuho Securities USA LLC, MUFG, SunTrust Robinson Humphrey Inc. and TD Securities (USA) LLC acted as joint bookrunners.

Proceeds will be used to redeem all of the operating partnership's outstanding 9¾% senior notes due March 15, 2019 and for general partnership purposes including capital expenditures.

Qorvo upsizes

Qorvo priced an upsized $500 million issue of 5½% eight-year senior notes (Ba1/BB+) in a quick-to-market Tuesday trade.

Initial guidance has the deal coming with a yield in the high 5% area, a trader said.

BofA Merrill Lynch was the lead.

The Greensboro, N.C.-based technology company plans to use the proceeds to fund tender offers for its 6 ¾% senior notes due 2023, and up to $150 million of its 7% senior notes due 2025, and for general corporate purposes.

Simmons accelerates timing

Simmons Foods priced a $250 million issue of first-lien senior secured notes due Jan.15, 2024 (B1/BB-) at par to yield 7¾%, also in a quick-to-market Tuesday deal.

The yield printed in the middle of yield talk in the 7¾% area, and inside of initial talk in the low 8% area.

Timing was accelerated. When the deal was announced early Tuesday, it was scheduled to remain in the market until Wednesday.

Wells Fargo Securities LLC was the left bookrunner. BMO Securities was the joint bookrunner.

The Siloam Springs, Ark.-based poultry processor and pet food producer plans to use the proceeds to pay down its existing credit facility and for general corporate purposes including capital expenditures and/or acquisitions.

Magnolia Oil & Gas roadshow

Magnolia Oil & Gas Operating LLC and Magnolia Oil & Gas Finance Corp. plan to start a roadshow in New York and New Jersey on Wednesday for a $400 million offering of eight-year senior notes.

Citigroup Global Markets Inc. is the left bookrunner for the Rule 144A and Regulation S for life offer. Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC are the joint bookrunners.

A high single B to low double B ratings profile is expected.

The Houston-based independent oil & gas company plans to use the proceeds to fund the its business combination with EnerVest, Ltd.’s South Texas division, fund any redemptions of the company’s class A common stock in connection with the combination, and for general corporate purposes.

DCP in demand

DCP Midstream’s new 5 3/8% notes dominated trading activity in the secondary space with more than $77 million of the bonds on the tape by late afternoon.

The notes were seen trading at par 1/8 shortly after freeing for trade and continued to improve as the session progressed. The notes were quoted at par 5/8 bid, par 7/8 offered late in the afternoon, according to a market source.

DCP is a stable credit, a market source said. The strength of the notes in secondary trading was attributed to the strength of the oil and gas sector and the dearth of new issuances.

SFR Group in focus

SFR Group’s junk bonds remained in focus on Tuesday and were among the most actively traded issues of the day although with little movement in price, a market source said.

SFR’s 7 3/8% senior notes due 2026 were quoted at 98½ bid, 99½ offered. They were seen trading at 98¾ with about $28 million of the bonds on the tape.

SFR’s 6% senior notes due 2022 continued to trade on a 102 handle on Tuesday. They were seen trading at 102 5/8 with $24 million of the bonds on the tape.

SFR Group’s junk bonds have zigzagged over the past few months amid speculation Paris-based telecommunications conglomerate Bouygues was eyeing the company for acquisition.

The notes made gains last week after parent company Altice reaffirmed it would not consider the sale of SFR Group.

The notes made further gains on Monday after Altice announced it was shopping a $2 billion eight-year term loan in a refinancing deal. Commitments are due on Thursday, Prospect News reported.

Bombardier gains

Bombardier’s junk bonds were on the rise on Tuesday after news broke JetBlue ordered 60 planes from the aerospace and transportation company in a $5.4 billion deal.

The news came late in the session and the bonds were not active. However, the company’s 6 1/8% notes due 2023 were quoted up about 1 point, a market source said.

They were seen at 101 bid, 102 offered late Tuesday afternoon.

“The news is relatively fresh,” the source said. However, the notes were expected to continue to rise on Wednesday.

Indexes mixed

Three benchmarks for the high-yield secondary market were mixed on Tuesday after all saw gains on Monday.

The KDP High Yield index was up slightly with a 1 basis point gain to close Tuesday at 70.23 with the yield now 5.96%. The index was up 3 basis points on Monday.

While the increases have been slight, the index posted its third consecutive trading day of gains on Tuesday after seeing eight consecutive trading days of losses.

The Merrill Lynch High Yield index rose 15.4 bps on Tuesday with the year-to-date return now 0.476.

The index was up 25.5 bps on Monday.

After spending most of last week in negative territory, the index flipped back to the positive on July 6.

However, the CDX High Yield 30 index was down 11 bps to close Tuesday at 106.6. The index saw large gains over the last two trading days with the index up 28 bps on Monday and 37 bps on Friday.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.