Junk off with sagging stocks; Ineos prices two-parter, Regal, OnCure to come; Essar bows out

By Paul Deckelman and Paul A. Harris

New York, May 5 - The high yield secondary market found itself undeniably in retreat for a second consecutive session on Wednesday, as Junkbondland continued to take its cues from a stumbling stock market thrown for a loop by continued investor fears over the economic basket case that is Greece, as well as concerns that the contagion could spread to other overleveraged countries in Europe or elsewhere.

Statistical indexes of junk bond performance were continuing to move to the downside, and lists of active movers mostly included issues moving lower, including such well known names as General Motors Corp. and Rite Aid Corp., gaming companies like Harrah's Operating Co. and paper names like NewPage Corp.

In the primary arena, Ineos Finance plc, an arm of U.K. chemical company Ineos Group Ltd., came to market with an upsized two-part offering of dollar- and euro-denominated five-year senior secured notes. Traders saw the dollar notes initially firm solidly when they were freed for secondary dealings, but give some of that back as the day wore on.

The only other pricing of the day was from another non-U.S. issuer, a $120 million deal from Hong Kong property company Fantasia Holdings Group Ltd.

Elsewhere, price talk emerged on OnCure Holdings, Inc.'s $210 million offering of seven-year senior secured notes, with the radiation oncology treatment center operator's deal expected to price early Thursday. There was also talk out on American Petroleum Tanker Parent LLC's $275 million issue of secured bonds.

Knoxville, Tenn.-based Regal Cinemas Inc. announced a $250 million add-on offering to its existing 2019 bonds, a deal expected to price on Thursday

German auto parts maker TMD Friction Holdings GmbH was heard by syndicate sources to have started a road show to market a planned €160 million offering of seven-year secured notes to potential investors, while Canadian agribusiness concern Viterra Inc. will hit the road next week with its C$500 million 10-year deal.

While the forward calendar was thus fattening modestly, it lost a deal, as India-based steelmaker Essar Steel Holdings Ltd. and its Gallop Holdings LLC U.S. subsidiary were heard to have postponed their planned benchmark-sized issue of seven-year dollar-denominated notes -- the latest of several prospective junk bond deals to recently bite the dust, even amid an otherwise busy primary run.

Greek troubles hit primary

Meanwhile, fallout from the financial difficulties that have taken hold in the Eurozone - difficulties that center on the distressed sovereign debt of Greece - began to be felt in the high-yield primary market on Wednesday, the a syndicate official said, adding that junk significantly underperformed U.S. equities, which also moved lower on the day.

Early in the session high-beta bonds were down as much as 3 to 4 points, according to a trader.

However those prices recovered significantly. Heading into the middle of the New York day high-beta junk bonds were down only 1 to 2 points, the source specified.

"Liquidity remains fleeting," the trader commented.

Ineos 10-times oversubscribed

Although there certainly were signs of chop in the primary market, two issuers - bringing a combined total of three tranches - managed to cross the finish line on Wednesday.

Dollar-denominated issuance came to about $688 million.

After retooling tranche sizes, England's Ineos Finance priced €700 million equivalent of five-year senior secured notes (B2/B) in a dual tranche deal.

The specialty petrochemical company priced a downsized $570 million tranche of 9% notes at par, with the 9% yield printing at the tight end of the 9% to 9¼% price talk. The dollar-denominated tranche was decreased from $585 million.

INEOS also priced an upsized €300 million tranche of 9¼% notes, also at par, with the yield printing at the tight end of the 9¼% to 9½% price talk. The euro-denominated tranche was upsized from €250 million.

The resizing of the tranches reflected sentiment on the part of European investors that the euro-denominated tranche should be bigger than the €250 million which the company initially brought to the market, the source said.

The deal was around 10-times oversubscribed and went very well, the official added.

Barclays Capital and JPMorgan were the joint physical bookrunners for the bank debt refinancing. Citigroup and Morgan Stanley were the joint bookrunners.

Fantasia prices $120 million

Meanwhile, Hong Kong's Fantasia Holdings Group Co. Ltd. priced $120 million of 14% notes due 2015 (B2/B+/) at 98.264 to yield 14½%, on top of price talk.

Citigroup Global Markets, Merrill Lynch International and UBS AG were the bookrunners.

The property developer will used the proceeds for general corporate purposes and to fund property projects.

OnCure sets talk

Setting the stage for Thursday's session, OnCure Holdings, Inc. talked its $210 million offering of seven-year senior secured notes (B2/B) to yield 12% area, including about 1.5 points of original issue discount.

The deal is set to price on Thursday morning.

Jefferies & Co. has the books for the debt refinancing and general corporate purposes deal.

Americold upsizes, boosts price talk

Elsewhere, price talk increased twice on the upsized Americold Warehouse Investment Portfolio $325 million offering of 10-year senior secured notes, market sources said on Wednesday.

The talk increased to a 7 7/8% area yield. Earlier in the session talk of the 7¾% area was heard.

The deal was talked late last week at the 7 5/8% area.

Pricing is set for Thursday morning.

