Headwaters prices; Park-Ohio, Liz Claiborne slate; American Airlines; CKE await; Sprint up

By Paul Deckelman and Paul A. Harris

New York, Mar. 8 - Headwaters Inc. priced a $400 million offering of eight-year notes late in the day on Tuesday - too late for any kind of aftermarket activity in the manufacturer's bonds.

There were also euro-denominated pricings from overseas issuers Pernod Ricard SA, the French drinks dispenser, and German plumbing supply house Grohe Holding GmbH.

Back in the domestic market, there was some calendar-building activity going on, as industrial manufacturer and supply-chain company Park-Ohio Corp. was heard by syndicate sources to be hitting the road on Wednesday to market a $250 million subordinated deal.

They also heard Liz Claiborne, Inc. emerging as the latest of several apparel firms to tap the junk market, although details on the prospective deal were still up in the air.

Japanese telecom operator eAccess Ltd. was meantime shopping around a dollar- and euro-denominated deal.

Price talk emerged on deals from American Airlines, Inc., CKE Holdings, Inc. and Deluxe Corp., with Wednesday pricings possible on those names.

In the secondary market, buzz about a prospective deal between wireless carriers T-Mobile and Sprint Nextel Corp. sent the latter's bonds up solidly.

The secondary market was otherwise mostly unchanged.

Headwaters $400 million

Headwaters completed Tuesday's sole dollar-denominated deal - a $400 million issue of eight-year senior secured notes (B2/B+), which priced at par to yield 7 5/8%.

The yield printed on top of price talk.

Deutsche Bank Securities Inc. ran the books.

The company plans to use the proceeds to fund its tender offer for any and all of its $328.3 million of 11 3/8% senior secured notes due 2014.

Pernod prices €1 billion

Pernod Ricard priced a €1 billion issue of 5% six-year fixed-rate notes (Ba1/BB+/BB+) at a 193 basis points spread to mid-swaps.

The deal was launched at mid-swaps plus 193 bps.

The bonds were sold at a reoffer price of 99.595, resulting in a 5.08% yield to maturity.

Credit Agricole CIB, ING, Mediobanca, Santander and Royal Bank of Scotland were the joint bookrunners for the debt refinancing deal.

Credit Agricole will bill and deliver.

The deal played to a €4 billion order book, according to a syndicate source.

Grohe upsizes

Elsewhere Germany's Grohe priced an upsized, restructured €500 million issue of 6.5-year senior secured floating-rate notes (B2/B-) at par to yield three-month Euribor plus 400 basis points on Tuesday, according to an informed source.

A planned seven-year fixed-rate tranche was abandoned.

Credit Suisse, Deutsche Bank and Morgan Stanley were the joint bookrunners for the issue, which was upsized from €400 million.

The Dusseldorf, Germany, plumbing fixtures company plans to use the proceeds to fund the tender offer for a like amount of its senior secured floating-rate notes due Jan. 15, 2014, of which $800 million is outstanding.

Ford Canada at tight end

Meanwhile, Ford Credit Canada priced an upsized C$500 million issue of three-year senior notes (Ba2/BB-/DBRS: BB) par to yield 4 7/8%, at the tight end of the 4 7/8% to 5% yield talk.

BMO Capital Markets Corp., Scotia Capital Inc. and RBC Capital Markets Corp. led the general corporate purposes deal.

Skyline Aviation upsizes

Also in Canada, Skylink Aviation Inc. priced an upsized C$110 million of five-year senior secured second lien notes (/B/DBRS: B) to yield 12¼%.

The yield printed at the tight end of the 12% to 12¼% price talk.

RBC Capital Markets was the lead manager for the deal, which was upsized from C$110 million.

Talking the deals

The dollar-denominated market figures to reignite on Wednesday.

Among the offerings on deck, American Airlines talked its $1 billion offering of five-year senior secured first-lien notes (B2/B+/) with a 7% to 7¼% yield.

Citigroup Global Markets Inc. is the left bookrunner for the general corporate purposes deal. Credit Suisse and J.P. Morgan Securities LLC are the joint bookrunners.

Meanwhile, Headwaters talked its $400 million offering of eight-year senior secured notes (B2/B+) with a yield in the 7 5/8% area.

Deutsche Bank Securities Inc. is leading the debt refinancing transaction.

