Neiman Marcus megadeal prices, moves up; Allied Vehicles prices; market firm on D.C. progress

By Paul Deckelman and Paul A. Harris

New York, Oct. 16 - Neiman Marcus Group Ltd. came to market on Wednesday with a $1.56 billion two-part offering consisting of eight-year cash-pay and PIK toggle notes. When the luxury retailer's big new deal hit the aftermarket, traders said that both halves of the transaction firmed smartly.

There was also a pricing from Allied Specialty Vehicles Inc., a maker of ambulances, fire engines and other specialty vehicles. However, the traders did not see any immediate secondary dealings in that $200 million six-year secured deal.

Tuesday's new deals from builder KB Home and broadcaster Gray Television, Inc. were each seen having firmed a little from the levels they had reached in initial aftermarket dealings following their respective pricings.

And there was continued activity in the recently remarketed bonds of wireless provider T-Mobile USA Inc.

Apart from the deals that have actually priced, syndicate source heard that Exopak Holding Corp. was hitting the road to market a $325 million bond deal, while Dole Foods Co. Inc. is expected to bring a similarly sized deal to market fairly soon.

Overall, traders said the market was firm, in line with improved stocks and Treasuries, on news reports indicating that a congressional solution to the government shutdown and the looming debt ceiling deadline might finally be within reach.

Statistical market-performance measures were up across the board.

Neiman Marcus sees demand

Primary markets in North America and Europe were active on Wednesday, although the news flow was muted.

In the dollar market, two issuers brought a combined three tranches of notes to raise a total of $1.76 billion.

The day's big dollar deal came from Neiman Marcus Group Ltd., which priced $1.56 billion of eight-year senior notes (Caa2/CCC+) in two tranches.

The deal included a $960 million tranche of cash-pay notes that priced at par to yield 8%, on top of price talk.

In addition, the company priced a $600 million tranche of PIK toggle notes that also priced at par and have a cash coupon and yield of 8¾% and a PIK coupon and yield of 9½%. The cash-pay yield printed at the tight end of yield talk, which had the PIK toggle notes coming 75 basis points to 100 bps behind the cash-pay notes, with a 75 bps coupon step-up for PIK payments.

Credit Suisse, RBC, Deutsche Bank, Goldman Sachs and Morgan Stanley were the joint bookrunners for the buyout deal.

Both tranches hit the ground running in the secondary market, with a trader marking both tranches at 102½ bid, 103½ in the street, not long after terms circulated.

A little later a portfolio manager had the 8% cash-pay notes at 102¾ bid, 103½ bid, and the 8¾%/4%/9½% PIK toggle notes at 103 bid, 103¾ offered.

"People are piling into the big, liquid deals and chasing them in the secondary," said the portfolio manager, who added last week's remarketing of $5.6 billion of T-Mobile USA, Inc. senior notes (Ba3/BB) in five tranches, by Deutsche Telekom, saw colossal demand.

"It seems like most of the rest of the stuff on the calendar is $200 million or $300 million, and people just aren't as interested in them," the buysider added.

Allied Specialty at wide end

Wednesday's other dollar-denominated deal would seem to lend credence to that buysider's last assertion.

Allied Specialty Vehicles priced a $200 million issue of 8½% six-year senior secured notes (B3/B+) at 99.417 to yield 8 5/8%.

The yield printed at the wide end of yield talk set in the 8½% area.

Deutsche Bank, Morgan Stanley and Goldman Sachs managed the debt refinancing and acquisition-related deal.

EWOS fixed and floating deal

There was also activity in Europe on Wednesday.

Norway's EWOS Group priced €225 million and NOK 1.81 billion of seven-year senior secured notes (B2/B).

The €225 million tranche of fixed-rate notes, downsized from €300 million, priced at par to yield 6¾%.

The yield came 12.5 bps inside of yield talk that was set in the 7% area.

Global coordinator Deutsche Bank will bill and deliver for the euro-denominated notes. Rabobank and Danske Bank were the joint bookrunners for the euro-denominated notes.

In addition, EWOS priced an upsized NOK 1.81 billion issue of floating-rate notes at par to yield three-month Nibor plus 500 bps.

The tranche was upsized from NOK 1 billion. The spread came at the tight end of the 500 bps to 525 bps spread talk.

Joint global coordinator Swedbank will bill and deliver for the krone-denominated tranche. Deutsche Bank was also a global coordinator for the krone-denominated tranche, and Danske Bank was the joint bookrunner for the same tranche.

Proceeds will be used to help fund the acquisition of EWOS by Altor Fund III GP Ltd. and Bain Capital LLC from Cemaq and to put cash on the balance sheet.

The financing also included NOK 1.04 billion Nibor plus 920 bps seven-year senior subordinated notes (/CCC+/) which were privately placed.

Crew Energy's C$150 million

In the Canadian market,Crew Energy Inc. priced a C$150 million issue of 8 3/8% seven-year senior notes (/B-/DBRS: B) at 99.454 to yield 8.48%.

The yield printed toward the wide end of yield talk that was set in the 8 3/8% area.

TD, GMP and Scotia managed the debt refinancing deal.

Exopack starts Thursday

Exopack Holding Corp. plans to start a roadshow on Thursday for a $325 million offering of six-year senior notes (Caa2/B-).

The roadshow wraps up on Oct. 23.

The bond deal is upsized from $250 million, with proceeds shifted from the concurrent term loan that is downsized to $675 million from $750 million, sources say.

Goldman Sachs, J.P. Morgan, BofA Merrill Lynch, Barclays, Investec and Morgan Stanley are the joint bookrunners.

Proceeds will be used to refinance debt and put cash on the balance sheet.

Elsewhere, look for Dole Food Co. Inc.'s $325 million offering of senior notes to surface in the very near future, a market source said.

