Hertz, Bumble Bee drive by, firm in aftermarket; Ingalls, JMC hold Friday gains; CKE on menu

By Paul Deckelman and Paul A. Harris

New York, Mar. 7 - Hertz Corp., following up a new bond deal from just six weeks ago, made a return visit to Junkbondland on Monday, with the car-rental king pricing an upsized $500 million drive-by add-on to that earlier issue.

Also pricing was another name about as well known to consumers: tuna fish titan Bumble Bee Holdco SCA, which brought a $150 million issue of seven-year PIK toggle notes to market.

Traders said that when both of the new deals were freed for secondary dealings, they firmed slightly from their respective issue prices - although one took exception to that mostly bullish consensus regarding the Bumble Bee offering.

Meanwhile, both of the new deals from Friday - shipbuilder Huntington Ingalls Industries, Inc. and pipe and tubing manufacturer JMC Steel Group, Inc. - were seen pretty much hanging onto the strong gains they had notched in initial activity after pricing.

The traders meantime did not see much secondary market activity away from the new or recently priced deals.

Back on the primaryside, participants saw a slew of new deals hit the forward calendar, including a $1 billion secured notes offering from American Airlines, Inc., as well as prospective transactions from CKE Holdings, Inc., Rotech Healthcare Inc., LBI Media, Inc., Sterigenics International, Inc. and MEG Energy Corp. While syndicate sources said that most of these were hitting the road, restaurateur CKE was heard to be selling its $175 million deal to prospective investors via a Tuesday conference call, with pricing possible later in that session.

Out of Europe came word that carmaker Fiat Industrial SpA had priced a €2.2 billion two-part deal, while Germany's Grohe Holding GmbH and France's Pernod Ricard SA were waiting in the wings with euro offerings, the latter likely to price Tuesday.

Hertz massively upsizes

Dollar-denominated junk issuers raised $647 million with a combined two tranches on Monday.

Meanwhile, the new deal calendar saw a massive buildup.

Hertz priced a massively upsized $500 million add-on to its 6¾% senior notes due April 15, 2019 (B3/B-) at 100.375.

The pricing resulted in a 6.69% yield to worst.

The deal priced in line with price talk of par to par 1/2.

J.P. Morgan Securities LLC, Barclays Capital, Bank of America Merrill Lynch, Citigroup, Credit Agricole CIB, Deutsche Bank Securities and Wells Fargo Securities were the joint bookrunners for the quick-to-market debt refinancing deal, which was upsized from $300 million.

Bumble Bee dividend deal

Meanwhile, Bumble Bee priced a $150 million issue of senior PIK toggle notes (Caa1/CCC+) at 98.138 to yield 10%.

The notes pay a cash coupon of 9 5/8% and a PIK coupon of 10 3/8%.

J.P. Morgan Securities LLC ran the books for the quick to market dividend-funding deal.

Fiat Industrial €2.2 billion

Turning to Europe, Fiat priced €2.2 billion of medium-term notes (Ba2/BB+) in two tranches.

The deal included €1 billion of 5¼% four year notes and €1.2 billion of 6¼% seven-year notes.

The notes of both tranches were priced at par, subsequent to being launched at their respective yields to maturity.

Banca IMI, Barclays Capital, BNP Paribas, Credit Agricole CIB, Citigroup, Royal Bank of Scotland, SG CIB and UniCredit were the bookrunners for the debt refinancing deal.

UniCredit will bill and deliver.

Fiat Industrial a blowout

The Fiat Industrial deal was a blowout, according to a syndicate source, who added that investors in Europe are starved for big, liquid, euro-denominated issuance.

It's a great name, the syndicate source added, remarking that Turin, Italy-based Fiat Industrial, which was established on Jan. 1 through the demerger of the capital goods activities held by Fiat SpA, is "knocking on the door" of investment-grade credit ratings.

The deal, which played to about €7 billion of orders, saw participation from high-grade accounts and multiple-asset accounts in addition to high-yield investors, the source said, adding that the order book for Fiat Industrial was open for not much more than half an hour.

Pernod benchmark for Tuesday

Elsewhere in the European high yield, French spirits distiller Pernod plans to price a benchmark-sized euro-denominated offering of notes on Tuesday.

The size and structure of the deal remain to be announced.

Credit Agricole CIB, Santander, Royal Bank of Scotland, ING and Mediobanca are the leads.

Grohe sets Tuesday call

Germany's Grohe will host a Tuesday investor call for its €400 million two-part offering of senior secured notes (B3/B-).

The deal is comprised of 6.5-year floating-rate notes and seven-year fixed-rate notes.

