Emergency Medical leads $2.6 billion deal parade to close week; NewPage again knocked lower

By Paul Deckelman and Paul A. Harris

New York, May 13 - Friday the 13th is traditionally thought of as an inauspicious time to be doing anything important - the superstitious often hide out at home for fear of encountering a black cat or some other calamity.

But a gaggle of borrowers - nearly a dozen in all - threw caution to the winds on Friday and boldly marched into the bond market to price $2.6 billion and €1.25 billion of new high-yield debt, with nary a black cat or other evil omen in sight.

The big deal of the day came from medical transportation provider Emergency Medical Services Corp., pricing $950 million of eight-year notes, which moved up by more than a point when they hit the aftermarket.

Also pricing and mostly moving up afterwards were deals from CoreLogic, Inc., Thompson Creek Metals Co., Inc. and Regent Seven Seas Cruises - the latter's $200 million secured paper issue was heard by traders to have done especially well when it was freed for trading.

Houghton Mifflin Harcourt Publishers, Inc. - which had been on track to be the day's big deal before its decision Thursday to radically downsize its issue to just $300 million from an original $1.35 billion also brought a transaction to market, but too late in the day to trade.

An earlier pricing, during the European trading day, came from Irish packaging maker Ardagh Group SA, which did an upsized $345 million of seven-year payment-in-kind notes, along with a euro-denominated mirror tranche; both were seen by traders having firmed smartly in the aftermarket.

Other European borrowers pricing during the session were Belgium's Ideal Standard SA and Britain's Odeon & UCI Cinema Group, the latter denominated in sterling and euros.

The new dollar-denominated paper bumped the week's new-issue tally up to the $10 billion mark, surpassing the nearly $9 billion which had priced in the previous week.

The forward calendar meantime grew as Alpha Natural Resources, Inc. announced plans for a $1.5 billion two-part offering, with the proceeds slated to help fund the acquisition of Alpha's fellow Virginia coal operator Massey Energy Co. and the repayment of Massey's debt. Smaller deals surfaced from U.S. energy services firm Gulf Offshore Logistics, LLC and from British gaming operator Gala Coral Group.

In the secondary market, papermaker NewPage Corp. had the unwanted honor of being the disaster of the day for a second straight session.

Secondary performance indicators were meantime mixed on both the day and the week.

Emergency Medical at tight end

The primary market saw $2.55 billion of dollar-denominated issuance during the formidable Friday session.

Emergency Medical Services priced a $950 million issue of eight-year senior notes (Caa1/B-) at par to yield 8 1/8%.

The yield printed at the tight end of price talk which had been set in the 8¼% area.

Barclays Capital Inc., Deutsche Bank Securities Inc., Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., RBC Capital Markets, LLC, UBS Securities LLC, Citigroup Global Markets Inc. and Natixis Securities North America Inc. were the joint bookrunners.

Proceeds, along with a $1.725 billion credit facility and an equity contribution, will be used to fund the buyout of the company by Clayton, Dubilier & Rice LLC.

The deal was as much as four-times oversubscribed, according to a fund manager who played, but who allowed that potential investors might have backed away as pricing retreated to 8 1/8% from 8¼%.

Meanwhile a syndicate source, who said the deal went very well, described the book as modestly oversubscribed, which might bear out the investor's perception.

At any rate, the par-pricing notes were 101¾ bid at Friday's close, the investor said.

CoreLogic upsizes

Meanwhile, CoreLogic priced an upsized $400 million issue of 10-year senior notes (Ba3/B+) at par to yield 7¼%, on top of the price talk.

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

Thompson Creek upsizes

Thompson Creek Metals price an upsized $350 million issue of seven-year senior notes (B3/B) at par of 7 3/8%, at the tight end of the 7½% price talk.

JPMorgan Securities Inc. and Deutsche Bank AG were the bookrunners for the capital expenditures and working capital deal, which was upsized from $300 million.

Houghton Mifflin downsized

Houghton Mifflin priced a massively downsized $300 million issue of eight-year senior secured first-lien notes (Caa1//B) at par to yield 10½%, on top of the price talk. The offering had originally been planned at $1.35 billion.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Wells Fargo Securities were the joint bookrunners.

The Boston-based educational publisher plans to use the proceeds for general corporate purposes.

Had sufficient demand materialized the deal size could have been pushed back up to $500 million, according to a buy-side source who added that the company intends to put the proceeds on its balance sheet as cash.

Seven Seas prices at tight end

Regent Seven Seas Cruises priced a $200 million issue of eight-year second-lien senior secured notes (B3/B-) at par to yield 9 1/8%, at the tight end of price talk which was set in the 9¼% area.

