U.S. Foodservice, Sensata, Neff Rental pricings close out busy week; new bonds head higher

By Paul Deckelman and Paul A. Harris

New York, May 6 - Like a marathon runner approaching the finish line, the high-yield primary market turned on the juice heading home with a quick series of pricings late in the session Friday, which totaled more than $1 billion.

U.S. Foodservice Inc. priced a widely expected $400 million offering of eight-year notes, which were heard by traders to have moved up solidly when the Columbia, Md.-based company's new bonds were freed for secondary dealings.

Another forward calendar deal came from construction equipment rental company Neff Rental LLC, which brought a $200 million offering of five-year secured notes. Those bonds, too, gained more than a point when they began trading in the aftermarket.

Market participants were meantime a little surprised to see two other calendar deals, from Sensata Technologies BV and from Harmony Foods Corp. Both had been expected to price in the upcoming week, but were moved up to Friday by their issuers, looking to opportunistically take advantage of a hot, deal-friendly market. Dutch electrical and electronic components supplier Sensata brought an upsized $700 million offering of eight-year notes to market, while Harmony, a California-based manufacturer of gummy chewable vitamins, came with a slightly upsized offering of five-year secured notes. While Sensata's big issue traded around and rose slightly, the smallish Harmony deal was not seen in the secondary.

The pricing parade was not yet done; junk participants reported the drive-by pricing of Kansas City Southern de Mexico CV de SA's $220 million offering of 10-year notes, a deal which found some interest among both emerging markets investors and mainstream junk accounts and which moved up in the aftermarket.

Those deals lifted the week's new-issuance total in the dollar-denominated market to well above $8 billion, surpassing the previous week's total in the high $7 billion area which.

One prospective dollar deal which did not quite make it was Heckler & Koch GmbH's; the German small-arms manufacturer was poised to bring a €290 million equivalent two-part issue of seven-year senior secured notes, to have been split between dollars and euros, but high yield syndicate sources heard on Friday that the dollar tranche had been dropped and the whole deal, slightly upsized, priced in euros.

Traders said that little was going on in the secondary market apart from activity in the new deals. Statistical indicators were mixed to better on the day and the week.

Sensata upsizes drives by

A roaring Friday primary market came up just shy of the $2 billion mark, with an even half dozen issuers each bringing a single, dollar-denominated tranche, raising a total of $1.94 billion.

Sensata priced an upsized $700 million issue of eight-year senior notes (B3/B) at par to yield 6½%.

The yield printed at the tight end of the 6½% to 6¾% price talk. The amount was increased from $600 million.

Barclays Capital Inc., Morgan Stanley & Co., Goldman Sachs & Co., BMO Nesbitt Burns and RBC Capital Markets were the bookrunners for the quick-to-market issue.

U.S. Foodservice wide of talk

U.S. Foodservice priced a $400 million issue of eight-year senior notes (Caa2/CCC+) at par to yield 8½%.

The yield printed 12.5 basis points beyond the wide end of price talk that had been set in the 8½% area.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Fosun prices five-year deal

China's Fosun International Ltd. priced a $300 million issue of five-year notes (Ba2/BB+/) at par to yield ½%.

The deal came at the tight end of price talk.

Goldman Sachs, Standard Chartered Bank and UBS were the bookrunners for the debt refinancing.

Kansas City drives through

Kansas City Southern de Mexico priced a $220 million issue of 10-year notes (Ba3/BB-/) at par to yield 6 1/8%.

The notes priced at the tight end of talk, which was set at 6 1/8% to 6¼%.

Bank of America Merrill Lynch and JPMorgan were the bookrunners for the debt refinancing.

Neff raises $200 million

Neff Rental LLC and Neff Rental Finance Corp. priced a $200 million issue of five-year second lien senior secured notes (Caa1/B-) at par to yield 9 5/8%.

The yield printed at the wide end of the 9½% area price talk.

Morgan Stanley & Co. Inc. and Jefferies & Co. were the joint bookrunners.

The Miami-based privately owned construction equipment rental company plans to use the proceeds to pay down a portion of its asset-based loan and to make a distribution to members of Neff Holdings LLC.

Harmony prices at tight end

Harmony Foods moved up timing and priced an upsized $115 million issue of five-year senior secured notes at par to yield 10%.

The yield printed at the tight end of the 10% to 10¼% price talk and the amount was increased from $105 million.

