High-yield putters along in wake of Sandy; TXU dives following results; new deals announced

By Paul A. Harris and Stephanie N. Rotondo

Phoenix, Oct. 31 - As New York and the rest of the East Coast attempted to pull itself back together in the aftermath of Hurricane Sandy, high-yield bond traders reported that little was getting done.

As Sandy made its way toward land, the equity markets shut down on Monday and the bond market had only half a day of trading. Tuesday's markets were shuttered completely.

"It was a pretty uneventful day," one West Coast trader said of Wednesday's session. He said many of the "brokers' brokers" whom he dealt with were still out.

"It was like the Friday after Thanksgiving," he said. "Stuff just wasn't being done or initiated."

Another trader noted that it was also month-end, so those that did manage to get to their desks were otherwise occupied.

"There wasn't a ton going on," he said.

Overall, it was a mixed day, according to market indicators.

The big mover of the day was Energy Future Holdings Ltd. A trader said the name - also referred to by its former moniker, TXU - was "down a bunch," with the bonds falling 5 to 12 points, just one day after the company reported earnings.

Spectrum sets investor call

However the primary was in action during the first post-hurricane session - as it has been all year.

There were deal announcements even though syndicate desks tended not to be fully staffed, sources said.

Spectrum Brands, Inc. intends to hold an investor conference call at 11 a.m. ET on Thursday to discuss a $1.04 billion two-part offering of senior notes (B3/B-).

The deal, which is comprised of eight-year notes and 10-year notes, is expected to price on Thursday afternoon or Friday morning.

Barclays is the lead left bookrunner for the acquisition deal. Deutsche Bank is the joint bookrunner.

Perstorp starts roadshow

Sweden's Perstorp Holding AB began a roadshow on Wednesday on the West Coast of the United States, for a $1.09 billion multi-currency offering of senior secured notes.

The company is in the market to refinance debt.

The roadshow is scheduled to move to Boston on Thursday, with other stops expected to follow. A European roadshow is scheduled to take place from Nov. 6 to Nov. 9.

The specialty chemicals company intends to sell $660 million equivalent of first lien notes due in May 2017 (B2/B/). The first lien notes will be offered in dollar and euro denominations, with tranche sizes to be determined.

In addition Perstorp is offering $430 million of second-lien notes due in August 2017 (Caa2/CCC/).

Joint physical bookrunner J.P. Morgan will bill and deliver for the dollar-denominated notes. Goldman Sachs, which is also a joint physical bookrunner, will bill and deliver for the euro-denominated notes.

Perstorp had no luck getting its loans extended, so it came to the bond market, a London-based senior debt capital markets said on Wednesday.

Most people were expecting a bigger equity injection, the banker added.

However the underwriters seem confident that accounts in the United States will participate in the second-lien tranche, which is offered in dollars only.

With a Caa2 from Moody's and a CCC from Standard & Poor's, European accounts would have been disinclined to become involved in the second lien tranche, at any rate, the source added.

Timing TBD

As to how Hurricane Sandy impacted timing on deals announced prior to the storm, very little information circulated on Wednesday, sources said.

That is no surprise, according to a syndicate banker.

"A lot of people are out due to the storm," the source said.

"The syndicates spent most of the day making their evaluations as to what's possible."

Earlier in the week, before the market disruption caused by the storm, only one of the deals in the market had official price talk.

PQ Corp. talked its downsized $600 offering of 5.5-year second-lien senior secured notes (Caa1/B-) at 8½% to 8¾% on Monday.

When the price talk was announced a market source said that the deal was possible Wednesday business.

Unsurprisingly, however, the deal did not price on Wednesday, and there was no update as to the timing.

J.P. Morgan, Credit Suisse, Barclays, Jefferies, Mizuho and Morgan Stanley are the joint bookrunners.

Also the $500 million offering from Cincinnati Bell, Inc. via CyusOne LP and CyrusOne Finance Corp. of 10-year senior notes (B2/B+/), which had been expected to wrap up its roadshow on Friday and price Friday or Monday, now appears more likely to be Monday business, an informed source said.

Barclays, Citigroup, RBS and UBS are the joint bookrunners.

Titlemax's private placement

Although the public market remained quiet on Monday, there was activity in the private placement space.

Titlemax privately placed $100 million of non-rated 11% three-year senior PIK notes via lead placement agent Jefferies.

The notes priced at 98 to yield 11.816%.

Proceeds will be used to fund a dividend and for general corporate purposes.

The company's most recent previous deal came in June 2010, and played out in the context of a Rule 144A and Regulation S transaction.

At that time the Savannah, Ga.-based auto title lending company priced a $250 million issue of 13¼% senior secured notes due July 2015 at 99.078 to yield 13½%.

Jefferies ran the books.

Market ends mixed

In the secondary, market indicators were mixed in Wednesday trading.

The CDX North American Series 19 High Yield index inched up ½ point to 99 3/16 bid, 99 5/16 offered, one market source said. The KDP High Yield Index meantime fell to 74.32, with a yield of 6.08%, compared to Monday's reading of 74.38, with a 6.06% yield.

TXU nosedives

Energy Future's bonds took a dive Wednesday, following the company's earnings release on Tuesday.

A trader said the paper was down 5 to 12 points on the day, "depending on which flavor you're looking at." The 6.55% notes due 2034 were the "most active issue in that capital structure," the trader said, calling the debt down 10 points at 36 bid, 38 offered.

The Dallas-based utility reported its seventh consecutive quarterly loss on Tuesday, though the loss was narrower year over year.

The loss was $407 million, versus $710 million the year before.

Revenues dropped almost 25% to $1.75 billion, due in large part to milder summer temperatures.

Still, liquidity was not horrible, with $3.8 billion in cash and equivalents on hand.

But the company continues to labor under a huge mountain of debt - about $37.4 billion - that has resulted in high annual interest expense. As such, concerns about a looming bankruptcy were fueled.

Kodak up post-results

In other earnings news, Eastman Kodak Co.'s 9¾% second-line notes due 2018 were quoted higher, despite a wider monthly operating loss.

A trader said the paper was quoted in the high-60s.

For the month of September, the bankrupt Rochester, N.Y.-based company reported a $136.46 million net loss on $160.6 million in revenues. That compared to a $79.26 million net loss posted for August on $168.42 million in revenues.

AMD, Clear Channel decline

Elsewhere in the high-yield space, a trader said Advanced Micro Devices Inc.'s 7¾% notes due 2020 were "down a point or so," trading around 83.

He also saw Clear Channel Communications Inc.'s 10¾% and 11% "legacy" bonds due 2016 "a smidge weaker" at 73 bid, 74 offered.

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