Deutsche Bank Securities Inc. was the left bookrunner. Barclays Capital Inc. and HSBC were the joint bookrunners.

The Fort Lauderdale, Fla.-based cruise ship company plans to use the proceeds to repay debt and for general corporate purposes.

$11.9 billion week

With Friday's business into the mix, the primary market saw $11.9 billion of junk price in 26 tranches during the May 9 week.

It was the second largest amount of weekly issuance thus far in 2011, the biggest being the $14.2 billion which price during the week of Jan. 10.

It extends year-to-date issuance to $148.8 billion in 344 junk-rated dollar-denominated tranches.

Ardagh prices dollar/euro deal

Ireland's Ardagh Group SA priced an upsized dual-currency seven-year senior secured PIK notes deal (Caa1/B-) on Friday.

The notes, which came in tranches sized at $345 million and €185 million, priced at par to yield 11 1/8%.

The yield printed at the tight end of price talk which had been set in the 11¼% area.

The dollar tranche was upsized to $345 million from $300 million.

Citigroup Global Markets Inc. ran the books.

Ardagh plans to use the proceeds to refinance its existing senior PIK notes and return capital to its shareholders. The $45 million upsize amount will be added to the distribution to shareholders.

Ardagh went well, according to an informed source, who added that there were a lot of equity accounts in the deal.

Odeon upsizes euro tranche

Also from Europe, England's Odeon & UCI Finco plc priced £475 million equivalent of seven-year senior secured notes (B3/B) in two tranches.

The movie theater operator prices a £300 million tranche of fixed-rate notes at par to yield 9%. The yield printed at the tight end of the 9% to 9¼% price talk.

Odeon also priced an upsized €200 million tranche of floating-rate notes at par to yield three-month Euribor plus 500 basis points. The floating-rate tranche was upsized from €150 million, and the Euribor spread came at the tight end of the 500 to 525 bps price talk.

The floating-rate tranche was added after the deal was launched into the market. The offer hit the market as a single £475 million tranche of seven-year fixed-rate notes.

Merrill Lynch International and Goldman Sachs International were the joint physical bookrunners.

Proceeds will be used to repay debt, to fund acquisitions and for general corporate purposes.

The euro-denominated floating rate tranche was upsized due to demand from investors in a collateralized loan obligation who were being taken out of the loan paper and were keen to retain exposure to the name, a syndicate source said.

Ideal Standard taps 11¾% notes

Finally, Belgium's Ideal Standard International SA priced a €25 million add-on to its 11¾% senior secured notes due May 1, 2018 (Caa1//B+) at 102.75 to yield 11.168%.

Goldman Sachs International ran the books.

Proceeds will be used to fund capital expenditures and for general corporate purposes.

The original €250 million issue priced at par on April 20.

Alpha Natural plans $1.5 billion

The forward calendar continued to build on Friday.

Alpha Natural Resources plans to price $1.5 billion of senior notes in two tranches during the week ahead, according to an informed source.

An investor call is set for 10:30 a.m. ET on Monday.

The deal includes tranches of eight-year notes, which come with three years of call protection, and 10-year notes which come with five years of call protection.

Morgan Stanley & Co. and Citigroup Global Markets are the joint bookrunners for the public offering.

The Abingdon, Va.-based coal producer plans to use the proceeds to help finance its acquisition of Massey Energy Co., including the repayment of some outstanding Massey Energy debt.

Gulf Offshore plans secureds

Gulf Offshore Logistics will also market a $110 million offering of five-year senior secured notes during the May 16 week.

Global Hunter Securities and Knight Capital are leading the deal.

Proceeds will be used to repay debt and for general corporate purposes.

Gala sets Monday meeting

Finally, Gala Coral Group will meet with investors in London on Monday ahead of a possible sterling-denominated bond deal.

Although size and structure have not been announced, the anticipated deal is expected to feature £250 million of senior secured notes and £400 million of senior unsecured notes, according to a debt capital markets banker in London.

Barclays, Credit Suisse, Deutsche Bank AG, Goldman Sachs International and Morgan Stanley are helming the presentation.

The London-based gaming company is seeking to refinance debt.

Saving the best for last

A secondary market trader, meantime, summed the day's activity up this way: "We're exhausted" from the rapid-fire pace of the new deals, especially down towards the end of the day.

Another trader noted that "unless you were trading NewPage bonds, it wasn't until the last hour, or half hour, that things began to really heat up," as the primary deals then started coming, one right after another, and started trading around.

