Boise prices over-subscribed deal, MGM prices also, both firm; await Suburban Propane offering

By Paul Deckelman and Paul A. Harris

New York, March 9 - Boise Paper Holdings, LLC/Boise Co-Issuance Co. priced a $300 million offering of 10-year notes on Tuesday, with market sources hearing that the Idaho-based paper and packaging product's deal was so popular with investors that its order book was oversubscribed by several times, and it traded up in the aftermarket.

But the big deal of the day was MGM Mirage's suddenly appearing and quickly shopped $845 million offering of 10-year senior secured notes. After pricing at par, the Las Vegas-based casino giant's paper was seen by traders to have firmed smartly, up more than 2 points after the break.

Also pricing were Charlotte, N.C.-based car retailer Sonic Automotive Inc.'s $210 million issue of eight-year senior subordinated notes, which rose in the aftermarket, and Wayne, N.J.-based Building Products Corp. of America, whose $325 million of 10-year notes priced too late for any secondary dealings.

Apart from issues which actually priced, Suburban Propane Partners, LP, a Whippany, N.J.-based retail distributor of propane and fuel oil, announced plans to sell $225 million of 10-year notes to fund a tender for its existing bonds. That deal is expected to price on Wednesday.

Elmsford, N.Y.-based pharmaceutical services provider BioScrip Inc. was heard by syndicate sources to have begun a roadshow for its $225 million issue of five-year notes, while Swedish maritime operator Stena AB also began shopping its euro-denominated 10-year offering around to potential investors in Europe. Sources heard whispers of price talk on the latter deal, although it is not scheduled to price until Thursday at the earliest. Terphane, Inc., a Bloomfield, N.Y.-based manufacturer of polyester film, was meantime heard to be preparing to hit the road next Monday to market its offering of seven-year secured notes.

Among secondary names with no new-deal connections, Select Medical Corp.'s bonds fell 4 points in heavy size trading on reports a Senate committee is looking into treatment problems and patient deaths in the long-term hospital industry and is focusing on Mechanicsburg, Pa.-based hospital operator Select.

A busy Tuesday session in the primary market saw four issuers, each bringing a single tranche of dollar-denominated notes, price a combined face amount of $1.68 billion.

Two of the four deals priced at the tight end of price talk, while the other two priced on top of talk.

MGM Mirage sells $845 million

MGM Mirage priced $845 million of 10-year senior secured notes (B1/B) at par to yield 9%.

The deal went very well, an informed source said, adding that talk was 9% to 9¼%.

The issue printed at the tight end of that range, without granting an original issue discount, the source noted.

Bank of America Merrill Lynch, RBS Securities, Barclays Capital, JP Morgan, BNP Paribas, Citigroup, Deutsche Bank Securities, UBS Investment Bank, Commerzbank, Morgan Stanley and Wells Fargo Securities were joint bookrunners.

Proceeds will be used to repay the Las Vegas-based gaming, hospitality and entertainment company's credit facility following a recent amendment to the agreement.

Building Materials prices at tight end

Building Materials Corp. of America priced a $325 million issue of 7½% 10-year senior unsecured notes (B3/BB-) at 99.135 to yield 7 5/8%.

The yield printed at the tight end of the 7¾% area price talk.

The deal was well received, according to an informed source, who spotted the notes trading in the aftermarket at par bid.

The book was a mix of existing bondholders and accounts new to the credit, the source added.

Deutsche Bank Securities was the left bookrunner for the quick-to-market Rule 144A for life issue. Citigroup and Wells Fargo Securities were joint bookrunners.

Proceeds will be used to repay the company's second-lien term loan due in 2014.

Boise 2.5-times oversubscribed

Meanwhile Boise Paper Holdings, LLC and Boise Co-issuer Co. priced a $300 million issue of 10-year senior unsecured notes (B2/BB-) at 98.311 to yield 8¼%.

The yield printed on top of price talk.

The deal was more than 2.5-times oversubscribed, according to an informed source.

Bank of America Merrill Lynch, Barclays Capital Inc. and J.P. Morgan Securities Inc. were joint bookrunners.

Proceeds will be used to pay down the company's term loan B.

Sonic matches talk

Finally, Sonic Automotive priced a $210 million issue of 9% eight-year senior subordinated notes (Caa1/B-) at 99.299 to yield 9 1/8%.

The yield printed on top of the price talk.

Bank of America Merrill Lynch and JP Morgan were joint bookrunners.

Proceeds will be used to redeem a portion of the company's 8 5/8% senior subordinated notes due 2013.

As with the above-mentioned Boise and MGM deals, investors who already owned Sonic debt were conspicuous in the order book for Tuesday's deal, an informed source said.

Suburban Propane for Wednesday

Suburban Propane Partners will host an investor call at 11 a.m. ET on Wednesday for its $225 million public offering of 10-year senior notes.

The deal is expected to price on Wednesday afternoon.

