Seagate drives by; Nalco, Pilgrim's Pride, Trinidad to come; McClatchy hops, NewPage drops

By Paul Deckelman and Paul A. Harris

New York, Dec. 8 - Seagate HDD Cayman came to market on Wednesday with a solidly upsized $750 million issue of eight-year notes, opportunistically timed and quickly shopped around. The Scotts Valley, Calif.-based hard disk drive maker's new paper traded slightly above its par pricing level, traders said.

Apart from that pricing and a $200 million drive-by offering of five-year notes from Chinese property developer Yuzhou Properties Co. Ltd., the primary market mostly spent the day building its forward calendar.

In addition to Seagate, there were new-deal announcements from CNO Financial Group, Inc., healthcare services company ResCare , Inc. and water treatment and specialty chemicals provider Nalco Co. The latter's $1 billion equivalent two-part offering of dollar- and euro-denominated notes is expected to price on Thursday morning.

Previously announced deals from poultry producer Pilgrim's Pride Corp. and Canadian energy drilling equipment company Trinidad Drilling Ltd. are also expected to price on Thursday morning.

ResCare and CNO Financial meantime began marketing their deals to potential investors.

Among recently priced deals, both halves of Tuesday's offering by California homebuilder Standard Pacific Corp. were seen by traders to have come off the highs which they hit in initial trading on Tuesday. But Monday's deals from Citadel Broadcasting Corp. and Bumble Bee Acquisition Co./Bumble Bee Foods LP were pretty much hanging on to their aftermarket gains.

Away from the new-deal stage, the junk market was down a little after several straight sessions on the upside. One of the biggest losers was paper manufacturer NewPage Corp., which released lowered guidance and announced a plant closing.

However, newspaper publisher McClatchy Co.'s bonds were better as its CEO predicted continued improvement in advertising revenues heading into 2011.

Seagate upsizes

Although it pushed at the $1 billion-mark, the dollar-denominated market came up slightly shy on Wednesday.

Two issuers, each bringing a single tranche, raised $946 million.

Seagate HDD Cayman priced a massively upsized $750 million issue of eight-year senior notes (Ba1/BB+) at par to yield 7¾%, at the tight end of the 7¾% to 8% price talk. The size was increased from $500 million.

Morgan Stanley and Bank of America Merrill Lynch were the joint bookrunners for the quick-to-market issue.

The Scotts Valley, Calif.-based hard disk drive and data storage products company will use the proceeds for general corporate purposes, which may include the repayment, redemption and/or repurchase of some of its outstanding debt.

Yuzhou Properties returns

Meanwhile, after pulling its deal in mid-November, Yuzhou Properties returned to the high-yield market on Wednesday and priced a $200 million issue of 13½% five-year senior notes (B2/B) at 98.24 to yield 14%.

The deal came on top of the most recent price talk. However when the Fujian Province-based property developer came into the market earlier, in November, it was looking for a yield in the 13% to 13½% context, a source said.

Bank of China International, Nomura and Royal Bank of Scotland managed the general corporate purposes deal.

Nalco talks $1 billion deal

Looking ahead to what will likely be a busy Thursday session, Nalco Co. set price talk for its $1 billion equivalent two-part offering of eight-year senior notes (confirmed Ba2/expected BB-) on Wednesday.

The Naperville, Ill.-based water treatment services and products supplier talked its offering of dollar-denominated notes with a 6 5/8% to 6¾% yield. An offering of euro-denominated notes is talked with a 7% area yield. Tranche sizes remain to be determined.

Goldman Sachs & Co. is the left lead bookrunner for the quick-to-market debt refinancing deal. Citigroup Global Markets Inc., HSBC and Deutsche Bank Securities Inc. are the joint bookrunners.

Talking the deals

Price talk also surfaced on Trinidad Drilling's $450 million offering of eight-year senior notes (B2/BB-). The bonds are expected to come with an 8% to 8¼% yield, according to an informed source.