One deal had come earlier, though, and was already trading around - the Ardagh notes, since the Irish company's two-part issue, including the upsized $345 million of seven-year PIK notes, had priced during the European trading day, which ends several hours before Stateside trading does.

A trader said that the deal "did really well," adding that he had seen the bonds quoted as high as 105 bid, well up from their par issue price.

At another desk a trader said that the dollar- and euro-denominated mirror tranches had traded above 104 before coming in to around 1031/2, "so they did really well."

EMS, Thompson deals move up

A trader said that at his shop, "we traded a bunch of the [Emergency Medical Services] eight-year bonds, seeing them at 101½ bid, 101¾ offered, up from the par level at which the Greenwood Village, Colo.-based company's deal had priced.

A second trader saw the bonds at 101¼ bid, 101¾ offered.

The day's other Colorado-based deal, for mining company Thompson Creek Metals Co,, Inc. had about the same trajectory, with a trader quoting the bonds at 101 bid, 101¼ offered.

The $350 million issue of seven-year notes had priced at par.

Smooth sailing for Seven Seas

One of the standout performers of the day in the secondary market was Regent Seven Seas Cruises' $200 million offering of eight- year senior secured notes.

A trader said the Fort Lauderdale, Fla.-based cruise ship operator's bonds "did pretty well," rising to 103 bid, 103½ offered from their par issue price earlier.

A second trader saw the bonds break at 102½ bid, 103½ offered, but then rise above the 103 level, "so they did go up and do pretty well."

CoreLogic climbs a little

Santa Ana, Calif.-based analytical services company CoreLogic's new bonds were seen slightly better, although the company's deal had priced late in the day.

A trader saw the $400 million issue at 100 3/8 bid, 100 5/8 offered, versus their par issue price.

A second quoted them at 100¼ bid, 100½ offered.

Jaguar holds most gains

Away from the day's new deals, a trader said that Jaguar Land Rover plc's new bonds, which had priced on Thursday and then had moved sharply higher in that session's aftermarket, continued to do well on Friday.

He saw the British luxury carmaker's dollar denominated 7¾% notes due 2018 at 102¼ bid, 102¾ offered - off a little from the 102 5/8 bid, 102 7/8 offered level at which the $410 million issue had traded on Thursday, but still well up from its par pricing level.

And he saw the $410 million issue of 8 1/8% notes due 2021 move up to 103 bid, 103 3/8 offered on Friday, after pricing at par on Thursday and settling in later that session at 102 7/8 bid, 103 1/8 offered.

Secondary mixed on day, week

Away from the new issues, a trader saw the CDX North American Series 16 HY index unchanged on the session Friday, to end at 102 15/16 bid, 103 1/16 offered, after having gained 1/16 point on Thursday.

That left the index up about 3/8 point versus where it had ended the previous week on Friday, May 6.

The KDP High Yield Daily Index meantime lost 5 basis points on Friday to close at 76.25, after having given up 2 bps on Thursday. Its yield moved up by 1 bp for a third consecutive session, to 6.39%.

The index thus slightly lost ground versus the previous week's 76.29 reading and 6.38% yield.

However, the Merrill Lynch High Yield Master II Index bounced back on Friday after having posted a rare loss on Thursday, which was the first such downturn following a 16-session winning streak dating all the way back to mid-April.

The index rose by 0.021% on Friday, after having lost 0.055% on Thursday. The rebound lifted its year-to-date return to 5.933%, up from Thursday's 5.911%, though still down from Wednesday's close at 5.969%, the peak level for the year so far.

The index posted a one-week gain of 0.147% on Friday, lifting it above the previous Friday's 5.777% cumulative return, the eighth consecutive week-to-week gain.

NewPage pounded, again

Among specific names in the non-new-deal secondary market on Friday, a trader exclaimed "paper - OOOF! OUCH! In capital letters," on viewing the fall in NewPage Corp.'s bonds, which plunged for a second consecutive session on in response to investor disappointment with the company's latest quarterly numbers and on worry that it won't be able to refinance one issue of its bonds in time to meet a deadline to prevent the threatened maturity acceleration of its senior secured first-lien notes.

A second trader said that NewPage for a second consecutive session was the big story in the junk bond secondary market outside of activity in the whole slew of new issues which have priced over the past several sessions, including and especially Friday.

He saw the Miamisburg, Ohio-based coated-paper manufacturer's 10% notes due 2012 - which on Thursday had plummeted some 12 points on the session, down to around 45-46 in heavy trading - fall as low as 39 bid during Friday's trading, down another 6 or 7 points intra-day, although he saw the last trades of the day going off at 40½ bid - up slightly from the day's lows but still down more than 5 points.