Bank of America Merrill Lynch and Goldman, Sachs & Co. are joint bookrunners.

Proceeds will be used to eliminate or reduce up to $250 million of the company's outstanding 6 7/8% senior notes due 2013.

BioScrip starts roadshow

Meanwhile BioScrip Inc. began a roadshow on Monday for a $225 million offering of 5.5-year senior notes (B3/B-).

Jefferies & Co. is the bookrunner.

Proceeds will be used to help fund the acquisition of Critical Homecare Solutions, as well as to refinance existing debt and for general corporate purposes.

The roadshow wraps up on March 18.

Terphane to price via PrinceRidge

Also Terphane, Inc. took a spot on the forward calendar.

The polyester films manufacturer based in Bloomfield, N.Y., and Sao Paulo, Brazil, will begin a roadshow on Monday for a $90 million offering of seven-year secured notes.

PrinceRidge Group is the bookrunner for the debt refinancing deal.

PrinceRidge becomes at the third boutique underwriter to emerge as a physical bookrunner since late last year.

Knight Libertas was left bookrunner for Birch Communications, Inc.'s $100 million offering of five-year senior secured notes - a deal that was ultimately shifted out of the Rule 144A market, and into the private placement bourse.

Also Broadpoint Gleacher was joint physical bookrunner, along with Goldman Sachs, for Appleton Papers Inc.'s $305 million issue of 10½% 5.5-year senior secured notes (B1/B+/) which priced at 98.035 to yield 11% in late January.

MGM gains are no Mirage

When the new MGM Mirage 9% notes were freed for secondary dealings, a trader quoted them on the break at 101½ bid, 102½ offered versus the deal's par issue price.

Shortly after that, a trader was quoting the new bonds as having risen to 102 1/8 bid, 102 5/8 offered. The bonds got as good as 102¼ bid, 102¾ offered, before finally coming slightly off that peak to go out around 102 bid, 102½ offered.

A trader said that he had not studied the collateral package that the gaming company offered its bondholders, "but I assume the market likes it." The new notes are secured by a mortgage on the company's biggest property, the MGM Grand Las Vegas. The 30-story resort, with 6,852 hotel rooms and 171,500 square feet of casino space, cuts a distinct figure on the Las Vegas Strip with its emerald-green glass façade and is in fact the second-largest hotel in the world, and is the second-biggest casino resort complex in the United States after Vegas Strip rival the Venetian.

Boise bonds are buoyant

A trader saw the new Boise Inc. 8% notes due 2020 trade as high as par on the break, later quoting them going out at 99¼ bid, 99¾ offered - still up from the 98.311 level at which the issue priced.

"They traded above par initially," another trader said, up to 100¾ "but then they settled down," into a 99 bid, 99¾ offered market.

Yet another trader saw the Boise bonds ending at 99½ bid, par offered.

A trader said that "it seems like on the Boise, a lot of guys got cut back [in their allocations], so you had a lot of small pieces trading - not really that small, but just not huge pieces."

Sonic Auto revs up

A trader saw Sonic Automotive's 9% notes trade up to 101 3/8 bid, 101 7/8 offered after they were freed - well up from the 99.299 level at which the issue had priced.

Recent deals pretty firm

A trader saw Monday's Garda World Security Corp. 9¾% notes due 2017 trading at 101 bid, 101½ offered, although he allowed that there was not much activity in it - the quote he had seen was a couple of hours old, reflecting a single trade around midday. Another trader saw the bonds in a 101 1/8-101¼ context, which he called "nice and tight - but very boring."

The Montreal-based security series provider priced US$250 million and C$75 million of the notes on Monday at 98.148 to yield 10 1/8%, pricing being identical for the two tranches.

A trader meantime saw Avis Budget Group Inc.'s 9 5/8% notes due 2018 at 100¾ bid, 101 offered - slightly off Monday's close around 101 bid, 101¼ offered, but still up from the 98.634 level at which the Parsippany, N.J.-based vehicle-rental giant's $450 million of new bonds - upsized from the originally announced $400 million - had priced on Friday to yield 9 7/8%.

New issuance grabs the spotlight

A trader said "you have new deal after new deal coming across, so it seems like it's quiet all day until the very end, when you have an explosion of activity.

"We were just waiting for the flurry of activity on the new-issue front."

A second trader said that "the market is really, really dominated again by the [new-issue] calendar," as the deals "just keep on coming. Everybody wants to refinance."

The first trader - noting the solid performance of almost all of the recent new deals in the aftermarket, with the exception of last week's mega-deal sized issue of 10-year secured notes from HCA Inc. - said "you leave a little bit of pent-up demand and the thing trades on its own."

The Nashville-based hospital operator's offering of 7¼% first-lien senior secured notes due 2010 - upsized to $1.4 billion from the originally announced $1 billion - priced last Tuesday at 99.095 to yield 7 3/8%, and then proceeded to go . . . nowhere, leading several traders to theorize that by upsizing and giving everyone the allocations they wanted, there was no reason for anyone to buy the deal once it priced. One did note, however, that while upsizing the deal undermined the aftermarket, "it was still a good move for the company itself, to lock in the 7¼% rate and borrow the extra money."

