Navistar avoids proxy fight as bonds fall; PDVSA down as Chavez wins election; Supervalu slips

By Stephanie N. Rotondo and Paul A. Harris

Phoenix, Oct. 9 - There were "no major movers," up or down, in the high-yield bond market, a trader said on Tuesday.

"Lots of things were pretty much unchanged," he said.

Still, another trader said that "volume was up a little bit" despite it being a Jewish holiday that left several desks empty.

In the secondary, Navistar International Inc.'s bonds were down - albeit in minimal trading - following news out late on Monday regarding a battle with investor Carl Icahn. The company announced that it had agreed to add three members to its board in an effort to avoid a proxy fight with Icahn.

Petróleos de Venezuela SA's debt was "dominating," a trader said. That was no surprise given that the name is typically active. However, the action in the bonds - and the downward course - came after Hugo Chavez won Venezuela's election on Sunday in his tightest margin yet.

And, Supervalu Inc. paper was weakening towards the end of the day, according to a trader. The notes have been slipping of late, as the company has struggled to find a buyer.

Tuesday session ends weak

A trader said that the high-yield bond market was on the softer side on Tuesday and began drifting even more towards the end of the day.

"A couple bids were getting hit late in the day," he said.

The weakness of the session was mirrored by various high yield indexes. The KDP High Yield Index dropped to 74.35, with a 6.03% yield, versus Friday's reading of 74.41, with a 6.02% yield.

The CDX North American Series 19 High Yield index meantime fell 5/8 to par bid, par¼ offered.

Another trader noted that even recent new issues were not much moved, stating that there was "no 'hey, look at me' " among recent issues.

For example, Cemex Finance's 9 3/8% notes due 2022, which priced on Friday at par, were seen hanging in at 1011/2. Manitowoc Co. Inc.'s 5 5/8% notes due 2022 - a deal that came on Thursday - were likewise unchanged at par.

In so-called bellweather names, Chrysler Group LLC's 8¼% notes due 2021 slipped half a point to 108, according to a trader.

HD Supply massively upsizes

The high-yield primary market got out of the gate with a bang on Tuesday following a three-day holiday weekend in the United States.

Two issuers brought single-tranche drive-by deals totaling $1.32 billion.

And there was a raft of deal announcements.

HD Supply, Inc. priced a massively upsized $1 billion issue of senior notes due July 15, 2020 (Caa2/CCC+) at par to yield 11½%.

The yield printed at the wide end of the 11¼% to 11½% yield talk.

The deal was upsized from $750 million.

Bank of America, Goldman Sachs, Barclays, J.P. Morgan, Credit Suisse, Deutsche Bank, Wells Fargo and UBS were the joint bookrunners for the debt refinancing.

Jo-Ann Stores

Jo-Ann Stores Holdings Inc. became the third post-Labor Day issuer to bring a PIK toggle dividend deal - said by many to be a sign of a hot market.

The Hudson, Ohio-based specialty retailer priced a $325 million issue of seven-year PIK toggle notes (Caa1/CCC+).

The notes, which came with a cash coupon of 9¼% and a PIK coupon of 10½%, priced at 98.764, rendering a cash yield of 10% and a PIK yield of 10.485%.

The cash yield came at the wide end of yield talk. The reoffer price came in line with the 98 to 99 price talk.

J.P. Morgan, Bank of America and Barclays were the joint bookrunners.

Last week, Petco Holdings, Inc. priced a $550 million issue of five year senior PIK toggle notes (Caa1/CCC+) with a cash coupon of 8½% and a PIK coupon, which steps up to 9¼%. The notes priced at 99.5 to yield 8.624%.

And on Sept. 25, Emergency Medical Services Corp. priced a $450 million issue of five-year senior PIK toggle notes (Caa1/B-) at 97 with a cash coupon of 9¼% and a PIK coupon of 10%.

CVR Refining for Tuesday

The active forward calendar saw a precipitous buildup on Tuesday.

CVR Refining, LLC and Coffeyville Finance, Inc. plans to price a $500 million offering of 10-year second lien senior secured notes on Wednesday.

Credit Suisse, Citigroup, Barclays, UBS and Jefferies are the joint bookrunners.

Proceeds will be used to refinance existing first-lien debt and for general corporate purposes.

BI-LO to tap 9¼% notes

BI-LO, LLC and BI-LO Finance Corp. will plan to hold an investor conference call at 9:30 a.m. ET on Wednesday for a $140 million add-on to their 9¼% senior secured notes due Feb. 15, 2019.

The company will be presenting at the Deutsche Bank Leveraged Finance Conference in Scottsdale, Ariz. on Wednesday.

The deal is expected to price on Thursday.

Citigroup is the left bookrunner. Deutsche Bank is the joint bookrunner.

The Greenville, S.C.-based supermarket operator plans to use the proceeds to dividend approximately $145 million of equity contributed by the sponsor in connection with the acquisition of Winn-Dixie.

The original $285 million issue priced at par to yield in January 2011.

Albea in dollars and euros

Albea Beauty Holdings SA began a roadshow on Monday in Europe for its $650 million equivalent offering of seven-year senior secured notes (expected ratings B2/B+).

