Scotts Miracle brings 10-year deal; Swift, CNO await; First Data climbs; bankrupt A&P moves up

By Paul Deckelman and Paul A. Harris

New York, Dec. 13 - What is widely expected to be the final week of any real activity this year in the high-yield new-issue sphere began relatively quietly on Monday as just one domestic dollar-priced deal came to market: lawn and garden products producer Scotts Miracle-Go Co.'s quickly shopped $200 million offering of 10-year notes. It was seen to have moved up modestly when it was freed for secondary dealings.

The only other pricing came out of Europe, with Scandinavia's Sevan Marine ASA bringing an issue of Norwegian kroner-denominated four-year bonds.

But things are expected to pick up on Tuesday, with trucking operator Swift Holdings Corp./Swift Transportation slated to come to market with a $490 million offering of eight-year notes and insurance provider CNO Financial Group, Inc. seen likely to price a $300 million secured deal after its books close on Tuesday afternoon. Price talk emerged Monday on both prospective issues.

Tuesday may also see pricings from another financial firm, First Capital Holdings, Inc., which has been shopping a $100 million issue of five-year paper around, and from health care operator Aurora Diagnostics Holdings, LLC/Aurora Diagnostics Financing, Inc., coming with a $230 million seven-year deal.

Gasoline engine-maker Briggs & Stratton Corp. meantime announced plans for a $200 million bond offering, with pricing expected around midweek.

In the secondary arena, First Data Corp.'s bonds were busy, although there was no fresh news out on the company.

With Great Atlantic & Pacific Tea Co.'s bankruptcy filing now a fait accompli, its bonds firmed from the levels to which they had fallen on Friday.

Scotts Miracle-Gro drives by

The Monday session saw a single deal price in the high-yield primary.

Scotts Miracle-Gro completed a quick-to-market $200 million 10-year senior notes offering (B1/BB-), which priced at par to yield 6 5/8%.

The yield printed at the tight end of the 6 5/8% to 6¾% price talk.

Bank of America Merrill Lynch and J.P. Morgan Securities LLC were the joint bookrunners.

The deal was multiple-times oversubscribed, according to a source close to the transaction.

The Marysville, Ohio-based lawn and garden products company is a credit that high-yield investors know and like, and thus is not too challenging, the source added.

"It's the kind of deal you want in mid-December," the official commented.

Talking Tuesday's deals

The dealers set the stage for the Tuesday session by putting out price talk on a pair of deals.

Swift Holdings talked its $490 million offering of eight-year senior second-priority notes (/B-/) with a 9¾% to 10% yield.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., Wells Fargo Securities, Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and UBS Investment Bank are the joint bookrunners.

Meanwhile, CNO Financial Group talked its $300 million offering of seven-year senior secured notes (/B-/) via Morgan Stanley and Barclays Capital with a 9% area yield.

Apart from Swift and CNO, two other deals are believed to be possible Tuesday business, sources say.

First Capital Holdings talked its $100 million offering of five-year senior notes (B3/B-) with a 12% coupon at a discount to yield 12½% last week.

Gleacher & Co. is the bookrunner.

Also last week Aurora Diagnostics Inc. talked its $230 million offering of seven-year notes (/CCC+/) with a 10½% area yield.

Morgan Stanley, Barclays Capital Inc. and UBS Investment Bank are the joint bookrunners.

Syniverse in New York

Syniverse Holdings, Inc., now on the road with a $475 million offering of eight-year senior notes (Caa1/B-/), presented the deal in New York on Monday.

The presentation, which took place at the New York Palace Hotel, was very well attended, with management needing to bring out a couple of extra tables to accommodate the overflow, according to a market source who attended.

No price talk surfaced on the deal, the market source said.

However, it is expected to price during the latter part of the present week.

Credit Suisse, Barclays Capital and Goldman Sachs & Co. are the joint bookrunners.

Winding down

The history-making year of 2010 appears to finally be winding down, syndicate sources continued to advise Prospect News on Monday.

It is conceivable that there will be some quick-to-market business through Wednesday, one syndicate banker said.

After Wednesday's close, the likelihood of announcements of new deals expected to price by year-end diminishes, the official added.

A few deals that were initially expected to come to market during the late days of 2010 now are seen as more likely to be 2011 business, one debt capital markets banker said on Monday.

Chalk that up to rate sensitivity on the part of issuers, the sell-sider commented.

Issuers realize they are not going to receive the extremely advantageous executions which characterized the mid-November primary market, the source added.

Despite the market's apparent ability to shrug off early December's negative credit news out of Europe, the fact remains that the secondary market has backed up 70 basis points since mid-November, the official said.

New Scotts paper shows growth

When the Scotts Miracle-Gro 10-year bonds were freed for secondary dealings, a trader saw the new paper trading at 100¾ bid, 101¼ offered, up from its par issue price earlier in the session.

A second trader also quoted it bid at 1003/4, although he added that the smallish $200 million issue "traded well - but there was just not a ton a trading in the secondary, it seemed."