Wells Fargo Securities is the left bookrunner for the Rule 144A and Regulation S for life notes. Citigroup Global Markets Inc., HSBC and Deutsche Bank Securities Inc. are the joint bookrunners.

Meanwhile Pilgrim's Pride talked its $350 million offering of eight-year senior notes (B3/BB-) with an 8% to 8¼% yield.

Barclays Capital Inc., BMO Nesbitt Burns, Jefferies & Co., Morgan Stanley & Co. Inc. and Rabo Securities are the joint bookrunners.

And although no price talk or other hard news surfaced, the market was buzzing about FMG Resources Pty. Ltd.'s $800 million offering of seven-year senior notes (B1/B/B+) via bookrunner JPMorgan.

Early Wednesday, word held that timing had been moved ahead on the deal, which had initially been expected to price on Thursday.

However, no terms or price talk were available Wednesday night as Prospect News was heading for press.

Rate discussions are in the 6¾% range, according to a debt capital markets banker not in the deal.

CNO starts roadshow

CNO Financial Group began marketing a $300 million offering of seven-year senior secured notes on Wednesday.

The Rule 144A for life offering, which comes to market via joint bookrunners Morgan Stanley and Barclays Capital, is set to price during the week ahead.

Proceeds, along with cash on hand and a new credit facility, will be used to repay existing bank debt, with proceeds from any upsizing of the bonds to be used for general corporate purposes

ResCare begins marketing

Meanwhile ResCare began a roadshow for a $200 million offering of eight-year senior notes (B3/B-).

The deal, which is being led by joint bookrunners J.P. Morgan Securities LLC and Bank of America Merrill Lynch, is expected to price early in the week ahead.

Proceeds will be used to repurchase and retire $150 million of the company's 7¾% senior notes due 2013, to fund the second-step share exchange through which an affiliate of Onex Partners III, LP will complete the acquisition of all of the equity shares of ResCare, and for general corporate purposes.

Looking beyond Wednesday's primary market news, sources advised that the primary is apt to remain busy through the week ahead, and perhaps somewhat beyond.

However, 2010 may have seen its last full roadshow announcement, a syndicate source said on Wednesday.

The 2010 business yet to be announced is likely to come quick to market or with a marketing regime consisting of one or two days of investor calls.

New Seagates don't go far

When Seagate's new eight-year bonds began trading around, they were quoted at one desk "right above issue," in a 1001/4- 100½ bid context, after having priced at par.

A little later on, a trader there said the bonds had come by ¼ from the pricing level to around 1001/4.

A second trader quoted them going home at par bid, 100¾ offered,

Standard Pacific sheds gains

A trader said that he had seen Irvine, Calif.-based homebuilder Standard Pacific's new 8 3/8% notes due 2018 - sold as an add-on to its existing $300 million of those bonds priced earlier this year - trading in the 102-103 area late Tuesday, versus the 102.25 level at which the $275 million issue had priced, while seeing its $400 million of new 8 3/8% notes due 2021 at 99¾ bid, 100½ offered, up a little from 99.154 at issue.

But he said he had not seen any trace of the new bonds on Wednesday and cautioned that "with these [new] things, you never know after a day or two, if someone runs them up, or runs them down."

A second trader also did not see those bonds on Wednesday.

But a third did - and pegged the 2018s as having eased to 100¾ bid, 101¾ offered and the 2021s as having dipped to bid levels between 98 and 99, asking rhetorically "they didn't do so good, did they?"

Buyers getting more choosy?

A trader, noting the somewhat more skeptical reaction which some new deals have been getting since the junk market's peak in early November, pointed out that now, "it is December - the year-end is coming and there's a little window-dressing going on. Maybe [investors] are raising a little cash, and trying to keep the powder dry for the deals that might try to squeeze in before the end of the year that might be a little more attractive."

He suggested that "most accounts are positive - they've made their year, and they don't really have to do anything - they've beat their index, or whatever they have to do, and I think they're picking and choosing their spots. I think they're getting a little more picky and choosy on covenants and not just accepting the deals that come - they're saying 'no, that doesn't work, we want this' - and I think they're getting it.