And CKE Holdings set price talk for its $175 million offering of five-year senior PIK toggle notes.

The deal is talked with an 11% area cash pay coupon and an 11¾% area PIK coupon. The notes are talked at a reoffer price of par.

Morgan Stanley & Co., Citigroup, RBC Capital Markets and Morgan Joseph Triartisan are the joint bookrunners for the dividend-funding deal.

10 dividend deals

The CKE Holdings deal would be the 10th thus far in 2011 to feature a dividend payment representing at least a partial use of proceeds, a list that includes Bumble Bee Holdco SCA's 9 5/8% senior PIK toggle notes due 2018 and American Renal Holdings Co., Inc.'s 9¾% senior PIK toggle notes due 2016.

CKE also joins Burlington Coat Factory Warehouse Corp., Dave & Buster's Parent, Inc., American Commercial Lines Inc., Yankee Candle Co., BI-LO, Packaging Dynamics Corp. and Vanguard Health Systems Inc.

The dealers have taken notice of investors' apparent willingness to move out further on the risk curve in order to garner a "high" yield, a syndicate source reflected during a Tuesday conversation with Prospect News.

In the wake of the Lehman Brothers bankruptcy in September 2008, the dividend deal became scarce, according to Prospect News data.

The opening two months of 2008 and 2009 put up goose eggs in terms of dividend-funding transactions.

However, the 10 dividend deals since the beginning of 2011 represent fewer than half the amount of such transactions pricing during the record-setting year of 2010, which saw 22 dividend deals price between Jan. 1 and the beginning of March.

Park-Ohio starts Wednesday

Following Monday's phenomenal buildup, the new deal calendar continued to grow on Tuesday, albeit at a somewhat more moderate pace.

Park-Ohio plans to start a roadshow on Wednesday in New Jersey and the Mid-Atlantic States for a $250 million offering of 10-year senior subordinated notes.

Barclays Capital and J.P. Morgan Securities LLC are the joint bookrunners.

The Cleveland-based provider of supply chain logistics services plans to use the proceeds to fund the tender offer for its 8 3/8% senior subordinated notes due 2014, as well as to repay borrowings under its term loan A and term loan B and for general corporate purposes.

Deluxe starts $200 million

Meanwhile, Deluxe Corp. began a brief roadshow on Tuesday for its $200 million offering of 10-year senior notes (Ba2/expected BB-).

J.P. Morgan Securities LLC and Credit Suisse Securities (USA) LLC are the joint bookrunners for the debt refinancing.

MOTO £170 million

MOTO Finance plc began marketing a £170 million offering of six-year second-lien notes on Tuesday in London.

Deutsche Bank, Credit Agricole CIB, HSBC and ING are the joint bookrunners for the debt refinancing.

eAccess dual currency deal

Finally, Japan's eAccess plans to start a roadshow on Thursday for a two-part offering comprised of dollar-denominated and euro-denominated seven-year senior notes.

The deal size and tranche sizes remain to be determined.

UBS Investment Bank is the lead left bookrunner for the debt refinancing. ING and Credit Agricole CIB are the joint bookrunners.

Headwinds comes too late

Traders said there was not much going on in the secondary, which recently has been focused on new-issue trading.

The new deal from Headwinds came way too late for any kind of aftermarket action.

"When the only thing going on is new issues and those aren't even going on, it makes for a fun day," a trader said.

Monday deals back off

Among the new deals priced on Monday, a trader saw Park Ridge, N.J.-based vehicle-rental giant Hertz Corp.'s 6¾% notes due 2019 at 100 3/8 bid, while a second pegged the $500 million drive-by add-on issue at 100 3/8 bid, 100 7/8 offered.

That was down a little from Monday's aftermarket levels around 100 7/8 bid, 101 1/8 offered, after the deal - fungible with the company's original $500 million of those bonds issued last month - had priced earlier Monday at par.

However, a third trader said that he saw the bonds "wrapped around" 101, but allowed that the quote came from much earlier Tuesday and "surprisingly, that was the only thing I saw in them."

He also did not see any dealings on Tuesday in Bumble Bee Holdco's 9 5/8% PIK toggle notes due 2018, which priced on Monday at 98.138 to yield 10%. He surmised that the deal's small size - just $150 million - made it a good candidate for just being put away and not trading.

