Thermadyne prices, gyrates, NV Energy, Service Corp. sell; junk firmer, GM off as IPO prices

By Paul Deckelman and Paul A. Harris

New York, Nov. 17 - Thermadyne Holdings Corp. came to market on Wednesday with a slightly upsized $260 million offering of seven-year notes, high yield syndicate sources said. The St. Louis-based industrial manufacturer's new bonds were seen by traders to have jumped as much as a point on the break - but then they came back down to end around their issue price.

Also pricing during the session were opportunistically timed and quickly marketed offerings from Nevada utility operator NV Energy, Inc. and deathcare giant Service Corp. International. The latter deal priced too late in the day for an aftermarket, but Reno-based NV Energy's issue shone brightly when it moved into the secondary realm, traders said.

They also saw a little more upside for the popular Dunkin' Brands eight-year deal which priced on Monday, while Ally Financial, Inc., which also did a bond deal on Monday, continued to struggle.

Away from the issues actually pricing, the syndicate sources heard price talk on issues being shopped around for possible pricing Thursday by Exterran Holdings, Inc., Nortek, Inc., Giraffe Acquisition Corp. - i.e. Gymboree Corp. - and Italian phone firm Wind Telecomunicazioni SpA.

Another Italian company, gaming systems maker Lottomatica Group, and Canadian airline caterer and restaurateur Cara Operations Ltd., were heard to be in the market with euro and Canadian dollar deals, respectively.

In the secondary arena, traders saw a generally firmer tone and a modest partial recovery from the pronounced slide seen on Monday and Tuesday, with statistical indicators turning mixed.

General Motors bonds settled in at lower levels, in line with the results of the restructured carmaker's pricing of its long-awaited stock offering, which will allow it to return to its former status as a publicly traded company beginning Thursday, while sharply cutting Uncle Sam's controlling stake in the company sometimes recently ridiculed as "Government Motors."

NV Energy at the tight end

For only the second time in the past nine sessions, the primary market put up an issuance total less than $1 billion on Wednesday.

Three issuers, each bringing a single tranche of junk, raised $825 million.

NV Energy priced a $315 million issue of 10-year senior notes Ba3/BB) at par to yield 6¼%.

The yield printed at the tight end of the 6 3/8% area price talk, according to a market source.

Credit Suisse, Bank of America Merrill Lynch and Deutsche Bank Securities were the joint bookrunners for the quick-to-market debt refinancing deal.

Themadyne slightly upsized

Meanwhile, St. Louis-based Thermadyne priced an upsized $260 million issue of seven-year senior secured notes (B3/B-) at par to yield 9%, at the tight end of the 9% to 9¼% price talk.

Jefferies & Co. and RBC Capital Markets were the joint bookrunners for the LBO deal.

Service Corp. oversubscribed

Also coming with a Wednesday drive-by was Service Corp. International.

The funeral services company priced a $250 million issue of 8.5-year senior notes (expected B1/confirmed BB-) at par to yield 7%, at the wide end of the 6 7/8% to 7% price talk.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners for the debt refinancing and general corporate purposes deal.

Investors saw the new Service Corp. paper coming at an attractive premium to the company's existing bonds, according to a syndicate official who added that the book was a couple of times oversubscribed.

The new Service Corp. 7% notes due 2019 traded up 1¼ points in the secondary, the banker said.

Talking the deals

Price talk surface on several deals during the mid-week session.

Gymboree Corp. talked its $400 million offering of eight-year senior notes (Caa1/B-) with a 9¼% area yield.

That deal, via Morgan Stanley and Credit Suisse, is set to price Thursday.

The issuing entity is Giraffe Acquisition Corp.

Meanwhile, Exterran Holdings talked its $350 million offering of eight-year senior notes (expected ratings Ba3/BB) with a 7¼% area yield.

Bank of America Merrill Lynch, Wells Fargo Securities, J.P. Morgan Securities LLC, BNP Paribas Securities Corp. and Credit Suisse Securities are the joint bookrunners.

Nortek downsizes, sets talk

Nortek downsized its eight-year senior notes offer (Caa2/CCC+) to $250 million from $300 million on Wednesday.

The Providence, R.I.-based building products manufacturer set price talk for the notes at the 9¾% area, and announced several other revisions to the deal.

The company revised its plans for the use of proceeds, which will now be used for general corporate purposes, including a potential acquisition. Previously proceeds were to be used to redeem Nortek's 11% notes due 2013, as well as for general corporate purposes, including but not limited to acquisitions.

Meanwhile a special call provision allowing the company to redeem up to 10% of issue for the first three years at 103 was removed. The notes have four years of call protection.

Bank of America Merrill Lynch, Credit Suisse Securities and UBS Investment Bank are the joint bookrunners.

Wind talks €3.2 billion

The European primary market continued to generate news on Wednesday.

