Morning Commentary: Aleris bonds up on acquisition by Novelis; Party City deal on deck

By Paul A. Harris

Portland, Ore., July 26 – The Aleris International, Inc. 10¾% senior secured junior priority notes due July 2023 improved on news that Novelis Inc. signed a definitive agreement to acquire Aleris Corp. for approximately $2.6 billion, including the assumption of debt, according to a trader in New York.

The Aleris 10¾% secured notes were 105½ bid, 106 offered on Thursday, the trader said, adding that they traded in the 104s on Wednesday.

The acquisition is expected to close in nine to 15 months, Novelis stated in a Thursday press release.

Elsewhere the share price of Fiat Chrysler Automobiles NV was down 17%, off its lows, on news that CEO Sergio Marchionne died at age 66 from complications related to recent shoulder surgery.

However, Fiat bonds were holding in, the trader said, adding that they were flat at mid-morning.

Away from headline news the market was flat and seemed pretty stable, the trader said.

Among recent issues, the Simmons Foods, Inc. 7¾% first-lien senior secured notes due Jan. 15, 2024 (B1/BB-) were 103¼ bid, 104 offered on Thursday morning. That same paper was spotted at 103¾ bid, 104¼ offered earlier in the week. The $250 million issue priced at par on July 10.

Party City on deck

In the primary market Party City Holdings Inc. is on deck with a $500 million offering of eight-year senior notes (B1/B-) talked to yield in the 6¾% area.

Books were scheduled to close at 10 a.m. ET on Thursday.

Goldman Sachs & Co. LLC is the left bookrunner for the debt refinancing deal.

Elsewhere, the market awaits updates on a modest dollar-denominated calendar expected to clear ahead of the weekend.

The calendar includes Intrepid Aviation Group Holdings, which is marketing a $515 million offering of three-year senior notes (/B/B+) via Jefferies with early guidance in the 6¼% area. The roadshow wraps up on Thursday.

And Hi-Crush Partners LP is marketing a $450 million offering of eight-year senior notes (B3/B-) with initial guidance in the 8½% area.

There is also a relatively modest euro-denominated calendar featuring a pair of deals expected to price ahead of the coming weekend.

Price talk surfaced Thursday in the WFS Global Holding SAS (Promontoria Holding 264 BV) €660 million two-part offering of senior secured notes due 2023 (B3/B-), according to a market source.

The deal features fixed-rate notes talked at 6¾% to 7% and floating-rate notes talked at Euribor plus 625 basis points to 650 bps. Tranche sizes remain to be determined.

And CEVA Logistics AG was expected to wrap up the roadshow for its €300 million offering of seven-year senior secured notes (B1/BB-) on Thursday.

As the market awaits official talk, early indications have the notes coming with a yield in the mid-5% area, a market source in Europe said.

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