"That's why the deals aren't still coming so fast and furious."

Monday gainers hold on

But some of the new deals are still posting pretty respectable aftermarket gains. A trader said that Bumble Bee's 9% senior secured notes due 2017 were at 102½ bid, 103 offered.

The San Diego-based canned fish company had priced its $605 million issue on Monday at par, with the bonds then moving up later that session to between 100½ and 101.

Another Monday winner, Citadel Broadcasting's 7¾% notes due 2018, had moved up to 102½ bid, 103½ offered.

The Las Vegas-based radio station owner had priced its $400 million of bonds at par and they had moved up to 102 bid, 103 offered in late trading on Monday.

Secondary indicators soften up

Away from the new-deal realm, a trader saw the CDX North American Series 15 HY index down by ¼ point on Wednesday to end at 101¼ bid, 101½ offered, after having gained ½ point on Tuesday.

The KDP High Yield Daily index meantime fell by 18 basis points on Wednesday to close at 73.93, after having gained 28 bps on Tuesday. Its yield rose by 3 bps on Wednesday to close at 7.40%, after having declined by 7 bps on Tuesday.

The Merrill Lynch High Yield Master II index fell by 0.104% on Wednesday after having gained 0.165% on Tuesday. That pushed its year-to-date return down to 14.108% on Wednesday from Tuesday's 14.227%. It also remains down considerably from the 2010 peak level of 15.602% recorded on Nov. 9.

Advancing issues fell behind decliners on Wednesday after having led them for five straight sessions. The losers led the winners by a better than seven-to-six margin.

Overall activity, represented by dollar-volume levels, fell by 13% on Wednesday after having jumped by a full 50% on Tuesday from the previous session's levels.

Among specific names, a trader said that "paper people have been bouncing around today," citing the drop in paper manufacturer NewPage Corp.'s bonds and the gains in a major paper customer, newspaper publisher McClatchy.

NewPage gets pummeled

A trader said that NewPage "was the big mover this morning," citing as a possible driver for its slide the news that the Miamisburg, Ohio-based coated-paper manufacturer plans a big plant closing - an indicator that the hoped-for rebound in demand for the company's products is not taking place, or at least, not taking place strongly enough. NewPage will shutter its plant in Whiting, Wis., in late February, with a loss of 360 jobs there. NewPage said the Whiting mill is its most expensive to operate, and it plans to shift production to cheaper mills.

The trader said that the company's 10% notes due 2012 plunged by 8 points in the early going, down to 56 bid from the lower 60s - the level to which those bonds had risen on Tuesday, when they gained about 3 points on the day, though on no fresh news that might explain the gain.

After hitting that low, he said that the bonds moved back up to around 58 bid, 59 offered - still down around 5 or 6 points from Tuesday's closing levels.

He also saw its 11 3/8% senior secured notes due 2014 drop as low as 91½ bid, 92½ offered, before ending at 92 bid, 92½ offered, a little below its recent levels, but said that "it was the 10s that got beat up."

NewPage, he concluded was "kind of the excitement today" away from the junk new-deal arena.

Another trader, while also seeing the NewPage 10s get pounded around, while the senior bonds also lost a little ground, opined that the company's lower guidance, released at the same time that it announced the close of the Whiting plant, was probably the major factor in its losses Wednesday.

He said its bonds "seemed to move around a little bit," with the 11 3/8s ending at 92 bid, 93 offered, down a point from 93 bid, 94 offered on Tuesday. There were "non-stop quotes on the issues" all day, with "tens of millions" of the company's bonds trading.

He saw the 10% notes drop to 56 bid, 57 offered early on, and move up to close around 58 bid, calling them down 5 points on "one big, ugly move."

At another shop, a market source saw the company's 12% notes due 2013 dive by 5 points down to 28 bid.

