Unitymedia, U.S. Foodservice, Gulfmark price to cap $6.75 billion week; SuperValu steadies

By Paul Deckelman and Paul A. Harris

New York, Nov. 30 - The high-yield primary sphere closed out the post-Thanksgiving week and the month of November with a flourish on Friday, as $1.6 billion of new paper came to market in four tranches, including an upsized $1 billion drive-by deal from Unitymedia Hessen Gmbh & Co. KG, as part of a larger dual-currency offering by the German cable operator. Traders saw those dollar bonds having firmed when they hit the aftermarket.

The day also saw a trio of quickly shopped and upsized add-on offerings to existing tranches of bonds.

U.S. Foodservice, Inc. priced $400 million of 2019 notes at a premium to par.

Gulfmark Offshore, Inc., a provider of maritime services to the energy industry, came to market with a $200 million tranche of 2022 notes, also at a slight premium. The latter issue was seen to have firmed nicely in secondary trading.

Energy exploration and production company Saratoga Resources, Inc. tacked $25 million of new paper onto its existing 2016 secured bonds.

Those deals capped off a week that saw $6.75 billion of new U.S. dollar-denominated, junk-rated paper come to market from domestic or developed-country issuers, according to data compiled by Prospect News. That was a sharp upturn from the holiday-shortened previous week, when just $450 million had priced in three lonely tranches - one of the lightest weeks seen this year. Record-pace new issuance remains about 46% ahead of where it was at this time last year, according to the Prospect News data.

Among the deals which priced earlier in the week, traders saw continued strong aftermarket performance from such names as Ally Financial Inc., Clean Harbors, Inc. and Inergy Midstream LP.

The traders saw the secondary market still firm, with statistical performance indicators up on the session and versus their week-earlier levels as well.

Among specific names, SuperValu Inc.'s bonds - which took a big hit on Thursday on reports the supermarket operator's talks with potential acquirer Cerberus Capital Management LP had hit a snag - came off their lows and were seen stabilizing.

Dollar and euro activity

The final November session in the primary market saw notable issuance in both dollars and euros.

The dollar market saw $1.61 billion in three tranches, while the euro market, which also saw three tranches clear, saw a total of €1.08 billion.

In a debt refinancing deal, Germany's Unitymedia Hessen GmbH & Co. KG and Unitymedia NRW GmbH issued in both currencies.

The cable operator priced $1 billion and €500 million of 10-year senior secured notes (Ba3/BB-).

The upsized $1 billion dollar-denominated tranche priced at par to yield 5½%, on top of price talk that was tightened from earlier talk of 5½% to 5¾%. The tranche was increased from a planned $845 million.

Joint bookrunner J.P. Morgan will bill and deliver for the dollar notes. The other joint bookrunners for the dollar notes were Credit Suisse, Goldman Sachs, BNP, Merrill Lynch and Morgan Stanley.

Unitymedia also priced a €500 million tranche of the notes at par to yield 5¾%, at the tight end of the 5¾% to 6% price talk.

Joint bookrunner Deutsche Bankwill bill and deliver for the euro-denominated notes. The other joint bookrunners for the euro-denominated tranche were Barclays, Citigroup, Crιdit Agricole, ING and Royal Bank of Scotland plc.

U.S. Foodservice rich to talk

U.S. Foodservice priced an upsized $400 million add-on to its 8½% senior notes due June 30, 2019 (Caa2/CCC+) at 101.50 to yield 8.198%.

The reoffer price came rich to price talk set in the 101 area. The amount was raised from the original $350 million.

Deutsche Bank, Citigroup, BMO, Goldman Sachs, KKR, J.P. Morgan, Morgan Stanley, Natixis and Wells Fargo were the joint bookrunners for the quick-to-market deal.

The Columbia, Md., broadline foodservice distributor plans to use the proceeds to refinance debt and for general corporate purposes.

GulfMark Offshore upsizes

GulfMark Offshore priced an upsized $200 million add-on to its 6 3/8% senior notes due March 15, 2022 (B1/BB-) at 100.5 to yield 6.286%.

The reoffer price printed on top of the price talk. The amount was increased from $150 million.

Wells Fargo was the left bookrunner for the quick-to-market issue. J.P. Morgan and RBS were the joint bookrunners.

The Houston-based provider of offshore marine services plans to use the proceeds to fully repay its existing facility agreement, to pay a liability related to a related interest rate swap, and for general corporate purposes, including the funding of vessel construction costs.