Credit Suisse, Deutsche Bank and Morgan Stanley are the joint bookrunners for the debt refinancing.

Hyva secured deal

Finally, Netherlands-based Hyva Global BV plans to price a $375 million offering of five-year senior secured notes (B1/B+/BB-) in the week ahead.

The deal is being transacted on an emerging markets desk in Asia.

Bank of America Merrill Lynch, Goldman Sachs & Co., Nomura Securities and Standard Chartered Bank are leading the acquisition financing.

CKE to price Tuesday

Turning back to action in the United States, the forward calendar built massively on Monday.

Right on the heels of the Bumble Bee dividend-funding PIK toggle deal, CKE Holdings aims to price a $175 million offering of five-year senior PIK toggle notes on Tuesday.

Morgan Stanley & Co., Citigroup, RBC Capital Markets and Morgan Joseph are the joint bookrunners for the dividend financing deal.

American Airlines $1 billion

Meanwhile, American Airlines began a brief roadshow on Monday for its $1 billion offering of five-year senior secured first-lien notes.

The roadshow continues on Tuesday. The notes are expected to price on Wednesday.

Citigroup is the left bookrunner for the general corporate purposes deal. Credit Suisse and J.P. Morgan Securities LLC are joint bookrunners.

Clayton Williams roadshow

Clayton Williams Energy will conduct an investor roadshow through Thursday for its $300 million offering of eight-year senior notes (/B/).

RBS Securities, J.P. Morgan Securities LLC, UBS Investment Bank and BNP Paribas are the joint bookrunners.

The Midland, Texas-based independent energy company plans to use the proceeds to fund the tender offer for its 7¾% senior notes due 2013 as well as to repay revolver borrowings and for general corporate purposes.

Sterigenics second-lien deal

STHI Holding Corp., the indirect parent of Sterigenics, began a roadshow on Monday for its $475 million offering of senior secured second lien notes (expected ratings B3/B-).

The offer is expected to price on Friday.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch, UBS Investment Bank and Morgan Stanley & Co. are the joint bookrunners for the acquisition financing.

Rotech $290 million

Rotech began a roadshow on Monday for its $290 million offering of seven-year second priority senior secured notes, which is expected to price during the present week.

Credit Suisse Securities and Jefferies & Co. are the joint bookrunners for the debt refinancing deal.

LBI Media first-lien deal

Elsewhere, LBI Media will conduct an investor roadshow during the present week for its $240 million offering of eight-year first-lien senior secured notes.

Credit Suisse Securities, Macquarie Capital and Wells Fargo Securities are the joint bookrunners for the debt refinancing deal.

Griffon starts Tuesday

Griffon will begin a roadshow on Tuesday for its $500 million offering of seven-year senior notes, which is expected to price early in the week ahead via bookrunner Deutsche Bank Securities.

The New York-based diversified industrial products company plans to use the proceeds to repay debt and for general corporate purposes.

MEG Energy starts Wednesday

MEG Energy will begin a roadshow on Wednesday in the Mid-Atlantic states for its $500 million offering of 10-year senior notes.

Barclays, Credit Suisse, BMO and Morgan Stanley & Co. have the books.

The Calgary, Alta.-based oil sands development company plans to use the proceeds, along with proceeds from a concurrent $500 million revolver and a $1 billion term loan B, to refinance its existing term loans and for general corporate purposes.

Full roadshow for Euramax

Finally, Euramax International began a full roadshow on Monday for its $375 million offering of five-year senior secured notes.

Deutsche Bank Securities has the books for the for the debt refinancing deal from the Norcross, Ga., producer of aluminum, steel, vinyl and fiberglass building supplies.

New Hertz deal trades higher

When Hertz's upsized new offering was freed for secondary dealings, a trader initially said that the new bonds had opened at 101 bid, but then had declined to 100½ bid, 101 offered and then to par bid versus the 100.375 level at which the quickly marketed issue had priced.

However, a second trader saw the company's bonds slightly better on the day at 100½ bid, 101 offered.

A bit later in the session, a market source at another shop quoted the bonds at 100 7/8 bid, 101 1/8 offered.

Traders mixed on Bumble Bee

A trader meanwhile opined that Bumble Bee Holdco's new PIK toggle deal was "a piece of crud." He quoted the bonds at being offered at their 98.138 issue price, declaring, "I don't think that one is doing all that well."

Others, however, took a more upbeat view of how the deal was doing in the aftermarket, with one seeing the bonds having traded at 98¾ bid, 99 offered on the break.

