Goodyear, Pinnacle lead $3 billion primary; new Regal, SPX rise; Appleton eases after numbers

By Paul Deckelman and Paul A. Harris

New York, Aug. 10 - More than a half-dozen new high yield deals priced on Tuesday, as the junk bond juggernaut rolled on . However, unlike Monday, when nearly $5 billion of new junk paper priced, plus more than $2 billion more in split-rated bonds attractive to crossover players - Tuesday's total came out to around $3 billion, in the absence of any supersized mega-deals like the ones priced Monday by the likes of Chesapeake Energy Corp. ($2 billion) and Ally Financial, Inc. ($1.75 billion).

Tuesday's biggest deal was the $900 million offering from Goodyear Tire & Rubber Co. The Akron, Ohio-based tire giant's 10-year drive-by deal arrived too late for aftermarket dealings.

Also coming too late for secondary activity was Las Vegas-based timeshare and vacation ownership company Diamond Resorts Corp.'s slightly downsized $414 million of eight-year senior secured notes, and Canadian paper company Tembec Inc.'s slightly upsized eight-year bond deal.

Pinnacle Foods Group LLC brought a quickly-shopped $400 million seven-year note issue to market. When those bonds were freed to trade, the Mountain Lakes, N.J.-based packaged food products maker's issue firmed slightly from par. There was also a little upside in Targa Resources Partners LP's new $250 million of eight-year notes, which also priced at par.

Standout aftermarket performers among the day's new issues were Regal Entertainment Group's $275 million of rapidly-marketed eight-year notes, as well as SPX Corp.'s upsized $600 million of seven-year notes, which was also a drive-by. Both issues priced at par and then firmed solidly higher.

Away from the new deals, quarterly numbers helped push Appleton Papers Inc.'s bonds lower. There was continued activity in Clear Channel Communications, Inc., which reported its results on Monday.

Goodyear upsizes

The primary market saw seven junk-rated issuers raise $3.084 billion of proceeds on Tuesday.

Each issuer brought a single tranche of notes. Only one of the seven was marketed via an investor roadshow.

Goodyear Tire & Rubber priced an upsized $900 million issue of 8¼% 10-year senior notes (B1/B+) at 99.163 to yield 8 3/8%, at the wide end of the 8¼% area yield talk.

The reoffer price came in line with discount talk of zero to one point. The size was increased from $750 million.

Deutsche Bank Securities Inc., Barclays Capital Inc. and Morgan Stanley & Co. were the joint bookrunners for the quick-to-market debt refinancing deal.

SPX massively upsized

Meanwhile, SPX Corp. priced a massively upsized $600 million issue of seven-year non-callable senior notes (Ba2/BB+) at par to yield 6 7/8%, at the tight end of the 6 7/8% to 7% price talk. The amount was increased from $350 million.

JP Morgan, Bank of America Merrill Lynch and Deutsche Bank Securities were joint bookrunners for the quick-to-market bank debt refinancing deal.

Diamond Resorts prices wide of talk

Elsewhere, Diamond Resorts raised $414.43 million of proceeds with the sale of its new issue of 12% eight-year senior secured notes (B3/B-).

The notes came at a reoffer price of 97.513 to yield 12½%.

The yield printed 50 basis points beyond the wide end of the 11¾% to 12% price talk.

Credit Suisse Securities, Bank of America Merrill Lynch and Guggenheim Securities were the joint bookrunners for the only one of Tuesday's seven deals to be marketed via a roadshow.

The deal came with covenant changes. These included the removal of a special call provision, which would have allowed for up to 10% of the issue to be callable annually at 103 during the non-call period.

Proceeds will be used to refinance bank debt.

Pinnacle drives by with $400 million

Pinnacle Foods Finance LLC and Pinnacle Foods Finance Corp. priced a $400 million issue of seven-year senior unsecured notes (B3/CCC+) at par to yield 8¼%, at the wide end of the 8 1/8% to 8¼% price talk.

Barclays Capital, Bank of America Merrill Lynch and Credit Suisse were the underwriters for the quick-to-market debt refinancing deal.

Regal prices tight to talk

Elsewhere, Regal Entertainment priced a $275 million issue of eight-year senior unsecured notes (B3/B) at par to yield 9 1/8%, at the tight end of the 9¼% area price talk.

Credit Suisse Securities (USA) LLC, Barclays Capital Inc., Bank of America Merrill Lynch and Deutsche Bank Securities were the joint bookrunners for the quick-to-market deal.

Proceeds will be used to redeem all of Regal Cinemas' outstanding 9 3/8% senior subordinated notes due 2012, to repurchase or repay all of the company's outstanding 6¼% convertible senior notes due 2011, and for general corporate purposes, which may include the redemption, repayment or repurchase of other debt.

Tembec $255 million

Tembec Industries priced a $255 million issue of 11¼% senior secured notes due Dec. 15, 2018 (B3/B-) at 98.717 to yield 11½%, on top of price talk.

Bank of America Merrill Lynch and Credit Suisse were the joint bookrunners for the quick-to-market bank debt refinancing deal.

Targa atop price talk

Finally, Targa Resources Partners LP and Targa Resources Partners Finance Corp. priced a $250 million issue of eight-year senior notes (expected ratings B2/B+) at par to yield 7 7/8%.

The yield printed on top of the price talk.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Wells Fargo Securities were the joint bookrunners for the quick-to-market deal.

Proceeds will be used to pay down bank debt and for general partnership purposes, which may include redeeming or repurchasing some of the partnership's outstanding notes, as well as for working capital and acquisitions.

Talking the deals

Meanwhile among upcoming deals, Cott Beverages Inc., a wholly owned subsidiary of Cott Corp., talked its $375 million offering of eight-year senior notes (B3/B) with an 8% area yield, on Tuesday.

