Split-rated Wyndham prices, rises; other deals hit road; TreeHouse holds gains in firm market

By Paul Deckelman and Paul A. Harris

New York, Feb. 22 - The high-yield primary market continued to come back to life on Monday with one pricing, several deals emerging and the borrowers for those sales starting road shows to market them to investors, and price talk coming out on another issue already out there.

Wyndham Worldwide Corp. priced a barely split-rated (Ba1/BBB-) $250 million offering of 10-year notes, just hours after that drive-by deal had first popped up on the radar screens. When the new bonds moved into the secondary market, they were seen to have firmed about a point, helped by a generally positive market tone.

Oshkosh Corp. announced plans to sell $500 million of seven- and 10-year notes in a two-part deal, while Central Garden & Pet Co. unveiled a $300 million offering of eight-year paper. High yield syndicate sources later heard that both companies would start roadshows on Tuesday to market the offerings, with Central Garden & Pet's pricing expected later in the week, while further timing on the Oshkosh deal was not immediately available.

The sources also heard that a few other deals had come into the market, without the benefit of formal announcements, and were also being shopped around to investors. Express, LLC/Express Finance Corp. and Learning Care Group (US) No. 2 were beginning roadshows on Tuesday, with pricing expected next week, while a little more imminently, Niska Gas Storage, LLC was heard to be holding an investor call on Tuesday for would-be buyers of its $800 million offering of units, which will consist of a mixture of senior notes issued by its U.S. and Canadian subsidiaries; the Calgary, Alta.-based natural gas storage company's deal is seen likely to price later in the week.

That's also when Reddy Ice Holdings, Inc.'s $300 million of senior secured notes is seen coming to market, after a short roadshow which began on Monday.

Price talk meantime surfaced from RDS Ultra-Deepwater, Ltd., whose $260 million of senior secured seven-year notes are heard likely to price on Wednesday morning.

Among recently priced deals, TreeHouse Foods Inc.'s new issue of eight-year paper, which priced on Friday and then moved smartly higher on the break, was quoted Monday as hanging onto to those gains, amid the backdrop of a generally stronger secondary arena, which was building on the gains notched in last week's dealings.

Niska plans $800 million

Although no high-yield deals priced on Monday, the forward calendar saw a conspicuous build-out of offerings set to price during the fortnight ahead.

Niska Gas Storage plans to price an $800 million offering of eight-year senior notes units via Canadian- and U.S. financing units this week.

An investor call is set for 11 a.m. ET on Tuesday.

Each $1,000 unit will be comprised of $218.75 from Niska Gas Storage US Finance Corp. and $781.25 from Niska Gas Storage Canada Finance Corp.

Morgan Stanley, UBS Investment Bank, Goldman, Sachs & Co., Credit Suisse and RBC Capital Markets are joint bookrunners for the debt refinancing and dividend deal.

Oshkosh starts roadshow Tuesday

Meanwhile Oshkosh Corp. will begin a roadshow on Tuesday for a $500 million offering of senior notes.

The deal is comprised of tranches of seven-year years, which come with three years of call protection, and 10-year notes, which come with five years of call protection.

The roadshow wraps up on Friday, and the notes are expected to price after that.

Bank of America Merrill Lynch, Goldman Sachs & Co. and JP Morgan are joint bookrunners for the bank debt refinancing.

Reddy Ice to price this week

Reddy Ice Holdings, Inc. plans to price a $300 million offering of five-year first-lien senior secured notes (B1) this week following an investor roadshow.

JP Morgan is leading a syndicate of banks.

The Dallas-based packaged ice company will use the proceeds to refinance its existing credit facility.

Learning Care readies secured deal

Learning Care Group (US) No. 2 Inc. will begin a roadshow on Tuesday for a $265 million offering of five-year senior secured notes (expected ratings B2/CCC+).

The roadshow wraps up on March 2. Pricing is set for the middle part of the March 1 week.

Barclays Capital, Wells Fargo Securities and Morgan Stanley are joint bookrunners for the debt refinancing and general corporate purposes deal.

Express to sell $200 million

Express, LLC and Express Finance Corp. will begin a roadshow on Tuesday for a $200 million offering of senior notes due March 1, 2018.

The roadshow wraps up on March 1, and the notes are expected to price after that.

Bank of America Merrill Lynch, Goldman Sachs & Co. and Morgan Stanley are joint bookrunners for the debt refinancing and dividend-funding deal.

RDS Ultra-Deepwater sets price talk

Looking toward the Tuesday session, RDS Ultra-Deepwater, Ltd. set price talk for its $260 million offering of seven-year senior secured notes (B3).

The notes are talked to come with a 12½% area yield, including an original issue discount of approximately 3 points.

The books close at 3 p.m. ET on Tuesday. Pricing is set for early Wednesday morning.

