PDVSA bonds active, soft; FMG's new loan helps bonds, stock; Patriot Coal dips; ResCap rises

By Stephanie N. Rotondo

Phoenix, Sept. 18 - A high-yield bond trader said that "some stuff was coming off recent highs" during Tuesday trading.

"There's hardly anybody on the upside," he said, speculating that profit-takers were to blame.

However, market indexes were unchanged to slightly higher.

Petroleos de Venezuela SA was the dominating name of the day, according to a trader. The Venezuelan oil company's debt declined following news late Monday of a leaking gas pipeline.

Meanwhile, FMG Resources' bonds were strong, its stock "on fire," a trader said. The gains came as the company said it had secured a large loan.

In other mining names, Patriot Coal Corp. was coming down. Late last week, the company said it was again cutting production due to weakened demand. That news was again circulating on Tuesday.

Market indicators disagree

The CDX North American High Yield index held in at 101 15/16 bid, 102 1/8 offered, a market source reported.

The KDP High Yield Index, however, rose to 75.17 with a 5.73% yield. That compared to Monday's reading of 75.16 with a 5.75% yield.

Tuesday's level was a 52-week high in terms of price.

Biomet brings $1.63 billion

A robust dollar-denominated primary market saw issuers raise $3.5 billion on Tuesday.

Biomet, Inc. upsized its quick-to-market two-part deal by $300 million on Tuesday and priced both note tranches.

The deal included an $825 million add-on to the 6½% senior notes due Aug. 1, 2020 (B3/B-), which was priced at 105.00 to yield 5.698%. The reoffer price came rich to price talk that had been set in the 104.75 area.

Goldman Sachs & Co., Bank of America Merrill Lynch, Barclays, Citigroup Global Markets, J.P. Morgan Securities LLC and Wells Fargo Securities LLC were the joint bookrunners for the add-on.

In addition, Biomet priced an upsized $800 million issue of new eight-year senior subordinated notes (Caa1/B-) at par to yield 6½%, on top of price talk.

Bank of America Merrill Lynch, Goldman Sachs & Co., Barclays, Citigroup, JP Morgan and Wells Fargo were the bookrunners for the new notes, which were upsized from $500 million.

The orthopedic medical device company plans to use the proceeds to fund a tender offer for its 10% senior notes due 2017 and up to $500 million of its 11 5/8% senior subordinated notes due 2017.

Nielsen upsizes

Nielsen Finance LLC and Nielsen Finance Co. priced an upsized $800 million issue of eight-year senior notes (B2/BB-) at par to yield 4½%.

The yield printed at the tight end of price talk that was set in the 4 5/8% area.

JP Morgan and Goldman Sachs were the joint bookrunners for the quick-to-market deal, which was upsized from $750 milion.

The information and measurement company plans to use the proceeds to prepay its 8½% senior secured term loan due 2017 and for general corporate purposes, including capital expenditures and working capital.

Par Pharma at the tight end

Par Pharmaceutical Cos. Inc. priced a $490 million issue of eight-year senior notes (Caa1/B-) at par to yield 7 3/8% on Tuesday, according to a market source.

The yield printed at the tight end of yield talk that was set in the 7½% area.

Goldman Sachs & Co., Bank of America Merrill Lynch, Deutsche Bank Securities Inc., RBC Capital Markets LLC, Citigroup Global Markets Inc. and BMO Securities were the joint bookrunners.

Proceeds will be used to help fund the LBO of the company by TPG.

The issuer is a Woodcliff Lake, N.J.-based specialty pharmaceutical company.

Amkor drives by

Amkor Technology, Inc. priced a $300 million issue of 10-year senior notes (Ba3/BB) at par to yield 6 3/8%.

The yield printed at the tight end of price talk that was set in the 6½% area.

Deutsche Bank Securities Inc. and UBS Investment Bank were the joint bookrunners for the quick-to-market deal.

The Chandler, Ariz.-based semiconductor company plans to use the proceeds to repay $224.9 million of debt of certain of its subsidiaries and for general corporate purposes.

Ryland 10-year deal

Ryland Group, Inc. priced a $250 million issue of 10-year senior notes (B1/BB-) at par to yield 5 3/8%

The yield printed at the tight end of the 5 3/8% to 5½% yield talk, which had been revised tighter from earlier talk of 5½% to 5¾%.

JP Morgan Securities LLC and Citigroup Global Markets were the joint bookrunners for the quick-to-market deal.

The Westlake Village, Calif.-based homebuilder and a mortgage-finance company plans to use the proceeds for general corporate purposes.

Techem prices two-parter

The euro-denominated primary market also saw robust activity.

Germany's Techem priced €735 million of notes in a two-part offering.

Techem GmbH priced a €410 million tranche of seven-year senior secured notes (Ba3/B+/BB) at par to yield 6 1/8%. The yield came on top of yield talk, which was revised lower from earlier talk of 6¼% to 6½%.

Techem Energy Metering Services GmbH & Co. KG priced a €325 million issue of eight-year senior subordinated notes (B3/B-/B) at par to yield 7 7/8%. The yield printed on top of yield talk, which was revised lower from earlier talk in the 8% area.

Global coordinator JPMorgan will bill and deliver. Deutsche Bank AG and Credit Agricole CIB are also global coordinators. Commerz, RBS and UniCredit are joint bookrunners.

