Primary heats up with deals from Bombardier, HD Supply, Halcon; Crown comes back for more

By Paul Deckelman and Paul A. Harris

New York, Jan. 9 - The high-yield primary sphere, which had been muddling along at a moderate pace since the start of the new year, with just a couple of deals priced, shifted into high gear on Wednesday, pricing nearly $4 billion of new dollar-denominated, purely junk-rated paper via a quartet of quick-to-market transactions.

The big deal of the day was an upsized $2 billion offering from Canadian transportation equipment manufacturer Bombardier Inc.

That deal had originally been shopped around the market late last year, but was pulled due to market conditions.

Another big deal came from tool and building products distributor HD Supply Inc., which brought an upsized $950 million of subordinated bonds to market.

Halcon Resources Corp. also upsized a bond deal, with a $600 million add-on offering to an existing tranche of the oil and gas operator's paper.

And the issuer behind the year's very first junk bond deal, packaging maker Crown Holdings Inc., made a return visit to the market with a $200 million add-on to last week's 10-year deal.

All the deals priced too late in the session for meaningful aftermarket activity.

Traders meantime saw such recently priced transactions as Windstream Corp. and MarkWest Energy Partners LP continuing to pretty much hold their own in secondary dealings.

Away from the new deals, steelmaker ArcelorMittal SA's various bond issues were the most actively traded junk paper, most seen up several points on the company's plan to sell convertible notes and stock and use the proceeds for debt paydown.

Statistical performance indicators remained mixed, but mostly higher.

Bombardier back, doubles size

The primary market continued to get in gear on Wednesday.

The most active session thus far in 2013 saw four issuers bring a total of five tranches to raise a combined $3.75 billion.

Three of the four issuers massively upsized their overall deal sizes.

Also, three of the four issuers came with a.m.-to-p.m. drive-bys, the other deal having only been in the market overnight.

After pulling a $1 billion deal last November due to unsatisfactory market conditions, Bombardier returned on Wednesday and doubled the transaction's size.

The company priced $2 billion of non-callable senior notes (Ba2/BB) in two tranches.

The deal featured a $750 million tranche of three-year notes which priced at par to yield 4¼%, on top of yield talk, and a $1.25 billion tranche of 10-year notes which priced at par to yield 6 1/8%. The 10-year notes came in the middle of the 6% to 6¼% yield talk.

Before doubling in size, the deal had been announced on Wednesday morning as a $1 billion three-part offering. A proposed tranche of non-callable eight-year notes was withdrawn.

The timing of the transaction was moved ahead, as it was originally announced as business expected to price on Thursday or Friday.

J.P. Morgan was the bookrunner for the general corporate purposes deal.

HD Supply beats talk

HD Supply priced an upsized $950 million issue of seven-year senior subordinated notes (Caa2/CCC+) at par to yield 10½% on Wednesday, according to a syndicate source.

The yield printed 12.5 basis points inside of the low end of price talk that had been set in the 10¾% area.

HD Supply increased the amount from an original $650 million.

The par-pricing deal traded to 103½ bid, 104 offered after breaking, according to an investor.

Bank of America Merrill Lynch, Goldman Sachs, Barclays, J.P. Morgan, Credit Suisse, Deutsche Bank, Wells Fargo and UBS were the joint bookrunners for the debt refinancing deal.

Halcon upsizes

Halcon Resources priced an upsized $600 million add-on to its 8 7/8% senior notes due May 15, 2021 (B3/CCC+) at 105.

The reoffer price came on top of price talk that was reduced when the deal was upsized from $400 million.

The yield to worst is 7.787%

Wells Fargo and RBC were the joint global coordinators.

J.P. Morgan, Barclays and Goldman Sachs were joint bookrunners.

Proceeds will be used to repay bank debt and for general corporate purposes, including capital expenditures.

Crown taps 4½% notes

Crown Americas LLC and Crown Americas Capital Corp. IV priced a $200 million add-on to their 4½% senior notes due Jan. 15, 2023 (Ba2/BB) at par to yield 4½%.

There was no official price talk.

Deutsche Bank ran the books.

Proceeds, together with cash on hand, will be used to repay bank debt.

The Wednesday add-on took the overall issue size to $1 billion. The original $800 million issue, which priced at par on Jan. 3, was the inaugural high-yield deal of the new year.

Fresenius sets 3% to 3¼% talk

An active European high-yield market generated a decent Wednesday news flow.