A trader at another shop quoted them going out at 99 bid, 99½ offered, while yet another trader pegged the new bonds at 99½ bid, par offered.

Friday deals hold their gains

Traders meantime saw the new issues, which had priced on Friday and then firmed smartly in the aftermarket, trading around those same better levels on Monday.

For instance, one saw JMC Steel Group's 8¼% notes due 2018 at bid levels around 102-1021/4.

The Beechwood, Ohio-based steel piping and tubing manufacturer priced $725 million of the bonds at par on Friday afternoon, and they had moved up to 102 bid, 102½ offered when they began trading later that session.

Another trader saw the bonds on Monday "pretty much unchanged" around 102, "kind of bracketing" that level for most of the day.

A trader meantime saw Huntington Ingalls Industries' upsized $1.2 billion deal steady not far from Friday's aftermarket levels. He quoted its 6 7/8% notes due 2018 at 103¼ bid, 103 ¾ offered - off a little from Friday's peak level around 103¾ bid, 104¼ offered, but "still a nice premium" from the par level at which the Newport News, Va.-based shipbuilder had priced its $600 million of seven-years earlier Friday.

He meantime did not see the company's new 7 1/8% notes due 2021, a $600 million tranche, which had priced at par on Friday and then got as good as 104 1/8 bid, 104¼ offered.

A second trader saw both tranches of the new Ingalls bonds trading at bid levels between 103½ and 104 "most of the day."

"So it's right near the highs," the trader noted.

Recent deals mostly hold

A trader said the recent Jo-Ann Stores, Inc. 8 1/8% notes due 2019 - known in the market as "the needle deal" from the official name of the issuing entity, Needle Merger Sub Corp. - traded at 101 in the morning and then traded into a 100¾ bid, holding "all day" in a 1003/4-101 context.

The Hudson, Ohio-based fabrics and crafts specialty retailer's $450 million issue had priced at par on Thursday and then moved up to 101 bid, 101½ offered in initial aftermarket dealings and stayed there.

He saw Perry Ellis International, Inc.'s 7 7/8% notes due 2019 at 102¼ bid. The Miami-based fashion house's $150 million issue, upsized from an originally announced $125 million, had priced at par this past Wednesday and then had jumped to bid levels as high as 102¾ after that.

But he said that fellow clothier Jones Group's 6 7/8% notes due 2019 continue to have all of the appeal of last year's fashion designs. The parent of the Jones New York line priced $300 million of the bonds at par in a drive-by transaction last Wednesday, but then they proceeded to fall to a 98ish context and have yet to recover from that slide.

The trader quoted the bonds on Monday at 98¼ bid, 99 offered. "It's laying on its butt still, not doing anything." In fact, he said, that level was actually down from Friday's already-depressed level at 98¾ bid, 99¼ offered.

"It must have been a bad read on the underwriters' part," he speculated, noting that "it didn't really trade down, it opened down" and never got better.

"It's kind of weird," he continued. "It was almost the exact opposite of the Huntington [Ingalls] deal."

The rest of the new issues, he declared, were "kind of just laying where they were on Friday, give or take 1/8 or ¼ of a [point] - nothing to write home about."

Secondary indicators mixed

Away from the new deal world, a market source saw the CDX North American Series 15 HY index off by 3/16 of a point on Monday to end at 103 9/16 bid, 103 11/16 offered on top of the 1/8 point easing seen on Friday.

The KDP High Yield Daily index meantime eased by 6 basis points on Monday to close at 75.95, after having risen by 4 bps Friday. Its yield rose by 2 bps Monday to 6.62%, after having come in by the same amount on Friday.

The Merrill Lynch High Yield Master II index gained 0.033% on Monday, on top of its 0.040% advance seen on Friday. That lifted its year-to-date return to 3.707%, a new peak level for 2011 so far, up from Friday's 3.673% reading, the previous high-water mark.

Advancing issues trailed decliners for a second consecutive session on Monday, with the losers widening their advantage over the gainers to several dozen issues out of the nearly 1,400 traded Monday versus Friday's margin of fewer than two dozen issues.

Overall market activity, as measured by dollar-volume levels, rose by 3% on Monday, after having slid by 25% on Friday from the previous session's activity level.

Aside from activity in the new issues, a trader said "not a whole heck of a lot" was going on. "It seems like everything is kind of new-issue driven.

"You come in in the morning, you see what's coming today, you get on the conference call, you put your order in, and then - you wait. That's what everyone seems to be doing."

There was, he added, "Nothing much else. Nothing too dramatic."