The deal, backing the purchase of the company, will be led by Deutsche Bank, BofA Merrill Lynch and Scotia.

In the interim, announcements on a couple of new dollar deals, both in the sub-$500 million size range, could surface as early as Thursday, according to a syndicate official.

"It's `to-be-determined,'" the banker said, but added that the high yield was strong on Wednesday, so the announcements could indeed materialize.

Neiman Marcus trades up

In the secondary market, a trader said that the new megadeal from Dallas-based luxury retailer Neiman Marcus Group "did well," quoting both tranches of that $1.56 billion issue at 102¾ bid, 103½ offered.

A second trader said that the bonds had gotten as good as 103 bid, after both tranches had priced at par via the issuing entities, Mariposa Borrower, Inc. and Mariposa Merger Sub LLC.

And a third trader pegged the 8% cash-pay notes due 2021 at 102 bid, 102½ offered, while its PIK toggle notes had moved up to 102¼ bid, 102½ offered.

There was no immediate aftermarket activity seen in Orlando, Fla.-based Allied Specialty .Vehicles' new 8 ½% senior secured notes due 2019.

Busy trading in KB Home

Among Tuesday's deals, a trader saw KB Home's 7% notes due 2021 up ½ point at 100 7/8 bid, 101 3/8 offered, although a second trader pegged the Los Angeles-based builder's bonds at 100 3/8 bid, 101 offered.

A market source saw over $13 million of those bonds having changed hands at levels as high as 101 bid, up 11/16 point.

Familiar junk issuer KB had priced $450 million of the notes at par in a quick-to-market deal that was increased from its original $350 million size.

When they were freed for secondary dealings, the bonds had firmed to around 100 3/8 bid, 100 5/8 offered.

Tuesday's other deal - from Atlanta-based broadcaster Gray Television Inc. - was also seen higher on Wednesday. Its 7½% notes due 2020 were quoted by a trader as high as 103¼ bid, 103¾ offered, while a second trader located the bonds at 103 3/8 bid, 103 5/8 offered.

Gray had priced that quickly shopped $375 million add-on to its existing bonds at 102 1/8 to yield 6.984% after the deal was upsized from $300 million originally.

T-Mobile stays busy

T-Mobile USA's big $5.6 billion five-part deal remained active on Wednesday, traders said, although volume levels had dropped off from the super-charged volumes seen the week before.

"It's a five-part deal - it's going to be pretty tradable," a market source said.

Over $14 million of its 6.464% notes due 2019 changed hands on Wednesday, one of the most actively traded issues in Junkbondland. Those bonds were up by ¼ point at 104½ bid.

Deutsche Telekom AG, the parent company of Bellevue, Wash.-based wireless service T-Mobile, had priced $1.25 billion of those bonds late Tuesday at a reoffer price of 102 to yield 6.033%. They shot up on Wednesday on volume of over $150 million and continued to move up for the rest of last week on busy volume to a peak level around 104 3/8 to 105 bid, and were at 104¼ bid on Tuesday.

Its $1.25 billion of 6.542% notes due 2020 gained ½ point on $9 million of volume to end at 104 5/8 bid. Deutsche Telekom had priced those bonds last Tuesday at par to yield 6.541%, and they had moved up by the close on Friday to around 103¾ bid, tacking on another 3/8 point to go over the 104 bid mark.

Germany-based communications giant Deutsche Telekom, which owns some 72% of the American company, priced a total of $5.6 billion of those bonds, which it had received from T-Mobile as part of the complex financing arrangements for T-Mobile's acquisition via a reverse takeover transaction earlier this year of smaller rival MetroPCS Wireless Inc. Besides the 2019 and 2020 notes, the deal included $1.25 billion of 6.33% notes due 2021, which traded up 3/16 point on Wednesday to 103 5/16 bid, on turnover of over $14 million; its $1.25 billion of 6.731% notes due 2022, which gained 5/8 point on Wednesday to end at 103 3/8 bid, with over $11 million traded; and its $600 million of 6.836% notes due 2023. Over $2 million of those traded on Wednesday, ending at 103¼ bid, up 5/16 point.

After their pricing, all had moved up solidly in heavy trading totaling more than $600 million last Wednesday and $145 million on Thursday, before volume tapered off to more normal levels on Friday and continued that way on Tuesday and Wednesday.

Better market tone

A trader said that generally, "the high-yield world feels better," with the strong performance of the new Neiman Marcus bonds.

He also noted that "the whole market feels better, obviously, with what's going on with both stocks and [Treasury] bonds and the government looking like it's going to resolve its shutdown issues."

A second trader, also noting the relatively good news coming out of Washington about a likely congressional solution to the government shutdown problem and Thursday's looming debt-ceiling deadline, declared that "the market is obviously higher today, with the [Markit Series 21 CDX North American High Yield] index up ½ to ¾ point."

Market indicators firm again

Statistical junk-market performance indicators were meantime seen higher across the board on Wednesday, after having been unchanged-to-higher on Tuesday.

The Markit CDX index, as predicted, rose by ¾ point on Wednesday to 106½ bid, 106 9/16 offered, after having been unchanged on Tuesday.

The KDP High Yield Daily index improved by 2 bps on Wednesday to end at 73.73 after having risen by 8 bps on Tuesday. Wednesday's gain was its fourth in a row.

Its yield came in by 4 bps for a second straight session on Wednesday to end at 5.97%, its fourth consecutive decline.

And the widely followed Merrill Lynch High Yield Master II index made it five straight gains on Wednesday, rising by 0.154%. On Tuesday it had advanced by 0.104%.

The latest gain lifted its year-to-date return to 4.893% from Tuesday's 4.732% reading.

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