Timing was moved forward; the roadshow had been scheduled to run until May 10.

Imperial Capital ran the books.

Proceeds will be used to refinance existing debt and to fund a distribution to equity holders.

Santa Cruz, Calif.-based Harmony Foods, doing business as Santa Cruz Nutritionals, manufactures chewable gummy vitamins for children.

Heckler prices euros only

Heckler & Koch priced a restructured €295 million issue of 9½% seven-year senior secured notes (Caa1/CCC+) at 98.75 to yield 9¾% on Friday, according to an informed source.

The yield printed on top of price talk.

A planned dollar-denominated tranche was withdrawn.

Citigroup Global Markets ran the books for the debt refinancing deal, the overall size of which was increased slightly from €295 million.

Emergency Medical for Monday

Apart from Friday's transactions, the forward calendar fattened as the first week of May came to a close.

Emergency Medical Services Corp. will begin a roadshow on Monday for a $950 million offering of eight-year senior notes (expected ratings Caa1/B-).

Barclays Capital Inc., Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Morgan Stanley & Co., RBC Capital Markets, UBS Investment Bank, Citigroup Global Markets and Natixis Bleichroeder are the underwriters for the long-anticipated LBO deal.

CoreLogic to sell $350 million

Elsewhere, CoreLogic will start a roadshow on Monday for a $350 million offering of 10-year senior notes (Ba3/B+).

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, Wells Fargo Securities LLC and Barclays Capital are the joint bookrunners for the debt refinancing transaction.

Styrolution plans €480 million

The euro-denominated junk calendar also filled out on Friday.

Germany's Styrolution Group GmbH plans to price a €480 million offering of five-year senior secured notes (expected ratings B2/B+).

Barclays Capital and Citigroup are the joint bookrunners.

Proceeds will be used to fund a contribution payment to BASF.

Styrolution is a Frankfurt, Germany-based styrenics company formed in January 2011 as a joint venture between BASF and Ineos AG.

PagesJaunes roadshow Monday

France's PagesJaunes Groupe SA will begin a roadshow on Monday in London for its €350 million offering of seven-year senior secured notes.

Goldman Sachs International and Morgan Stanley are the bookrunners for the debt refinancing deal from the publisher of online and print directories.

Meanwhile, a benchmark euro-denominated deal from the automotive sector is expected to be rolled out on Monday, according to a debt capital markets banker in London.

Credit Suisse and J.P. Morgan will be the leads.

A busy, late day

A trader said "we had a busy day - a lot of deals priced, all late in the afternoon as people were filing out the door."

The only deal which did not actually fit that description was Harmony Foods' upsized $115 million offering of five-year secured notes, which had priced a little earlier in the session at par.

But owing to its small size, as well as the market's relatively unfamiliarity with the issuer - certainly no one's idea of a familiar junk name - most traders said that they did not see the deal hit the aftermarket.

One heard a quote at 101¾ bid, "but it never really traded."

Sensata seen around

The trader said that the Sensata deal was "probably the most active." He saw its $700 million of eight-year notes get as good as 101, after having priced at par.

A second trader saw those bonds at 100½ bid, 101 offered.

At another desk, a trader saw the bonds break around 100¼ bid, and then move up to 100½ bid, 100 7/8 offered.

Good appetite for U.S. Foodservice

U.S. Foodservice's $400 million issue of eight-year notes performed well in the aftermarket, traders said, with one quoting the new issue at 101¼ bid, 101¾ offered, well up from its par issue price.

A second pegged the bonds around 101 3/8 bid, 101 5/8 offered.

At another desk, a trader said that the new bonds were trading around 101½ bid, 'but they were not as active as we expected it to be."

He said that in general, the day's new deals probably did not attract as much investor interest as they might have due to most of them pricing late in the session, as noted.

"It's a beautiful Friday, it's May, and there's a lack of interest at the end of the day here."

Neff does nicely

Even with the relatively restrained activity level late in the day, a trader said that Neff Rental's new five-year senior secured notes more than held their own when they moved into the aftermarket.

He quoted the Miami-based company's bonds at 101¼ bid, 101¾ offered, well up from their par issue price.

Another trader, quoting the Neff bonds around that same level, said that at his shop, "we heard a bit about Neff, saw that it priced [to yield] 9 5/8%, but we did not see any secondary trading at all in it."