TMF resizes tranches

TMF Group Holding BV priced €580 million of high-yield notes in two resized tranches.

The Amsterdam-based company priced an upsized €405 million tranche of Euribor plus 537.5 basis points six-year senior secured floating-rate notes (B1//) at 99.

The tranche was increased from €380 million. The spread came 12.5 basis points tighter than the 550 to 575 bps spread talk. The reoffer price came on top of price talk.

In addition TMF priced a downsized €175 million tranche of seven-year senior fixed-rate notes (Caa1//) at par to yield 9 7/8%.

The unsecured tranche was downsized from €200 million. The yield printed at the tight end of yield talk that was set in the 10% area. The reoffer price came on top of price talk.

Global coordinator Goldman Sachs will bill and deliver. HSBC, ING and UniCredit were the joint bookrunners for the debt refinancing deal.

Trilogy Energy starts Monday

The Friday session also heard news from the Canadian dollar-denominated high-yield primary market.

Trilogy Energy Corp. plans to start a roadshow on Monday for a C$250 million offering seven-year senior notes (/B/DBRS: B).

Guidance is in the low to mid 7% area

Scotia, RBC and BMO are the joint bookrunners.

$3.2 billion calendar

Elsewhere, the first week in December gets underway with $3.22 billion on the active calendar.

Expectations as to the pace of issuance during the run-up to 2013 are mixed.

Some, especially on the buyside, note that there is a great deal of cash to put to work, which should generate a healthy calendar.

Others, including syndicate bankers, are looking for a pace slower than that seen during the hectic run-up to Thanksgiving.

"From the standpoint of the banks, this is the busiest year ever, and everyone has hit their quotas." one syndicate banker said.

"And investors have seen 12% to 13% returns this year.

"I'm not sure where we go from here."

Also the Bank of America Merrill Lynch 2012 Leveraged Finance Conference is set to take place during the week ahead, the banker noted, adding that the conference might slow down the primary market a little.

Light aftermarket dealings seen

A secondary market trader summed up Friday's session this way: "one of those crazy days, when everybody can't wait to get out the door."

He said that "the market overall was fairly firm - you had the inflows." He was referring to the reports that circulated Thursday afternoon showing that investors put more money into high-yield mutual funds and exchange-traded funds this week than they took out - the first time that has happened in three weeks. The flow of cash into or out of the funds is seen as a reliable barometer of overall junk market liquidity trends.

He said that while there was some trading in new or recently priced issues, it was actually "sparse."

For instance, he did not see any aftermarket activity in Unitymedia Hessen's new 5½% senior secured notes.

"There was no quote on it at all," he said.

However, at another desk, a trader saw the bonds having moved up in initial dealings to around 100¾ bid.

Later on in the session, another trader saw the new cable paper having gotten as good as 101½ bid, 102 offered.

The first trader meantime saw Gulfmark Offshore's 6 3/8% notes firm to levels as high as around 102¾ bid, mostly in "small pieces." That followed the Houston-based maritime energy services provider's having priced its add-on to those notes at 100.5 earlier in the session. But a second trader saw no traces of the company's dealings.

No trades were immediately seen in either U.S. Foodservice's add-on to its 8½% notes, or to Saratoga Resources' small add-on to its 12½% senior secured notes.

Week's deals mostly better

Going back to the deals that priced earlier in the week, a trader saw Thursday's $500 million offering of 6% notes due 2020 from Inergy Midstream LP and Inergy Midstream Financial Corp. "right around" 101, calling that "up a tad" from the deal's initial aftermarket levels at 100¾ bid.

However, a second trader said that the Kansas City, Mo.-based natural gas storage and transportation company's new issue got as good as 102 bid, 102½ offered. Those bonds had priced at par on Thursday after the issue was upsized from its originally announced $400 million size.

One of the traders said that Ally Financial's 3 1/8% notes due 2015 "did well" after pricing on Wednesday at 99.445 to yield 3.3125%. He saw the Detroit-based automotive and residential lender and online banking concern's quick-to-market $500 million deal as having risen as high as 100 5/8 bid, 100¾ offered, although he said that after having hit that peak, "they backed off a little bit," easing a little on Friday afternoon to 100 3/8 bid, 100½ offered. However, he called that level "pretty good for that coupon."

A second trader also saw the Ally bonds at 100 3/8 bid, 100½ offered, while a third pegged them at 100¼ bid, 100 5/8 offered going home.