Nice pop for Novelis...

Among the issues which came to market on Friday, Novelis Inc.'s new $2.5 billion two-part deal continued to more than hold its own.

A trader said the Atlanta-based aluminum producer's 8 3/8% notes due 2017 were trading at 101 bid, 101½ offered. On Friday, its priced $1.1 billion of those bonds at par, and they moved up later that session to 101¼ bid, 101¾ offered.

He also saw Novelis' 8¾% notes due 2020 at 101½ bid, 102 offered. The company priced $1.4 billion of the notes at par on Friday, after which they had also moved up in initial dealings to 101¼ bid, 101¾ offered.

A second trader saw the new '17s on Monday at 101 1/8 bid, 101 3/8 offered, but saw no levels on the new '20s.

...but Fortescue still faltering

Friday's other big deal - the massively upsized $1.5 billion two-part offering from FMG Resources Pty Ltd. - a unit of Australian iron ore producer Fortescue Metals Group - remained underwater on Monday, with both tranches trading below their respective par issue levels, just like they did on Friday.

A trader saw FMG's $600 million of 6 3/8% notes due 2016 at 99 1/8 bid, not far removed from the 99¼ bid, 99¾ offered at which those bonds had traded late Friday after pricing at par. He did not see the company's $900 million of 6 7/8% notes due 2018, which had also priced at par Friday and then fell back to 99¼ bid, 99¾ offered in the aftermarket.

A second trader saw both tranches being quoted at 99¼ bid, 99½ offered.

Borrowing binge winding down

Those two giant deals may be the last such mega-deals the market may see this year, a trader suggested.

"I'm getting the impression, or talk from a lot of people, that books are pretty much closed for the year - so it may be a long 2½ weeks" from now until New Year's.

"If anyone's going to price anything - they'd better price it at the beginning part of this week," he added.

Indicators steady to firmer

Away from the new-deal realm, a trader saw the CDX North American Series 15 HY index up ¼ point for a second straight session on Monday, to close at 102 bid, 102¼ offered.

The KDP High Yield Daily index meantime was closing at 73.91 Monday, virtually unchanged from the day before for a third consecutive session. Its yield, though, pushed up by 5 basis points to 7.47%, after having risen by just 1 bp in each of the two previous sessions.

The Merrill Lynch High Yield Master II index gained 0.096% on Monday, after having risen 0.014% on Friday. That lifted its year-to-date return to 14.269% on Monday from 14.159% on Friday. However, the index remains down considerably from the 2010 peak level of 15.602% recorded on Nov. 9.

Advancing issues fell behind decliners on Monday after having finished essentially neck and neck with them on Friday. However, the margin of difference was just a few dozen issues out of the more than 1,400 that traded on Monday.

Overall activity, represented by dollar-volume levels, rose by 5% on Monday, after having fallen by 16% on Friday from the previous session's levels.

Even so, a trader said that there was "not too much going on," and a second opined that he was seeing "the same old stuff."

Yet another trader characterized Monday as "kind of a boring day."

First Data firms up

But it was pretty busy for investors in First Data's paper.

A market source saw over $17 million of the Atlanta-based electronic transaction processor's 11¼% notes due 2016 changing hands, earnings them a spot on Junkbondland's most actives list. Those bonds finished at around the 86 mark, up more than 4 points on the day, although counting only round-lot transactions, the gain was far more conservative - just 1 point to 83 bid.

The source also saw First Data's 9 7/8% bonds due 2015 move up by around 2 points on a round-lot basis to 93 bid, on $6 million traded.

There was no fresh news out on the company, which is nearing the end of its previously announced exchange offer to the holders of the $3.75 billion of outstanding 9 7/8s and the $3.71 billion of 10.55% PIK notes due 2015; First Data has proposed to give them a maximum of $6 billion of several series of new cash-pay and PIK bonds that mature in the early 2020s in exchange for their current bonds, thus pushing those 2015 maturities out by another six or seven years.

The exchange offer is scheduled to expire on Wednesday; the company said that as of the Dec. 1 early tender deadline, over $3.1 billion of the 9 7/8s and over $3.2 billion of the 10.55s had been tendered.

A&P up after bankruptcy

A trader said that the bonds of Great Atlantic & Pacific Tea "saw a lot of action" on Monday, ending up higher on the day versus their levels seen on Friday, which was before the Montvale, N.J.-based supermarket operator's actual weekend Chapter 11 filing.

He saw its 11 3/8% senior secured notes due 2015 at 83 bid, 84 offered by the day's end, although he noted that as had been the case on Friday, the bonds are trading flat, or without their accrued interest, "so it's just a little bit of an illusion that they're up in price."

On Friday, those bonds were seen having fallen as low as the 70 bid area on news reports that the venerable operator of the iconic A&P supermarket chain, among its other supermarket properties, had hired a bankruptcy counsel and was likely to file as early as the weekend, which turned out to be the case, although the bonds had bounced back to around an 80-82 context by late Friday, largely unchanged on the day despite the bankruptcy buzz.