Italy's Wind Telecommunicazioni set price talk for its €3.2 billion equivalent offerings of seven-year senior secured notes (Ba2/BB-).

A €2.5 billion tranche is talked with a 7½% area yield.

Meanwhile, a $1 billion tranche is talked with a 7¼% to 7½% yield.

The deal is set to price on Thursday.

Credit Suisse and Deutsche Bank are the global coordinators and joint bookrunners.

Banca IMI, Barclays Capital, BNP Paribas, Bank of America Merrill Lynch, Citigroup, Credit Agricole CIB, Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley, Natixis Bleichroeder, RBS Securities, UBS and UniCredit are also joint bookrunners.

Meanwhile yield "whisper" was heard on another sizable euro-denominated deal.

Europcar Group SA's €400 million offering of senior subordinated notes due April 2018 has early guidance of 9½%, according to a market source in Europe.

That deal, via Deutsche Bank, Credit Agricole, RBS and SG CIB, is expected to price before the end of the week.

Cara starts roadshow Friday

Finally, Cara Operations Ltd. will begin a roadshow on Friday in Toronto for a C$200 million offering of five-year senior secured second-lien notes.

The deal, which is being shopped by Scotia Capital, will continue to be marketed into the early part of the week ahead.

Proceeds from the sale of the notes will be used to reduce bank debt.

Thermadyne takes a wild ride

A trader said that when the new Thermadyne Holdings new seven-year paper broke in the aftermarket, the bonds shot up to 101 bid, 101½ offered.

However, he said that after that initial flurry, the bonds came back down almost as quickly as they had risen. "They traded up about a point - and now it's come in around a point," he said, quoting the notes as going out around par bid, 100¼ offered, little changed from their par issue price.

"101 was their high," another trader agreed, "but they're going out at their low," which he also saw around par.

NV Energy powers up

A trader saw NV Energy's 10-year notes "up quite a bit," pegging the utility operator's deal at 101½ bid, 102½ offered, up solidly from their par issue price.

A second trader quoted the issue at 101½ bid, 102 offered late in the session.

However, at least two traders said that they had not seen any sign of those bonds.

The day's other pricing, from Houston-based funeral home and cemetery operator Service Corp. International, came too late in the day for dealings.

Market still sweet on Dunkin'

The star of the secondary market among the recent new deals remained Dunkin' Brands, the Canton, Mass.-based franchisor of the popular Dunkin' Donuts and Baskin-Robbins ice cream stores.

Its $625 million of 9 5/8% notes due 2018, which priced at 98.5 on Monday to yield 9.9% and then immediately started to firm in the aftermarket, continued to strengthen on Wednesday, pushing up at least another ½ point on Wednesday to 100 1/8 bid, 100 3/8 offered.

"Who doesn't like Dunkin' Donuts?" another trader asked rhetorically, in seeing the bonds having firmed up to 100 1/8 bid, 100¼ offered, terming it "a really tight market, just trading right on top of each other."

Ally still friendless

Another notable deal from Monday, Detroit-based automotive and residential lender Ally Financial, on the other hand remained "a dog" in the words of a trader, who quoted its 6¼% notes due 2017 at 98 1/8 bid, 98¼ offered - up from the levels in the 97 area seen on Tuesday, but still down from the 98.602 level at which the $1 billion drive-by offering priced to yield 6½%.

"No they're not doing too well," another trader said, although he had them closer to issue at 98 3/8 bid, 99 offered.

MetroPCS comes off lows

Dallas-based pre-paid wireless telecommunications operator MetroPCS Communications Inc.'s 6 5/8% notes due 2020 remain well below the par level at which that $1 billion deal priced on Nov. 5.

However, a trader said that those bonds - which had fallen as low as 94 bid, 94¾ offered during Tuesday's dealings - were up by between 1 point and 1½ points from those lows on Wednesday, in line with the generally brighter tone seen in the junk market

Boyd bounces back

And a trader said that Boyd Gaming Corp.'s recently priced 9 1/8% notes due 2018 - which were seen as low as 94 bid, 94½ offered on Tuesday, had come back up on Wednesday to around 96 bid.

The Las Vegas-based operator of locally-oriented gaming casinos in Vegas and elsewhere had priced its $500 million deal at par on Oct. 28.

Waiting for more deals

A trader said that he "thought there were going to be a lot more new issues today," since Monday and Tuesday had been "jam-packed.

"I guess they'll come on [Thursday] and Friday." He added that "the calendar looks pretty busy through December."

Another trader noted that Burlington Coat Factory Warehouse Corp.'s scheduled offering of $500 million of eight-year notes had not priced by the close on Wednesday, even though price talk of a 10% area yield had circulated around the market on Tuesday. He suggested that the Burlington,. N.J.-based department store retailer's deal might be in a little trouble.

"I'm thinking that they may have to restructure that one," he opined. "I think they got some pushback on that original price talk of around 10%."