Clean Harbors' offering of 5 1/8% notes due 2021 "was another one that did very well," one of the traders said. He had seen the Norwell, Mass.-based environmental services provider's bonds having gotten as good at 103 5/8 bid on during Thursday's session - although he said that in Friday's dealings, the bonds had come down from that peak, trading in a 102½ to 102 7/8 bid context. However, that was still well up from the par level at which the company had priced its $600 million issue on Wednesday, after upsizing it from an originally announced $550 million.

Traders also saw Aircastle Ltd.'s 6¼% notes due 2019 continuing to hover at higher altitudes versus the par level at which the Stamford, Conn.-based commercial aircraft leasing company had priced its quick-to-market $500 million offering on Tuesday, after upsizing it from an initial $400 million.

One trader quoted the bonds on Friday still at 101 bid, while a second saw them even better, at 101 7/8 bid, 102 1/8 offered.

US Airways certificates fly

Also up in the wild blue yonder, a trader saw both tranches of U.S. Airways Inc.'s new pass-through certificates trading well up from their respective issue prices.

He saw the Tempe, Ariz.-based airline holding company's 4 5/8% class A certificates due 2025 trading at 102 3/8 bid on Friday - up from 101 3/8 in Thursday's initial aftermarket dealings.

The airline had priced $418,113,000 of the split-rated (Ba1/BBB/A-) certificates at par earlier Thursday, after upsizing the tranche from its original $364,419,000 size.

He also saw the purely junk-rated (B1/B+/BB-) 6¾% class B certificates due 2021 having risen as high as 103 bid on Friday - up from 101 on Thursday and from the par level at which the $128,071,000 issue had priced, after upsizing from the originally planned $111,777,000.

Alere holds near issue price

While those various issues were all seen having done better, a trader said that Alere Inc.'s 7¼% notes due 2018 "weren't going anywhere."

He saw the Waltham, Mass.-based healthcare services company's $450 million issue offered at 1001/4, after they "got weaker" and went down from 100½ earlier.

The company had priced those bonds at par on Wednesday. While they were initially quoted at a high tick of 100½ bid, 101½ offered, traders noted them gradually coming in and just staying not far from their issue price.

Market ends firmer

Away from this week's new issues, a trader characterized the junk market as "really firm, energy looked decent. Stuff was okay."

He noted that AK Steel Corp.'s bonds were doing well - both the West Chester, Ohio-based specialty steel alloys manufacturer's recently priced bond issue as well as its existing bonds.

He said AK was "really making a comeback, even though they say the company is being drained of cash" by its substantial pension obligations.

He saw its 8¾% senior secured notes due 2018 trading as high as 107 3/8 on Friday. The company had priced the $350 million deal at par on Nov. 14.

He also saw its established 8 3/8% notes due 2022 trading at 83 bid, up from recent levels in the high 70s.

SuperValu steadies

Another established name that has recent been in the spotlight is SuperValu, whose bonds got clocked on Thursday, along with its stock, on news reports indicating difficulties in its talks with potential buyer Cerberus Capital Management LP.

After having been beaten down by 3 or 4 points on Thursday, the Eden Prairie, Minn.-based supermarket operator's paper "stabilized today," a trader said. He quoted its 7½% notes due 2014 "seemed to grab hold" at 95 bid, after having fallen to around 92-93 on Thursday on fears that Cerberus "is playing a cat-and-mouse game" with the troubled grocer, which is in the process of trying to sell itself to a deep-pocketed savior.

"They made a nice comeback" on Friday, he added.

Another trader also saw the 71/2s up about 2 points on the day at 95, and saw its 8% notes due 2016 get back up to 92¼ bid, which he called a 13/4-point gain.

Indicators stay strong

Statistical junk market performance indicators were higher across the board for a third straight session on Friday, and were up on the week as well.

The Markit Series 19 CDX North American High Yield index edged upward on Friday to end at 99 15/16 bid, 100 1/16 offered, its third consecutive gain. The index had risen 3/8 point on Thursday.

Its close was up from the 99 3/8 bid , 99 5/8 offered level seen at the close during the abbreviated session the previous Friday, Nov. 23.

The KDP High Yield Daily Index rose by 18 basis points to end at a 74.33, its ninth consecutive gain. On Thursday, the index had advanced by 15 bps. Its yield came in by 6 bps Friday, to 6.07%, its ninth straight narrowing, after having declined Thursday by 5 bps.

Those closing levels compared favorably with the previous Friday's index reading of 73.72% and its 6.29% yield.

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