A second trader said that the junk market "started out like it wanted to do better, but kind of backed off with the equity markets backing up."

Stocks gave up their early gains on continued investor fears on the impact rising oil prices resulting from the Middle Eastern turmoil might have on the still-fragile economic recovery. The bellwether Dow Jones Industrial Average lost 79.85 points, or 0.66% on the day, to finish at 12,090.03.

But while stocks were getting killed - Nasdaq's percentage decline on the day was more than double that of the Dow - the trader said that in the junk market, "some bids are down ¼ here and there, but the offerings aren't really chasing them [lower]. And some stuff is still a little bit better," mostly in the energy sector.

While he saw credits like names like Chesapeake Energy Corp.'s 6 1/8% notes due 2021 trading around 102 7/8 bid, 103 3/8 offered, "kind of at their highs, or a little bit better," mostly, he said, "it's random - here and there."

He added, "There's no real weakness here - some bids might have backed off because of a potential weakness in the market, but it hasn't shown up yet.

"It's down a little bit in spots, and it's up a little bit in spots. But mostly, it's unchanged."

OPTI pops...

Among specific names, a trader saw OPTI Canada, Inc.'s 8¼% notes due 2014 at 56½ bid, calling the Calgary, Alta.-based oil-sands energy producer's paper "up slightly, maybe half point" on "decent volume."

A second trader agreed that OPTI's bonds were "a little better" today," despite a lack of fresh news out about the troubled company.

He saw the bonds get as high as 561/2, although he thought they "traded back down at the end of the day" to 551/2.

OPTI's 7 7/8% notes due 2014 were at 55 3/8 bid, 55 ¾ offered, after trading as high as 56½ earlier in the day."

He saw OPTI's senior paper - the 9% first-lien senior secured notes due 2012 - was trading at 100¼ bid, 100½ offered, "the first time I've seen them at a premium" in a long while.

...while Compton drops

But another Calgary-based energy operator Compton Petroleum Corp.'s 10% notes due 2017 were being quoted down a whopping 4 points on the session at 74 bid.

The company's bonds and shares have slid badly since it announced poor 2010 year-end financial results and reserves data on Feb. 24.

The day before that, its bonds had been trading as high as 84 bid, but they had fallen to around 78 by the end of last week and continued to slide further Monday.

The company's Toronto Stock Exchange-traded shares meanwhile fell to 35 cents on Monday, down 2 cents, or 5.80% on the day. Since Feb. 23, they have slid C$0.10 per share.

The bonds and shares started dropping after the company revealed a net loss of C$330.85 million, including a C$367 million write-down of assets due to the lower natural gas prices.

Meanwhile, it said that its total proved reserves dwindled by 40% versus year-end 2009, while their value shrank by 48% year over year.

Compton also warned that its proved plus probable reserves were down 48% from a year earlier, with the value of such reserves down 56% from the previous year.

A&P moves up

From deep in distressed-debt territory, Great Atlantic & Pacific Tea Co.'s busted convertible notes were seen continuing to firm from their recent lows in the lower 30s, a trend seen over the past few sessions.

A trader saw "some activity" in the bankrupt Montrose, N.J.-based supermarket operator's 6¾% notes due 2012, quoting them "holding at the higher level" around 40 bid, 40½ offered.

"They've been up the last few days," he said.

The bonds had traded around 39-40 on Friday, up from around 36 on Thursday and from levels around a week ago at 33 bid, though on no news about the company, which has announced a round of closings of some of its more than 300 A&P, Waldbaums, Pathmark, Super Fresh and Food Emporium stores in the Northeastern United States.

A&P's 11 3/8% senior secured notes due 2015 meantime continued to trade near the par level.

Autos skid lower

A trader said that Motors Liquidation Co.'s benchmark 8 3/8% bonds due 2033 were "anemic today," quoting that paper unchanged at 31 bid, 31½ offered, on "no volume."

A second trader, though, called those bonds down 1¼ point at 30¼ bid, 31½ offered.

Last week, a federal judge said he would approve the plan to wind up the company, which was the "old" General Motors Corp. before the Detroit auto giant's 2009 bankruptcy reorganization. That reorganization left the debt and other liabilities and unwanted assets with the newly renamed Motors Liquidation entity while transferring the profitable car-making operations to a separate "new GM," with bondholders and other creditors of "old GM" slated to get a portion of the new company's stock when Motors Liquidation is finally wound down.

GM domestic archrival Ford Motor Co.'s 7.45% bonds due 2031, meantime, lost 3/8 of a point to 108½ bid, 109½ offered.

Stephanie N. Rotondo contributed to this report

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