The European roadshow wraps up on Thursday.

A roadshow begins on Friday in the United States and wraps up on Oct. 17.

The notes are being offered in dollar- and euro-denominated tranches. The sizes of those tranches remain to be determined.

Joint physical bookrunner Bank of America will bill and deliver for the dollar notes. JP Morgan, also a joint physical bookrunner, will bill and deliver for the euro-denominated notes. Barclays is the joint bookrunner.

Upon the release from escrow, the proceeds will be used to fund the acquisition of Rexam PC, as well as to refinance debt and for general corporate purposes.

Mood Media roadshow

Mood Media Corp. began a roadshow on Monday for its $350 million offering of eight-year senior notes.

The deal is expected to price during the Oct. 15 week.

Credit Suisse and Jefferies are the joint bookrunners.

The Toronto-based in-store music, visual and scent media specialist plans to use the proceeds to repay existing debt under its first-lien credit facility, repay its second lien credit facility in its entirety and finance the Independence Media, Inc. acquisition as well as for general corporate purposes.

Viking Cruises 10-year deal

Viking Cruises, Ltd. held an investor call on Monday to discuss its $250 million offering of 10-year senior notes (expected ratings B3/B+).

The deal is set to price late in the present week or early in the week ahead.

Wells Fargo and Credit Suisse are the joint bookrunners.

Of the proceeds, $100 million will be used for acquisition costs related to river vessels to be built, $50 million to finance the acquisition of ships, vessels and other assets plus start up costs at subsidiary Viking Ocean Cruises Ltd., up to $50 million to purchase shares and options to acquire shares of Viking River Cruises Ltd. and $20 million to fund a dividend to MISA Investments, the parent.

The remainder will be used or general corporate purposes.

TransDigm dividend deal

TransDigm Group Inc. announced in a Tuesday press release that it intends to make an offering of $500 million senior subordinated notes, pending market conditions.

The company solicited consents from its lenders to go ahead with the deal.

The consent deadline was 5 p.m. ET on Tuesday.

Should it receive the consents, TransDigm would expect to use all or a portion of the proceeds of any such offering to pay a special dividend, the company stated.

Navistar sidesteps proxy fight

A trader said there was "minimal activity" in Navistar International's 8¼% notes due 2021, though the paper was deemed down a point at 951/2.

But another trader said the bonds "didn't look like they really moved at all," also pegging the notes with a 95 handle.

On Monday, the Lisle, Ill.-based manufacturer of utility vehicles said that it had succumbed to shareholder pressure and was replacing three members of its board. The new members will be shareholder Carl Icahn, Mark Rachesky and a third picked out by Icahn and Rachesky.

Icahn had been fighting for the board changes since earlier this year, as the company struggled to get its new engine technology approved by federal regulators.

The company ultimately scrapped the project and elected to use the standard technology that most of its rivals had employed. Navistar's chief executive, Dan Ustian, was also fired at that time, as he was blamed for the failures.

"Now that all this has happened as we envisioned, Navistar also is in the race for survival we anticipated as it attempts to rise from the ashes with what we believe is potentially insufficient liquidity to fund its most difficult transition over the next year," wrote Gimme Credit LLC analyst Vicki Bryan in a report published Monday.

Chavez win pressures PDVSA

Incumbent president Chavez won his re-election bid in Venezuela on Sunday, though by the tightest margin yet.

Despite a pro-Chavez banner being hung outside PDVSA's headquarters upon the win, the state-owned oil company's debt was dropping come Tuesday as investors had hoped for a challenger win.

A trader saw about $50 million of the 9¾% notes due 2035 change hands, falling nearly 1½ points to 791/2. The 8½% notes due 2017 fell almost half a point to 87 5/8, on about $37 million traded.

The 9% notes due 2021 were off marginally at 83.

Investors had hoped that Henrique Capriles would oust Chavez, who has deeply politicized PDVSA. Chavez also uses profits from the oil producer to fund everything from social programs to sports teams, which has depleted the company of enough funds to invest in itself. That has resulted in production and construction delays.

On Monday, analysts at JPMorgan also noted that production was expected to decline in the coming year, even as the country sits on one of the world's largest oil deposits.

Supervalu in retreat

Supervalu debt continued to tumble on Tuesday, according to market sources.

One trader said the 8% notes due 2016 "traded into an 86¼ bid, leaving them offered there." He added that there was a late-day trade at 86.

Another source placed the issue at 86¼ bid, down a point.

In addition to it being a generally weaker day, Supervalu's bonds have been coming off as the company struggles to find a buyer. Potential buyers such as KKR and Ron Burkle have expressed a desire for pieces of the company, but not the whole.

Broad market dips

Elsewhere in high yield, ArcellorMittal's 6¼% notes due 2022 fell half a point to 98 7/8, a trader said.

At another shop, a trader saw Edison International Inc.'s bonds, which tend to trade in line with one another, fall to a 48-50 context, down from 51-52 previously.

The trader also saw NewPage Corp.'s 10% notes due 2012 moving up to around 51/4, while the 11 3/8% first-lien notes due 2014 held in around 58.

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