Ticket to ride for Kansas City

High-yield traders noted Kansas City Southern de Mexico's unexpected new issue, which priced off the investment-grade desks but which did see some interest from the junk bond precincts, owing to investors' familiarity with the name and with the Mexican entity's U.S.-based parent, railway operator Kansas City Southern.

One trader said that the bonds "came at par, it was 100¼ bid for a second, but then that went radio silent also [along with the Neff deal]."

However, another trader later in the day saw the bonds at 101 bid, 101½ offered, up from the par level where the $220 million 10-year deal priced.

Earlier deals trade quietly

Among the deals which priced earlier in the week, a trader said that Host Hotels & Resorts, LP 's $425 million offering of 5 7/8% notes due 2019 was trading at par bid, 100 3/8 offered before lunch, but he didn't see much activity in the credit after that.

The Bethesda, Md.-based lodging industry operator's opportunistically timed and rapidly marketed deal - upsized from the originally announced $350 million - priced at 99.198 on Thursday to yield 6%, traded as high as 99¾ bid, par offered when it moved into the secondary, and then went home late Thursday at 99 5/8 bid, 99 7/8 offered.

Another trader saw the bonds trading as well as 100 3/8 bid, 100 5/8 offered on Friday.

Seagate HDD Cayman's $600 million issue of seven-year senior notes due 2021 was being quoted around 101 3/8 bid, 101 7/8 offered, not too far from the level at which the bonds had been seen trading on Thursday.

The Scotts Valley, Calif.-based computer hard-drive manufacturer had priced its quickly shopped deal on Wednesday at par; the new bonds moved up only modestly in Wednesday's aftermarket, but pushed above the 101 level on Thursday.

A trader said that Charter Communications Inc.'s issue of 6½% notes due 2021 "wasn't all that active. I didn't see as much of it as I would have expected," given that Charter is a well-known junk name and that the $1.5 billion issue is benchmark-sized.

He saw the bonds bid at 100 1/8 in the morning, "but then someone hit that bid," and took the bonds down to 99 7/8 bid, 100 1/8 offered, the last level he saw on Charter.

The St. Louis-based cable operator priced its drive-by deal - upsized from the originally announced $1 billion - at par on Tuesday, but the bonds could never get above that level and frequently traded a little below it.

Secondary indicators mixed

Away from the new issue realm, a trader saw the CDX North American Series 16 HY index fall back by 1/16 point on Friday to end at 102 9/16 bid, 102 13/16 offered, after having retreated by 3/16 point on Thursday.

For the week, the index fell from the 103¼ bid, 103 3/8 offered mark at the close the previous Friday, April 29.

The KDP High Yield Daily Index, however, rose by 9 basis points on Friday to end at 76.29, after having dropped by 5 bps Thursday. Its yield came in by 4 bps, to 6.38%, after having risen by 2 bps Thursday.

The index thus showed improvement from the previous Friday's level at 76.09 and its 6.47% yield.

The Merrill Lynch High Yield Master II Index notched its 13th consecutive upturn on Friday, gaining 0.072%, on top of Thursday's marginal 0.002% rise. That raised its year-to-date return up to 5.777%, a new peak level for the year, from Thursday's 5.701%, the previous zenith.

The index showed a one-week gain of 0.310%, bringing it up from the previous Friday's 5.45%.

Traders said that apart from dealings in the new issues, there was almost no real secondary trading.

Paper names trade

One of the few areas which did see activity Friday was in the bonds of paper companies.

A trader said that NewPage Corp.'s bonds "were a little active today," seeing the Miamisburg, Ohio-based coated-paper manufacturer's 10% notes due 2012 trading at 58 bid, 59 offered, which he called up 1 point on the day, on what "seemed to be a good amount of activity, decent activity." He noted that the bonds had "settled down" on Thursday, and were recovering on Friday on "good volume."

At another desk, the bonds were being quoted at 58 5/8 bid, up 1 3/8 points from the previous day's close.

However, he added that NewPage sector peer Catalyst Paper Corp. "did not have as good a day," with the Richmond, B.C. -based paper manufacturer's 7 3/8% notes due 2014 in a 66-67 range, which he called pretty much where they were previously, on "not much activity."

He did see the bonds trade as high as 68 earlier in the day, before coming back down to a 66-67 range later, "so they're hanging out at their lower levels, on not much volume at all."

However, at another desk, a market source saw the bonds finishing the day at 68½ bid, which he called up 1½ points on the day.

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