Jefferies & Co. has the books.

Central Garden to offer notes

Finally, Central Garden & Pet Co. plans to bring a $300 million offering of eight-year senior subordinated notes into the high-yield market via JP Morgan and Oppenheimer.

Proceeds will be used to fund a tender for the company's 9 1/8% senior subordinated notes due 2013.

New Wyndham issue a winner

A secondary market trader opined that "it looks like there are a lot more deals coming, and could be priced this week, a lot of drive-bys."

When Wyndham Worldwide's new 7 3/8% notes due 2020 were freed for secondary dealings, a junk trader said that the issue had attracted some high yield investors, despite its split-rated status. He saw the new issue trading around the 101 bid level "a couple of times" - up solidly from the 99.988 level at which the Parsippany, N.J.-based international lodging chain's $250 million deal had priced .

New TreeHouse bonds hold gains

A trader said that TreeHouse Foods' new 7¾% notes due 2018 continued to hold in around a 103-103 1/8 context on the bid side - about the same level at which the Westchester, Ill.-based private-label foods company's $400 million offering had traded up to on Friday, after earlier pricing at par, to yield 7¾%.

The deal "went really, really well," he declared.

A second trader saw the bonds trading in a 103 - 103¼ range "almost all day long," finally quoting them going home Monday at 103 1/8 bid.

Market indicators move up again

Among bonds not connected with the new-deal market, a trader saw the CDX Series 13 index up 1/16 point on Monday to end at 97 3/8 bid, 97 7/8 offered, after having gained ¼ point in Friday's dealings.

The KDP High Yield Daily Index meanwhile rose by 23 basis points on Monday to finish at 70.68, adding to the gains of 30 bps, 20 bps and 65 bps seen respectively on Friday, Thursday and Wednesday. Its yield tightened by 5 bps Monday to 8.33%, after having come in by some 10 bps on Friday.

Advancing issues topped decliners for a fifth consecutive session on Monday, holding a better than eight-to-five edge.

Overall market activity, as measured by dollar-volume levels, eased by about 4% from Friday's pace.

A trader characterized Monday's session as "very quiet on the secondary front today."

That having been said, he added that "the market definitely felt to be up ¼ to ½ point, on very light volume across the board. It definitely does feel a lot better than it did a week and a half ago."

Outflow downturn dies down

"And we definitely saw the selloff from the AMG number moving off. I didn't feel that at all this week, so far. The market's gone north."

Late in the session on Thursday, market participants familiar with the high yield mutual fund-flow statistics generated by AMG Data Services of Arcata, Calif. - a closely watched indicator of overall junk market liquidity trends - had reported that in the week ended Wednesday, some $916 million more left those funds than came into them. It was the second consecutive week in which outflows approached $1 billion, following the $984 million cash exodus seen in the previous week, ended Feb. 10. But while the market struggled after the first big outflow, little impact was seen from the second.

"The redemptions" from the mutual funds that were reported on Thursday "really took place during the last [few sessions of the previous week] before everybody went on vacation. Then last week was kind of a dead week, and you felt the market doing better."

Now that everyone has come back to work following the holiday layoff, and with a better market tone. "I wouldn't be surprised if saw an inflow [for the current week]."

Light volume not expected

However, he expressed some surprise at the light volume. "I thought it would be a little bit busier, coming off a shortened week last week and a lot of people being out, but I think it's kind of a dead week so far." He further said that the anticipated flood of quarterly earnings reports might have a hand in chilling market activity.

Among the gainers he did see was Ford Motor Co.'s 9 7/8% notes due 2011, which rose to 105 5/8 bid, 105 7/8 offered, versus levels a week and a half ago around 103 bid, 103½ offered.

Shorter Ford paper, he said, was "kind of staying right where it is, because it's so short."

He also said that despite a favorable media article about prospects for homebuilders' shares, "I haven't really seen a big run up in there - those bonds have been moving sideways because they've had such a run up already."

Rite Aid rally continues

For yet another session, traders saw Rite Aid Corp.'s bonds better, helped no doubt by the continued speculation that in the wake of last week's announced deal form drugstore industry leader Walgreen Co. to gobble up East Coast regional operator Duane Reade Inc., that Camp Hill, Pa. -based Rite Aid - the third largest pharmacy operator in the United States - might be an attractive acquisition target for a larger drugstore chain like Walgreen or CVS Caremark, or a non-pharmacy retailing giant like Wal-Mart.

Rite Aid's bonds have been climbing since the Duane Reade news hit the market on Wednesday, and climbed again on Monday, with a trader seeing its 9½% notes due 2017 "up dramatically" at 841/2, up more than 2 points Friday in very busy dealings.

He also saw its 9 3/8% notes due 2015 having also moved up a deuce on the day to 86½ bid.

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