He said that he had heard color from people in the market that "they're probably going to have to widen that price talk out and do some covenant changes to get that one done."

That, he continued, seemed to be a symptom of the suddenly cooler conditions for issuance in the market. "It's not as easy as it was a week ago," when over $10 billion of new paper priced, "that's for sure."

Indicators turn mixed

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index ending up 3/8 point on Wednesday at 99 5/8 bid, 99 7/8 offered, after having declined by 7/16 point on Tuesday to fall below the psychologically significant par level for the first time since Oct. 22.

The KDP High Yield Daily index meantime turned back up by 12 basis points on Wednesday to end at an even 74.00, after Tuesday's 64 bps nosedive, which followed another loss of 28 bps on Monday. Its yield went down by 2 bps on Wednesday to 7.36%, after having ballooned upward by 18 bps on Tuesday.

However, the Merrill Lynch High Yield Master II index continued to lose ground, falling for a fourth consecutive session Wednesday as it declined by 0.09%, after Tuesday's big 0.57% drop off. That left its year-to-date return at 13.982%, the first time the index has finished under 14% since Oct. 22. The reading was down from Tuesday's close at 14.085%, and well below its peak level for 2010, a 15.602% reading recorded on Nov. 9.

Advancing issues broke out of a four-session slump on Wednesday to overtake decliners, although their winning margin was just a few dozen issues out of the nearly 1,500 which traded. On Tuesday, declining issues had led gainers by an eight-to-five margin.

Overall activity, represented by dollar-volume levels, eased by 2% on Wednesday, after having risen by 28% on Tuesday from the previous session's volume level.

On Tuesday, a trader said "we saw a little weakness in the secondary in some stuff, but today, it felt like there was more of a better bid, with less things for sale and people were trying to chase a little bit of yield here."

Wednesday's session, he continued "was definitely firmer - I didn't see as much weakness. You're not seeing the leg-downwards that we're used to in high yield. We saw things come in by 1/4, ½ [point on Tuesday], now they're back up by 1/8, by 1/4, so it really wasn't too big of a pulldown.

"There were a lot of bids around."

"We definitely saw a bounce from [Tuesday]," another trader said. "The market in general was actually firm today."

But while Wednesday was surely an improvement over Tuesday's struggle, he cautioned that "we're definitely still on a little more sense of heightened alert than we were just a week ago at this point in time."

While there was a "definitely better tone," he said that there were "not a lot of specific issues" that stood out.

GM falls as IPO takes place

But one name which did was Motors Liquidation Corp. - that is, the "old" General Motors Corp., holding the debt and other unwanted assets the carmaker left behind when it restructured last year.

A trader said "let's go with the big news," meaning the movement in those bonds as the "new" GM finally did its long-awaited initial public offering of shares.

GM's majority owner, the U.S. Treasury, and other owners including the United Auto Workers union's retiree healthcare trust and the Canadian and Ontario provincial government, together sold some 478 million of the shares in the carmaker which they had taken in return for bailing a faltering GM out and preventing it from going out of business completely in late 2008 and early 2009. The shares sold at $33, for total proceeds of $15.77 billion. Should the underwriters, as expected, pick up their option to buy additional shares, the total size of the IPO would rise to 550 million shares, for proceeds of $18.14 billion, which would reduce Washington's stake in the carmaker to 33% from the current 61%, while the UAW trust's stake will drop to 13% from 20% at present. The shares start trading publicly on Thursday under GM's former New York Stock Exchange ticker symbol - GM.

"We might as well start with the top of the charts," the trader said.

Over $50 million of GM's benchmark 8 3/8% bonds due 2033 traded, making it easily the busiest issue of the day in Junkbondland. A market source cautioned that the $50 million figure was likely on the low side, since the Trace tracking system is not specific about bond transaction amounts greater than $1 million. Such a trade, he said, "could be $1 million plus $1 - or it could be $5 million or even $10 million."

The first trader saw GM benchmarks at 34 bid, 34½ offered, which he called down around a point on the day.

"The stock was priced at $33, so everything [on the bond side] is going to be quoted like the stock," seeing the company's bonds other than the benchmarks at 33 bid, 33½ offered, including its 7.20% notes due 2025 and its 7.70% notes due 2016.

"The bonds are going to get converted to equity," establishing a parity between the newly set stock price and the bonds' price.

However, he noted, "your coupon does play a part in it," and because the 8 3/8s "carry a bigger coupon," they were trading above the other GM legacy bonds. "There was a lot of trading in that one," he declared, while "the lower coupons were about 1 point lower."

Another trader saw the GM benchmarks down ¾ point on the session at 34¼ bid, 35¼ offered.

He meantime saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 - which had skidded more than 2 points on Tuesday down to the 107½ bid, 108½ offered level - get all of that lost ground back, gaining 2½ points to end at 110 bid, 111 offered.

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