Credit Suisse and Deutsche Bank are on almost all the euro deals, one London-based senior syndicate banker noted, and added that they seem to be making sure the deals come in an orderly fashion.

Fresenius Finance BV talked its €500 million offering of non-callable 7.5-year senior notes (confirmed Ba1/expected BB+) to yield 3% to 3¼%.

The deal is set to price on Thursday.

Joint lead manager Deutsche Bank will bill and deliver. JPMorgan, SG, Credit Suisse and UniCredit are also joint lead managers.

The Bad Homburg, Germany-based provider of dialysis products and services plans to use the proceeds to refinance debt, including its senior notes due 2013.

Cerved's three-part deal

Cerved Group SpA plans to start a roadshow on Thursday for a €780 million three-part offering of high-yield notes.

The deal features €550 million of senior secured notes in tranches of seven-year fixed-rate notes, non-callable for three years and with a target size of €300 million, and six-year floating-rate notes, non-callable for one year with a target size of €250 million.

In addition there is a €230 million offering eight-year senior subordinated notes which are non-callable for four years.

Global coordinator Credit Suisse will bill and deliver. Deutsche Bank is also a global coordinator.

Proceeds will be used to help fund the acquisition of Cerved by CVC Capital Partners Ltd. from Bain Capital.

Oxford Finance sets roadshow

Oxford Finance LLC, in conjunction with Oxford Co-Issuer Inc., plans to start a roadshow on Thursday for a $200 million offering of five-year senior notes (/B/).

J.P. Morgan is the bookrunner for the debt refinancing and general corporate purposes deal.

Day's deals come too late

Traders said that because of the relative lateness of the day, they did not see any immediate aftermarket dealings in the day's new issues from Bombardier, HD Supply, Halcon Resources and Crown Holdings.

A trader did see HD Supply's existing 11½% notes due 2020 move up by 1 to 2 points to around the 112½ level, helped by the news that the new-deal proceeds will be used to take out a portion of another one of its outstanding bonds, the 13½% senior subordinated notes due 2015, and thus improve the company's balance sheet.

The 131/2s, meantime, were seen ending at 103 7/8 to 104, around their anticipated takeout level. Volume of over $20 million made it one of the day's most active issues.

Windstream holds up

With the new bonds not yet in the aftermarket, there were some dealings seen in some of the recent new deals priced earlier in the week.

A trader said that Windstream's new 6 3/8% notes due 2023 "held on to their gains," seeing the bonds going out at 101¾ bid, 102 offered.

The Little Rock, Ark.-based telecommunications company priced $700 million of those notes at par in a drive-by offering on Tuesday, yielding 6.374%. They were seen on Tuesday having moved up to a 101¼ to 101¾ bid context.

Windstream's existing 8 1/8% notes due 2018 were seen up ½ point at 110¼ bid.

Speedway stays firm

Speedway Motor Sports Inc.'s 6¾% notes due 2019 were seen by a market source on Wednesday to be trading at 107¼ bid, up ¾ point on the day.

On Tuesday, the Concord, N.C.-based auto race-track operator priced a quickly-shopped $100 million add-on to its existing $150 million of those bonds at 105, for a yield to worst of 5.361%.

The bonds were seen having firmed late Tuesday to 106½ bid, 107 offered.

MarkWest holds its own

A trader said that MarkWest Energy Partners' and MarkWest Energy Finance Corp.'s new 4½% notes due 2023 "were right in that same spot" that they had traded late Monday and on Tuesday, trading between 101½ and 102.

The Denver-based oil and natural gas exploration and production company's $1 billion quick-to-market deal had priced at par on Monday, and had then moved as high as the 101½ bid level before dropping back to around 101, but had regained that peak in Tuesday's dealings.

ArcelorMittal most active

Away from the new-issue realm, a trader said that the various bonds of international steelmaking giant ArcelorMittal "were definitely very active," with some issues "up 4 or 5 points."

Its 7½% notes due 2039 shot up by 2¾ points to end at 101¾ bid, on round-lot volume of over $60 million, easily the busiest junk issue of the day.

Its 6¾% notes due 2022 and 6 1/8% notes due 2018 were almost as busy, rising several points to just over the 110 mark and to the 107 mark, respectively.

Perhaps the biggest gainer were the 6¾% bonds due 2041, which popped by some 3 5/8 points to end at 100¼ bid.