He meantime saw the 11 3/8% notes, which on Thursday had only retreated by about ½ point to a full point to end at 99, fall another 2¾ points, seeing them going home at 96¼ bid.

He also noted that between the two issues, over $130 million of NewPage paper changed hands on Friday, although that was less than the $230 million that traded on Thursday - an eye-popping $160 million of the 10s and $70 million of the 11 3/8s, according to the Trace system.

After Thursday's debacle, "they were trying to turn a new page," he quipped - "but they just couldn't."

The bonds were hammered down on Thursday and again on Friday, after NewPage reported first-quarter net sales of $904 million, up from $817 million the year before. The company attributed the increase to higher prices and higher sales volumes.

Adjusted EBITDA was $85 million, versus $15 million for the first quarter of 2010. Its net loss narrowed to $88 million from $175 million.

Traders said that although the results were certainly better than the year-ago numbers, they fell short of analysts' expectations, throwing bond investors into a funk.

As if that weren't bad enough, a trader said that adding to NewPage's problems is the fact that "based on the numbers, there is not enough cash flow" to refinance the 10% notes. The clock is ticking on a Jan. 31, 2012 deadline to repay or refinance that debt - or else its 11 3/8% senior notes due 2014 will be accelerated, moving the maturity up by nearly two years to March 2013 from December 2014.

With that bad news staring investors in the face, the first trader, meantime, said that "a ton of bonds" traded, with the 10s finishing at 40 after having gotten down into the 30s earlier. He said that at one point, the bonds were down 8 points, but ended the session down 6 points on the day.

He said that "everything [in the company's capital structure] got pressed" on Friday, with the 11 3/8s ending down 3 points on the session at 96 bid, 96½ offered, "also on tremendous volume." He said that for a senior secured bond that normally hugs par, a 3-point drop "is a lot of pain."

He also saw NewPage's 12% notes due 2013 at 10½ bid, 11 offered, down 4 points, although he said that those bonds "don't seem to trade that much," being only a relatively smallish $200 million deal, versus over $800 million outstanding for the 10% notes and $1.6 billion for the 11 3/8s. He said that the 4-point loss in the bonds was on "only one trade of size," versus pages and pages of round-lot trades for the other two bonds. The others "had real volume."

Second-lien little protection

Another trader noted that although the 10% notes due 2012 are technically a secured second-lien piece of paper, the bonds have pushed way down the food chain by the company's 11 3/8% first-lien notes and thus are trading dozens of points lower.

"The 10s are second-lien, but they got whacked," he said.

While there's no one general rule - "obviously it depends in each case how much first-lien is ahead of you and what the assets are worth," he said - in the case of the troubled NewPage, "these 11 3/8s are a very big issue, $1.6 billion, and the assets aren't good enough to support that issue and the 10s - so you've got a problem if you're a second-lien guy, I would guess."

As for the 12% unsecured subordinated notes, all the way down the totem pole, he saw those bonds trading around 91/2-10. Before Thursday, those bonds had been anchored around a 26 bid level before collapsing on Thursday and Friday.

While the situation looks bad for NewPage, especially for holders of debt other than the 11 3/8s, the trader did hold out the hope, however, that "who knows? Maybe they can still turn it around."

NewPage sector peer Catalyst Paper Corp.'s 7 3/8% subordinated notes due 2014 - which on Thursday had fallen 2 or 3 points to around the mid-62 range from 65 earlier, pulled down by generalized investor angst about the paper sector in the wake of the NewPage slide - continued to retreat on Friday.

A trader saw the Richmond, B.C.-based papermaker's bonds fall below 60 during the session on "decent volume" trading to 60½ bid, 61 offered.

"So paper did not fare very well," he said with no small degree of understatement.

Another market source saw those bonds at 60¾ bid, down 1 5/8 points on the day, while also seeing sector peer Verso Paper Holdings Corp.'s 11 3/8% notes due 2016 off by 5/8 point at 105 3/8 bid.

OPTI Canada moves lower

A trader saw OPTI Canada Inc.'s 8¼% notes due 2014 and 7 7/8% notes, also due 2014, fall to 47½ bid, 48 offered, which he called down 3 or 3½ points, on "decent" volume.

He saw the troubled Calgary, Alta.-based oil-sands energy company's senior secured bonds, like its 9% notes due 2012 at 98, little changed.

There was no fresh news out on the company.

He said that NewPage and OPTI "seemed to be the real big names of the day" from where he sat.

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