In addition to announcing the closure of Whiting mill - with the company's president and chief executive officer, George Martin, noting that despite the modest pickup in demand, it remains "a difficult time for the paper industry, for NewPage and for many of our customers" - NewPage also released lowered guidance for the current fourth quarter.

NewPage said it expects to report adjusted EBITDA of $125 million to $135 million and a net loss of between $275 million and $315 million - considerably more red ink than the year-earlier $55 million. While EBITDA will be up from its 2009 fourth-quarter total of $88 million, it will still come in below previous expectations. Earlier this year, NewPage had confidently predicted that fourth-quarter EBITDA would be anywhere from $55 million to $65 million more than third-quarter EBITDA - which ended up coming in at $106 million, down from $140 million a year earlier.

One of the trader said that while NewPage sector peer Catalyst Paper Corp. was also lower, "no way was there as much activity as in NewPage."

He saw the Richmond, B.C.-based paper company's 7 3/8% notes due 2014 down ½ point at 69 bid, 70 offered, although he said there was very little activity there." He saw "a little more" in the way of dealings in its 11% notes due 2016, which ended around 94 bid, down ½ point.

McClatchy bonds better

While NewPage and other paper companies were fizzling, one of their top customers' bonds were sizzling, as a trader saw sharp gains in McClatchy Co.'s bonds, with its 5¾% notes due 2017 "up a few points today" around 73 bid, 73½ offered, figuring a rise of more than 3 points.

"I saw it quoted a lot," he said. "There was a lotta, lot of volume in this name today," estimating that "tens of millions of it were trading" across the several issues in the Sacramento, Calif.-based newspaper publisher's capital structure.

He also saw the 6 7/8% bonds due 2029 around 60 bid, also up at least 3 points on the session, though on "not as much trading, though" as the 53/4s.

McClatchy's 11½% secured notes due 2017 were seen up ½ point at 107¾ bid, on what the trader called "decent volume."

At another desk, a trader quoted the 53/4s up 3 3/8 points, at 72¾ bid, while the 111/2s rose ½ point to 1071/2.

Its New York Stock Exchange-traded shares meantime zoomed by 46 cents, or 12.96%, to close at $4.01, on volume of 3.37 million shares, nearly four times the norm.

McClatchy, the third-largest U.S. newspaper company, owns papers including The Miami Herald, The Kansas City Star, the Fort Worth Star-Telegram and its hometown paper, The Sacramento Bee. In a presentation at the UBS Global Media & Communications Conference on Wednesday in New York, it reported that the decline in advertising revenues seen in recent quarters seemed to be slowing down, with revenues off by 5.8% in October and November from year-earlier levels, versus the 6.4% decline seen in the third quarter, the 8.2% drop seen in the second quarter and the first quarter's 11.2% plunge.

The company's chairman and chief executive officer, Gary Pruitt, said that the slowing of that decline was a sign of improvement and had been apparent each quarter this year. He predicted that the better trend would continue on into 2011.

OPTI Canada weak

Elsewhere, a trader saw "not much activity, and an unchanged to lower tone" in OPTI Canada's bonds. The paper has recently been under pressure as the Calgary, Alta.-based oil sands energy producer predicted likely lower output than previously anticipated from the big Long Lake facility in rural Alberta which is 35% owned by OPTI.

The trader quoted the company's 7 7/8% notes due 2014 ending around 70 bid, calling that "a little lower where they were" previously, adding "but I'm not seeing much activity."

He pegged OPTI's 8¼% notes due 2014 also around a 70-71 context adding that there was "not much there."

Auto bonds in a skid

A trader saw Motors Liquidation Co.'s benchmark 8 3/8% bonds due 2033 ending around 323/4, at the higher end of the day's 321/2- 32¾ range, on "a decent amount of trading."

But another trader said the bonds - issued by the former General Motors Corp. and left with that now-re-named company as GM shed its old debt and refashioned itself into the profitable "new" General Motors Co. - lost 3/8 point to end at 32¼ bid, 32¾ offered.

He also saw GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 fall by 1¾ points to end at 106¾ bid, 107¾ offered.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.