The Eschborn, Germany-based provider of energy management services plans to use the proceeds, along with a new credit facility, to repay existing debt and associated swap costs.

UPC drives by

UPC Holding BV priced a €600 million issue of 6 3/8% 10-year senior notes (expected ratings B2/B-) at 99.094 to yield 6½%.

Credit Suisse, Barclays, Credit Agricole CIB and Deutsche Bank AG were the joint bookrunners.

Credit Suisse will bill and deliver.

The Netherlands-based broadband provider will use the proceeds for general corporate purposes.

Smurfit Kappa upsizes

Smurfit Kappa Group plc priced an upsized €250 million issue of eight-year senior secured floating rate notes at par to yield Euribor plus 350 basis points on Tuesday, according to market sources.

The deal was upsized from €200 million.

The Dublin-based packaging company plans to use the proceeds to repay bank debt.

Hovnanian for Wednesday

The forward calendar saw a substantial build-up.

K. Hovnanian Enterprises, Inc. will hold an 11 a.m. ET Thursday investor call for its $797 million two-part notes offer.

The deal is comprised of $550 million of first lien senior secured notes due October 2020 and $247 million of second lien senior secured notes due November 2020.

Credit Suisse, Citigroup and J.P. Morgan are the joint bookrunners.

The Los Angeles-based homebuilder plans to use the proceeds to refinance its existing first lien notes due 2016.

Rockwood brings $750 million

Rockwood Specialties Group, Inc. plans to price a $750 million offering of eight-year senior notes on Thursday, according to a market source.

Deutsche Bank Securities, Citigroup, Morgan Stanley and UBS Investment Bank are the joint bookrunners. KKR Capital Markets and Lazard Capital Markets are the co-managers.

The Princeton, N.J.-based specialty chemicals and advanced materials company plans to use the proceeds for general corporate purposes.

PDVSA debt declines

PDVSA debt took a hit on Tuesday after the market learned late Monday that the company had contained a gas leak.

A trader said the name was by far the most active in the high-yield realm. About $45 million of the 9¾% notes due 2035 were exchanged, with the paper falling 1½ points to 801/2. The 9% notes due 2021 were down a like amount at 823/4, on about $19 million traded.

The 8½% notes due 2017 finished the day at 881/4, down over a point, on $30 million traded. And, the 5¼% notes due 2017 dipped a touch to 781/4, with $27 million bonds turning over.

During a maintenance operation, a piece of heavy machinery hit one of PDVSA's gas pipelines on Monday morning. By later in the evening, the company had shut down two wells in order to contain the problem.

Last month, one of PDVSA's warehouses caught fire and raged for four days after an explosion killed several workers.

FMG up on loan news

A trader said FMG Resources' bonds were getting a boost on news that parent company Fortescue Metals Group Ltd. Had secured an underwritten commitment for a $4.5 billion senior secured credit facility.

He called the notes up about half a point across the board, the 7% notes due 2015 at 101½ bid, 102 ½ offered and the 6 3/8% notes due 2016 at par ½ bid.

"The stock's on fire," he added.

The equity (OTCBB: FSUMF) gained 41 cents, or 12.97%, to end at $3.57.

On news of the new loan, Moody's Investors Service said it was continuing to review the company's credit ratings for possible downgrade.

Also in the metal mining arena, ArcelorMittal SA's debt was "under pressure," according to a trader.

The 6¼% notes due 2022 fell to par 7/8, though the 5¼% notes due 2020 held in at 981/4.

Patriot Coal dips

Patriot Coal paper was "kind of leaking," a trader said on Tuesday.

He pegged the 8¼% notes due 2018 around 441/2.

Another market source echoed that level, calling it down a point.

Last week, the bankrupt St. Louis-based coal producer announced yet another cut in production. For the next two months, Patriot will curtail production at three mines in West Virginia, which will affect 250 jobs.

The curtailment will result in a loss of about 85,000 tons of metallurgical coal per month.

The company said the cut was due to weakening demand.

ResCap rises, Ally loses

Residential Capital LLC's 6½% notes due 2013 put on nearly a point in Tuesday trading, according to a trader.

He said about $14 million of the bonds changed hands, ending around 291/4.

There was no fresh news out on the Minneapolis-based mortgage arm of Ally Financial Inc.

The bankrupt company recently won the exclusive right to file a plan of reorganization through December. The company had wanted to extend the period through March, but the judge overseeing the case denied the request, lamenting that the case was taking too long.

Meanwhile, Ally's 8% notes due 2020 fell almost a point to 120.

Broad market mixed

Also in the high-yield bond space, Charter Communications Inc.'s 5¼% notes due 2022 were seen off a touch at 101 5/8.

A trader said that Ambac Financial Group Inc.'s bonds remained strong, pegging the debt generically at 42 bid, 43 offered.

And, MF Global Holdings Ltd.'s 6¼%/7¼% notes due 2016 moved up to 481/2.

Nortel Networks Ltd.'s 10 1/8% notes due 2013 were also firmer, ending up at 1111/4.

"That's just a late-stage arbitrage name," a trader said.

Rounding things out, Eastman Kodak Co. continued to soften. The 9¾% second-lien notes due 2018 closed around 64, while the 7¼% notes due 2013 dipped to 10 bid, 11 offered.

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