Goldman Sachs & Co., Deutsche Bank Securities Inc. and RBC Capital markets Corp. are the bookrunners.

Proceeds, in addition to proceeds from a concurrent initial public offering of common shares, will be used to fund the acquisition of assets from Versacold and for general corporate purposes.

Essar postpones

Meanwhile, India's Essar Steel Holdings Ltd. postponed its benchmark offering of dollar-denominated seven-year senior unsecured notes (B2/B).

Investors were concerned about the company's performance, given the use of proceeds, which included capital expenditures and acquisitions, according to an informed source.

The deal was also impeded by the fallout the unfolding financial crisis in Europe.

The deal could come back to the market within six months, pending Essar Steel's performance in the interim, the source added.

Bank of America Merrill Lynch, Deutsche Bank Securities and Standard Chartered Bank were joint bookrunners.

In addition to capital expenditures and acquisitions, the Mumbai-based vertically integrated global steel producer intended to use some proceeds from the bond deal to repay debt and for general corporate purposes.

Regal Cinemas to tap 8 5/8% notes

The rocky Wednesday session did see a couple of new deals added to the calendar.

Regal Cinemas Corp. will host an investor call at 11 a.m. ET on Thursday for a $250 million add-on to its 8 5/8% senior unsecured notes due on July 15, 2019.

Credit Suisse, Barclays Capital, Bank of America Merrill Lynch and Deutsche Bank Securities are joint bookrunners.

The Knoxville, Tenn.-based motion picture exhibitor will use the proceeds, along with proceeds from a concurrent senior secured credit facility, to repay a portion of its senior secured term loan and to redeem its existing senior subordinated notes.

The original $400 million issue priced at 97.561 to yield 9% on July 9, 2009

TMD Friction starts roadshow

Finally, Germany's TMD Friction Finance SA began a roadshow on Wednesday in Europe for its €160 million offering of seven-year senior secured notes (expected ratings B3/B).

Credit Suisse and Quirin Bank are joint bookrunners for the Rule 144A and Regulation S for life deal.

Proceeds will be used to refinance the existing shareholder loan and for general corporate purposes.

New Ineos bonds rise, come off highs

A trader said that the new Ineos Finance 9% dollar-denominated senior secured notes due 2015 initially firmed to 101½ bid, 102 offered when they moved into the aftermarket, well up from the par level at which the $570 million issue - downsized from the originally planned $585 million - had priced.

However, by later in the afternoon, the bonds were seen at 101 bid, 101½ offered, having come in from that early peak.

"They were trading around the 101 [bid] level a couple of times," said a trader, "but they were still up [from issue]. It was a respectable performance."

At another desk, a trader saw both those dollar notes as well as the €300 million of euro-denominated 9¼% senior secured notes due 2015 going out at 100¾ bid, 101¼ offered. Like the dollar bonds, the euro-denominated tranche - upsized from the originally planned €250 million -- had priced at par.

Recent deals in retreat

Among recently priced issues, a trader saw Beazer Homes USA Inc.'s new 9 1/8% notes due 2018 "down on the day," with a second pegging those bonds at 99 bid; the Atlanta-based homebuilder had priced $300 million of the notes at par on Tuesday, and they had gone home that session trading around a par-100¼ context.

The second trader also saw Lantheus Medical Imaging, Inc.'s new 9¾% notes due 2017 trading into a 99½ bid in the morning and not improving from there. The Billerica, Mass.-based supplier of products for the medical diagnostic imaging industry had priced $250 million of the bonds - upsized from the originally planned $250 million - on Tuesday at par, and they had actually firmed to 100½ bid, 101½ offered in the aftermarket, before going out late Tuesday offered at 100 1/8.

Market indicators continue plunge

Among bonds not connected with the new-deal market, a trader saw the CDX Series 14 index plummet by 1½ points on Wednesday to end at 97 5/8 bid, 97 7/8 offered. That slide came on the heels of a 1 point retreat on Tuesday.

The KDP High Yield Daily Index was meantime freefalling by 62 basis points on Wednesday, to finish at 72.29, after having fallen by 20 bps on Tuesday. Its yield gapped out by 22 bps to 8.08%, after having widened by 7 bps on Tuesday.

Advancing issues remained behind decliners for a second straight session on Wednesday, as the latter widened their advantage to better than eight to five.

Overall market activity, represented by dollar-volume levels, jumped by 34% on Wednesday from the levels seen the previous session.

Junk is sunk

A trader characterized Wednesday's session as "a really bad day," while a second said it was "an ugly day in credit. Stocks went down, though not too horribly" -- the bellwether Dow Jones Industrial Average lost 58.65 points, or 0.54%, on top of the previous session's 225.06-point swoon, to finish at 10,868.12 - "and Greece is on fire again" as a financial trouble spot.

At another shop, a trader opined that "everything was down 1 or 2 points early in the morning. We bounced back and ended the day still down, but off the lows."

It was, he said, "just one of those days where you got out of the way and let it come in.

"Stuff trades down 2 points, and then 10-minutes later you see something offered, and you try to buy it and it's not there, then a half hour later, it's offered even cheaper. It was just all over the place."