Those bonds jumped, in heavy trading, after ArcelorMittal announced plans to raise $3.5 billion through the sale of stock and convertible notes to lower its net debt load to $17 billion by the end of June from the $22 billion of debt with which it ended 2012.

The Luxembourg-based company was originally expected to sell $1.75 billion of mandatory convertible subordinated notes, but was heard during the session on Wednesday to have upsized that to $2.25 billion, with tightened price talk for a yield of 6% and an initial conversion premium of 25%.

Travelport journey continues

Elsewhere, a trader said that Travelport LLC's recent upside ride was continuing Wednesday, seeing the Atlanta-based travel services 9 7/8% notes due 2014 get as good as 95 bid, which he called "up another 3 points" on the session from where those bonds had been on Tuesday.

"There's been a nice little pop in that name," a second trader said, noting that the '14s were "up a couple of points" in a 94 to 95 bid context, on volume of over $11 million.

He also saw its 11 7/8% subordinated notes due 2016 around 60 bid on Wednesday, on volume of about $5 million or $6 million.

"The last few days, it's been up a couple of points every day," he said, including Wednesday's 3 point gain.

The bonds started firming last week on news that the company had reached a deal with airline operator AMR Corp. regarding the ongoing legal battle between the two companies.

Travelport "was up a few more," yet another trader said, seeing the senior bonds at 94½ bid, 95½ offered. He meantime saw Fort Worth, Texas-based AMR's 6¼% convertible notes at 95 bid, up 2 to 3 points.

Sears slacks off

Elsewhere, a trader said that Sears Holdings Inc.'s bonds "weren't nearly as active" on Wednesday as they had been on Tuesday.

He saw the bonds trading at about 95 bid, "about in line with where they were [Tuesday], maybe a smidge better."

On Tuesday, the bonds had moved up following Monday's announcement that its current chief executive officer, Louis D'Ambrosio, will leave his post in February due to what are described as "family health matters." The company's chairman, Edward Lampert, will take over that role in addition to his current duties.

The Hoffman Estates, Ill.-based department store operator's bonds reacted positively to the news, as a trader saw its 6 5/8% notes due 2018 rising "almost" 1½ points to end around 95 bid.

Clearwire up on DISH news

A trader said that Clearwire Corp.'s bonds were "a little better on the heels of the DISH news" that satellite television broadcaster DISH Networks Corp. had made a bid for Belllevue, Wash.-based Clearwire, apparently looking to top the offer that Clearwire's 50% owner, Sprint Corp., was making for the remainder of the company.

He saw Clearwire's 14¾% notes around 139 bid while its 12% notes due 2015 moved up to "just north" of 108 bid, which he called a ½ point gain.

Another trader called the Clearwire bonds up ½ to 1 point on the news that DISH is offering to buy that other 50% of Clearwire for $3.30 per share, topping Sprint's current bid of $2.97 per share, although Overland Park, Kan.-based wireless operator Sprint is expected to match that and raise the ante.

The two companies are each hoping to gain access to Clearwire's valuable wireless spectrum holdings.

A trader said that DISH's own bonds, and Sprint's, were mostly unchanged to "maybe slightly higher" on all of the news.

But another market source saw DISH's 5 5/8% notes due 2022 up more than 2 points at just over par. But its 7¾% notes due 2015 were off ¼ point at 112½ bid.

Indicators still mostly up

Statistical junk market performance indicators were mostly better for a second straight session on Wednesday.

The Markit Series 19 CDX North American High Yield index lost 1/16 point on Wednesday to end at 102 3/16 bid, 102 7/16 offered, after having eased by 1/8 point on Tuesday.

But the KDP High Yield Daily Index rose for a seventh consecutive session on Wednesday, gaining 5 basis points to end at 75.88, after moving up by 4 bps on Tuesday. Its yield came in by 3 bps for a third straight day to end at 5.49% - its sixth straight decline.

And the widely followed Merrill Lynch U.S. High Yield Master II Index notched its seventh straight gain on Tuesday, rising by 0.155%, on top of Tuesday's 0.09% advance.

That lifted its year-to-date return to 1.119%, a new peak level for the year so far, from Tuesday's 0.963% the prior peak level.

The index's yield to worst meantime continued to decline on Wednesday, coming in to5.799% from 5.845% on Tuesday, while its spread to worst versus the comparable Treasury issues tightened to 493 bps from Tuesday's 495 bps. Both Wednesday levels were the tightest of the nascent year so far.

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