That was not the case with the company's other paper, which plummeted on Friday and then stayed down there.

The trader also saw A&P's 5 1/8% notes due 2011 and 6¾% notes due 2012 both trading at bid levels between 29 and 31, trading flat, perhaps up a little from the levels in the upper 20s to which that paper had swooned on Friday; the 5 1/8s nosedived around 45 points on Friday from prior levels in the lower 70s, while the 63/4s were down around 30 points from their previous levels in the upper 50s.

Both of those issues are nominally convertible bonds - but the trader noted that with the company's New York Stock Exchange-traded shares now down in penny-stock territory - on Friday, they plunged by $1.90, or 67%, to just 93 cents, their biggest drop in at least three decades, before trading was halted, and there was no trading on Monday - "you have the bond component [of the paper], but it just goes to the intrinsic value of the coupon and the maturity," since the stock those notes could be converted into is virtually worthless.

"So that's why those things are around 30, and the 11 3/8s are around 83-84. The market is telling us what it thinks they are worth."

A second trader quoted the 11 3/8s trading up around 84, the 5 1/8s at 28 bid, 29 offered and the 63/4s at 28 bid, 30 offered, all trading flat.

Another trader said that A&P's bonds "obviously" were a feature in what otherwise was a pretty lackluster day in the high yield secondary market. He said they "were actually up after their bankruptcy filing," seeing the 11 3/8s having moved up to an 83-85 context from around 79-80 on Friday, while the converts "were very active [at his shop], having moved up to around 29 by the day's end.

"Clearly from Monday of last week to today, it's a loser, but it was an up day today" versus Friday.

Secured papermaker debt holds

A trader said that Catalyst Paper Corp. "traded a bit today," seeing the Richmond, B.C.-based paper manufacturing company's 7 3/8% notes due 2014 ending at 71 bid, 71½ offered, while its 11% senior secured notes due 2016 closed right at 94 bid. The latter bonds were "just up a little bit," gaining ¼ to ½ point, "but there was some activity in the name," he said.

He meantime saw NewPage Corp.'s 11 3/8% senior secured notes due 2014 ending around 92½ bid, 93 offered, which he called up around ½ point on the day. He said that there was "some trading, but not a whole lot" in the Miamisburg, Ohio-based coated-paper manufacturer's bonds.

Gaming names see losses

A trader said that Mohegan Tribal Gaming Authority's paper was "weaker by a couple of points today." He saw no fresh news out on the Uncasville, Conn.-based Native American casino concern, which operates the Mohegan Sun gambling resort in the Nutmeg State, "but there was some late trading there, and that bond was definitely down a couple."

He quoted its 6 1/8% notes due 2013 trading down at 79 bid, while seeing trades around the 80 bid level on the 8% senior subordinated notes due 2012. He said the trades were "not on good size, but they were still down on that [name]."

Meanwhile, Caesars Entertainment Corp. - the recently re-named Harrah's Entertainment Inc. - was pretty much unchanged, he said. With the Las Vegas-based gaming giant's 10% notes due 2018, "your go-go bond," was still holding around an 89-90 bid context.

However, at another desk, a market source saw the former Harrah's 10% paper down 1½ points on the day, ending them off at 89 bid.

Sector peer Boyd Gaming Corp.'s 7 1/8% notes due 2016 lost ½ point to end just below 88 bid.

Auto names cruise in neutral

A trader said that the Motors Liquidation Co. (i.e. "old GM") 8 3/8% benchmark bonds due 2033 were unchanged at 31½ bid, 32½ offered, while GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 were likewise unchanged at 107¾ bid, 108¾ offered.

A second trader saw the GM benchmarks mostly trading at bid levels between 31½ and 32, which he called pretty much unchanged.

At another desk, a market source pegged those bonds down a point at 31 bid.

Clear Channel climbs

A trader said that Clear Channel Communications Inc. "seemed to have some activity," seeing the 10¾% notes due 2016 trading between 82 bid and 84 bid before going out around 83 bid. He called that up ½ point, and said that there was "decent volume" in the San Antonio, Tex.-based media company's bonds.

A market source at another shop meantime saw the company's 5¾% notes due 2013 up 1 point at 95 bid.

OPTI, McClatchy ease a little

A trader saw OPTI Canada's 7 7/8% senior secured second-lien notes due 2014 ending around 69 bid, 70 offered, which he called down about ½ point. He said there was "not a whole lot of movement" in the Calgary, Alta.-based oil sands energy company's bonds, "not much activity."

Meanwhile, McClatchy Co.'s bonds had "a lot of quotes" on Monday, a trader said, "but not a lot of trading."

He quoted the Sacramento, Calif.-based newspaper publisher's 5¾% notes due 2017 holding around the same 77-79 context they held last week, or perhaps "slightly lower," after the company's bonds moved up smartly in response to its chairman and chief executive officer Gary Pruitt's predictions that advertising revenues - down from last year, but with a progressively slowing rate of decline - would continue to show improvement heading into the new year.

© 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.