In the case of Tuesday's deal for Boise's paper, there was enough investor demand for the bonds to justify the company to issue more - but "if they didn't need the [extra] money and only wanted a certain amount, why get stuffed via extra interest expense?"

Market indicators firm again

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index add 1/8 point on Tuesday - the same as it did on Monday - to end at 99¼ bid, 99¾ offered.

The KDP High Yield Daily Index meanwhile edged up by 4 basis points on Tuesday to finish at 71.70, after having jumped 33 bps n Monday. Its yield came in by 2 bps to 7.95% , after having tightened by 9 bps for a second consecutive session on Monday.

Advancing issues led decliners for an eighth consecutive session on Tuesday, by around a better than four-to-three margin.

Overall activity, measured by dollar-volume levels, rose more than 23% from Monday's pace.

That having been said, traders noted that the heavy slate of upcoming deals grabbed the attention away from secondary names not connected with the primary market.

"It kind of takes the focus away," a trader said, "since it seems like there's five [new deals announced] every day, I guess - or more."

"It was pretty boring today," another trader lamented, "You had bits and pieces of some things trading -- $1 million here, or $1.5 million there. For lack of a better term, there was nothing to write home about."

Select Medical gets socked by the Senate

A market source saw Select Medical Corp.'s 7 5/8% senior subordinated notes due 2015 in retreat by 4 full points, ending the day at 92 bid, down from the bonds' previous levels around 95-96. Over $36 million of the paper changed hands, pushed down by the news that the hospital operator is coming under Senate Finance Committee scrutiny.

On Monday, Select Medical received a letter from the committee regarding its intention to investigate what a Feb. 10 New York Times article called "a number of disturbing incidents at Select Medical (long-term care hospitals) that allegedly resulted in patients deaths," according to a letter written to the company by senators Max Baucus, D.-Mont., and Charles Grassley, R.-Iowa.

The company had previously railed against the newspaper, calling the article a "false impression." After receiving the letter from the senate committee, Select Medical once again responded.

"We will cooperate fully and quickly with this inquiry because we are eager to demonstrate that the recent New York Times article that prompted the committee's questions is inaccurate, misleading and sensationalistic," the response said. "We look forward to providing the committee with accurate facts - untainted by plaintiffs' lawyers' pleadings - that make plain that Select Medical provides high-quality care to thousands of high-risk and fragile patients each year."

Select Medical's New York Stock Exchange-traded shares fell 43 cents, or 4.92%, on Tuesday on news of the senatorial probe, to end at $8.31. Volume of 987,000 shares was over three times the norm

Harrah's adds to gains

Elsewhere, a trader saw Harrah's Operating Co.'s bonds continuing to firm Tuesday, building on the solid 2 to 3 point gains notched on Monday after the Las Vegas-based gaming giant announced that its commercial mortgage-backed securities lenders had okayed pushing the maturities of some $5.5 billion of Harrah's CMBS paper out two years, to 2015 and agreed to let the company cut its overall debt by buying some of that paper back at a discount to face value.

He saw Harrah's 10% second priority notes due 2018, which had gained about 4 points on Monday to around the 80 level in busy round-lot trading, trading Tuesday in "some size" around 80¾ bid, which he said was up about ½ to ¾ point.

He also saw the company's 6½% notes due 2016 trading in a 581/2-59 context, again up about ½ point, on "some pretty good volume." Its 11¼% senior secured notes due 2017 were up by ¼ point around the 107 mark, "but it was not a huge jump."

At another desk, a market source quoted the company's 5 3/8% notes due 2013 up 2 points on the day at the 82½ level, the gain coming on top of Monday's nearly 4 point advance. However, its 5 5/8% notes due 2015, which had gained about 3 points on Monday to end at 62, retreated by more than a point to end just below the 61 level.

Auto names largely idle

A trader said that General Motors Corp.'s 8 3/8% benchmark bonds due 2033were down ¼ point on the session at 32¼ bid, 33¼ offered, while GM domestic arch-rival Ford Motor Co.'s 7.45 % bonds due 2031 were unchanged at 90½ bid, 91½ offered.

Also in the autosphere, Cooper-Standard Automotive's 8 3/8% notes due 2014 eased by 1 point to around the 57 level.

Blockbuster gains trimmed back

Blockbuster Inc. - whose bonds had been holding steady around the stronger levels reached Thursday and, to a lesser extent, Friday after bullish comments by the Dallas-based movie rental company's chief executive officer in a televised interview - were seen having come in off those peaks a little on Tuesday. Its 9% senior subordinated notes due 2012 were being quoted at 25 bid, down more than 1½ points from its previous peak levels in a mid-26 context.

-Stephanie N. Rotondo contributed to this report.

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