The San Diego-based canned seafood company's bonds had traded higher in Monday's aftermarket. One trader had them as good as 99½ par, although a second called the deal "a piece of crud" and said he saw the bonds offered at their issue price.

However, on Tuesday, a second trader said, in the morning, "they faded," falling to a 96 bid, 998 offered context, although he said that there was nothing after that.

Another trader also pegged the bonds going home below their issue price, quoting them at 97½ bid, 98½ offered, "so that's down."

One of the traders noted that the Bumble Bee deal, like the CKE offering, is being done to pay a dividend to the private equity holders who bought those companies.

Those PIK dividend deals seem to be making a comeback, after having been seemingly banished from the market a couple of years ago as investors shied away from risky structures.

"We thought those kind of deals were dead forever," he said, but their re-emergence would seem to point to an increased investor appetite for - or, at least, tolerance of - risk.

Jones still struggles

A trader saw several million of Jones Group's 6 7/8% notes due 2019 trading at 98½ bid, 98 5/8 offered.

"It was kind of interesting that they just popped up," he said, while noting that the New York-based apparel company's recent deal was still "trading under water."

Jones, the parent of the well-known Jones New York fashion line, priced the $300 million issue at par last Wednesday, but the deal never got any better than around 98 5/8 bid, 99 3/8 offered in the aftermarket.

Jones was one of three clothing companies that came to market last week with new deals: Miami-based Perry Ellis International Inc.'s $150 million of 7 7/8% notes due 2019, upsized from $125 million, also priced last Wednesday at par, but then moved smartly and stylishly to levels above 102 bid, while New York-based J Crew Group, Inc.'s $400 million of 8 1/8% notes due 2019 priced at par last Tuesday, initially firmed by around ¼ of a point, but then settled in just slightly under par.

Secondary stays mixed

Away from the new deal world, a market source saw the CDX North American Series 15 HY index up by 3/8 point on Tuesday to end at 103 11/16 bid, 103 13/16 offered, after having lost 3/16 of a point on Monday.

The KDP High Yield Daily index meantime eased by 2 basis points on Tuesday to close at 75.93, on top of the 6 bps easing seen on Monday. Its yield was unchanged at 6.62%, after having risen by 2 bps on Monday.

The Merrill Lynch High Yield Master II index edged downward by 0.002% on Tuesday versus Monday's 0.033% gain. That left its year-to-date return at 3.705%, off slightly from Monday's 3.707%, now the peak level for 2011 so far.

Advancing issues nosed ahead of decliners on Tuesday after having fallen behind the previous two sessions, but their winning margin was literally just a handful of issues out of the nearly 1,500 that traded, an even smaller advantage than the several dozen issues that separated the two groups on Monday.

Overall market activity, as measured by dollar-volume levels, jumped by 46% on Tuesday, after having risen by 3% on Monday.

Sprint runs up

Among specific issues, a trader said that Overland Park, Kan.-based wireless operator Sprint Nextel "seems to have been fairly active today" on news reports that it was in talks with Deutsche Telekom - parent of smaller U.S. wireless carrier T-Mobile - on a possible sale of T-Mobile, now the No. 4 U.S. wireless carrier, to No. 3 Sprint.

He said that Sprint's 6 7/8% notes due 2028 were up 4½ points to the 94 bid level, while its 8¾% notes due 2032 also gained 4½ points to trade at 108¾ bid.

"Those were the two large-volume guys" on the day, he added.

A second trader noted that according to the published reports, the German phone giant is considering the sale of T-Mobile in return for an equity stake in Sprint, "which would help the [Sprint] bonds quite a bit."

On that assumption, he said, "there were tons and tons of trading" in the 6 7/8s, calling them about 5 points better on the day at around the 94 level."

"That seems to be the big trader. Most of the trades happened around that 933/4-94 level."

Kodak climbs

A trader said that Eastman Kodak Co.'s 7¼% notes due 2013 seemed active on Tuesday and were a little better.

"Earlier in the day," he said, the Rochester, N.Y.-based photographic and imaging products company's bonds had traded as low as 91¾ bid, down from 92½ bid, 93 offered on Monday, but had moved up to 93½ by the close Tuesday.

"So they traded down this morning, but then came back a little bit."

There was no fresh news out on the company on Tuesday that might explain the bonds' gyrations.

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