He added that "if it was anywhere near a halfway decent bid, it probably got hit today."

He asked, rhetorically: "Is this what we have to look forward to for the next three months?"

Yet another trader declared that that "if you want to basically sum up today, it was more of a s-t show. Stuff was down 2 to 3 points in a lot of spots. We rallied back, and then we faded into the close."

He added that "we tracked equity all day long - we were getting hammered in the morning, and then stocks came back, and the high yield market came back some, but then equities faded again, and high yield went with it. So this was probably one of your better correlation trades with equities that we've seen in a long time."

All told, he said, the junk market "was definitely very sloppy and weak."

Autos in the breakdown lane

Among specific issues, a trader said that General Motors Corp.'s bonds were "really active," ending down 1½ points on the day. He quoted GM's benchmark 8 3/8% bonds due 2033 ending at 34½ bid, while seeing GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 off a point at 91 bid, 92 offered. However, he said that "GM had a lot activity, while Ford was just quoted lower. There was no volume to speak of."

At another desk, a trader said the GM benchmark bonds were down a deuce at 34½ bid, 35½ offered, while the Ford long bonds lost ½ point to end at 91 bid, 92 offered.

A third trader while seeing the GM benchmarks trading as low as 34 early in the session, that "they bounced off their lows" to close at 35¼ bid, 36¼ offered, which he called "still down a point."

Gaming bonds pushed down

A trader said that Harrah's bonds "were probably down 2 points, MGM [Mirage] were down 2 points, and then bounced back to close down 1, in the casino space."

He also saw Pinnacle Entertainment, Inc.'s recently priced 8¾% senior subordinated notes due 2020 trading as low as 98 bid, contrasting that with the par level at which the company - like Harrah's and MGM a Las Vegas-based casino operator - had priced its $350 million offering of the bonds, upsized from the originally announced $250 million - just last Thursday.

At another desk, the MGM 6 5/8% notes due 2015 were being quoted at 85 bid, down nearly 2 points on the day, while Harrah's 10% notes due 2018 were also at 85, down more than 2 points. Las Vegas-based sector peer Boyd Gaming Corp.'s 7¾% notes due 2012 lost a point on the day to finish just under par.

Sorenson seems to steady

A trader said that Sorenson Communications' recently volatile 10½% senior secured notes due 2015 "bounced off the bottom" to end the day at around 62½ bid, 63½ offered, down from the day's peak around 64. After having seen the Salt Lake City-based communications technology company's bonds having traded on Tuesday in a 58-60 context, he said they started Wednesday at around 59 bid, and were ending "up a little higher" around the 62ish level, "so that one was pretty active and a little higher on the day by a couple of points."

Another trader said that Sorenson's bonds - trading down sharply from the near-par levels they had held at the end of last week on the prospect that company might receive sharply reduced compensation payments under a federal formula for telephone services they provide to certain handicapped callers -- had opened at 59 bid, 561 offered and went out at 63 bid, 64 offered, but opined that "They seem to have settled into the lower 60s, and they may be there for a while."

Retailers trade off

A trader said that retailing was another area in retreat, seeing Rite Aid Corp.'s guaranteed unsecured paper "back down around 85 or 87, depending which issue," estimating them down another point or two on the session.

Another participant saw the Camp Hill, Pa.-based Number-Three U.S. drugstore chain operator's 9½% notes due 2017 fall nearly 2 points to end at 84¾ bid in brisk trading. The company's 9 3/8% notes due 2015 gave up more than 3 points to end at 86, while its 8 5/8% notes due 2015 were off 2 points at just under 87. However, a market source saw Rite Aid's 7.70% bonds due 2027 bucking the general trend and rising by about ¾ point on the day to close at 64.

Paper punched out

A trader said the paper and packaging sector was down, with NewPage Corp.'s 10% notes due 2012 ending around 681/2-69, with the last trade around 69, which he called down a point or so, on "not a lot of trading" in the Miamisburg, Ohio-based coated-paper manufacturer's bonds.

At another desk, a market source said the NewPage notes had moved down to the 67 level, calling that a 4 point loss on the session

The first trader saw Catalyst Paper Corp.'s bonds lower, with the Richmond, B.C.-based paper maker's 11% senior secured notes due 2016 around 95 bid, down a point.

He also saw Smurfit-Stone Container Corp.'s paper "a couple of points" lower, with the 8¼% notes and 8 3/8% notes both due 2012 off by 2 or 3 points to around the 96-96½ area.

Another market participant said the 8 3/8s were down 3 points on the day at 96½ bid, while the 81/4s likewise were down a trey, at just under the 96 mark.

CIT seen off

A trader saw CIT Group Inc.'s bonds 'probably down on the day," pegging the New York-based commercial lender's 7% notes due 2013 at 97 bid, going home.

"They were a little lower than that," during the session, he said, but were ending around 97, which he called down ½ to 1 point. He saw the 7% notes due 2017 easing to a 93ish level, down a point. He said that there was "good volume in that name," and "a little volatility."

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