Pricing is expected on Thursday.

Deutsche Bank Securities, J.P. Morgan Securities and Morgan Stanley are the joint bookrunners for the acquisition financing.

Gentiva Health Services Inc. talked its $305 million offering of eight-year senior unsecured notes (B2/B-) with an 11¼% to 11½% yield.

The order books close at the end of the day on Wednesday. Pricing is set for Thursday morning.

Barclays Capital Inc., Bank of America Merrill Lynch and SunTrust Robinson Humphrey Inc. are the joint bookrunners.

Proceeds will be used to help finance the acquisition of Odyssey HealthCare Inc. and to refinance debt.

Chemtura kicks off exit financing

Only one new offering came on board the active forward calendar during the Tuesday session. Chemtura Corp. will present its $450 million offering of eight-year senior notes to investors in New York, on Wednesday, according to a market source.

There may be subsequent investor meetings, the source added.

Citigroup Global Markets Inc., Bank of America Merrill Lynch, Barclays Capital Inc., Wells Fargo Securities and Goldman Sachs & Co. are joint bookrunners.

Proceeds will be used to repay and replace the company's existing debtor-in-possession facility, repay other debt, and to make payments including transaction fees and expenses.

Primary pace 'insane'

A trader in the secondary market declared "this is insane - nobody can keep up with" the flood of new issues.

He said that "for the first time, people are just starting to balk at the new issues, and there was a little bit of a backlog, although some of them were accepted pretty well."

He added that "it's almost impossible for the mutual funds and everybody [else] to keep up with it.

A second trader said that "all the buyside was contemplating which deals were good, because everybody was trying to do drive-bys today."

He added that "there's a lot of cash being put to work, which is great. It's only a matter of time before all of these new deals start to come a little bit too tight - so all these corporations are trying to squeeze in the calendar. As we progress the next couple of days, all of these companies are going to try to bring these deals tighter."

He said that with the news that the government, through the Federal Reserve, is buying back short-term federal debt "and where the 10-year is trading, we're going to see a boatload more of 10-year deals coming in the next week or so."

New Regal bonds rally royally

A trader said that Regal Entertainment Inc.'s new 9 1/8% notes due 2018 "did very well," trading as high as 102½ bid before settling in around 102 1/8 bid.

A second trader saw the Knoxville, Tenn.-based movie theater company's new drive-by deal trade up to 102½ bid, after having broken at around 101½ bid, 102½ offered.

Another trader quoted the bonds later on around 101½ bid, 102½ offered.

SPX trades strongly

Another one of the day's issues which did well when it moved into the aftermarket was Charlotte, N.C.-based industrial products manufacturer SPX Corp.

He saw the bonds, which came to market at par, trading around 101¼ bid, 101½ offered.

Another trader saw the new bonds at 101 bid, 101¼ offered.

Targa hits the target

A trader saw Targa Resources' new 7 7/8% notes due 2018 trading at 101 bid, 101¼ offered on the break, improving on the par level where the Houston-based natural gas processing and transportation company priced its offering.

New Ally Financials flounder around

A trader said "the new GMAC couldn't get out of its own way," referring to Ally Financial, Inc. by its former name. He said that the Detroit-based auto loan and home mortgage provider's 7½% notes due 2020, $1.75 billion of which priced on Monday in a quick-to-market deal at 99.116 to yield 7 5/8%, "just can't get much traction." He quoted the new bonds as having eased from their issue price down to 98 ¾ bid, 98 7/8 offered.

Chesapeake holds steady

A trader said both tranches of Chesapeake Energy Corp.'s new bonds were hanging in right around their par issue price.

The Oklahoma City-based natural gas exploration and production company priced $1.4 billion of 6 5/8% notes due 2020 and $600 million of 6 7/8% notes due 2018 on Monday.

A trader at another desk said that his shop "saw a few accounts playing the deal," quoting the bonds as having opened at 99½ bid, par offered and closing out at 99 7/8 bid, par offered on both tranches.

Rite Aid in retreat

Also not having an easy time of it in the aftermarket were Rite Aid Corp.'s 8% senior secured notes due 2020, $650 million of which priced at par on Monday, just hours after the company announced the new deal, and then firmed slightly after that to about the 100¼ bid, 100¾ offered area.

In Tuesday's dealings, he saw the Camp Hill, Pa.-based drugstore operator's bonds having given up those early gains to end around 99¾ bid, par offered, noting that "it's the first time that I've seen holders take a small loss, like ¾ or 7/8, just to get out."

Petrohawk hovers around issue

A trader saw Petrohawk Energy Corp.'s 7¼% notes due 2018 trading at 99 7/8 bid, 100¼ offered, straddling the par issue price at which the Houston-based energy exploration and production company priced its $825 million drive-by issue back on Aug. 3, "so you can see that some of them are stuck in cement."

Market indicators turn mixed

Away from the new deal sector, a trader saw the CDX North American HY Series 14 index down ½ point on Tuesday to end at 98 bid, 98¼ offered, after having risen by ½ point on Monday.

The KDP High Yield Daily index meantime eased by 3 points on Tuesday to 72.40, after having declined by 5 bps on Monday. Its yield, though, was 1 bp tighter on Tuesday, at 8.09%, after having gained 2 bps on Monday.

After 26 consecutive sessions in which it had posted a gain on a year-to-date basis, dating back to the beginning of July, and 14 straight sessions in which it posted a new high for the year in that category, the Merrill Lynch High Yield Master II index finally backed up a little on Tuesday, losing 0.076% on the day to bring its year-to-date return down to 9.002% from the 9.085% recorded on Monday, the peak level for 2010 so far.

But advancing issues led decliners for a 27th consecutive session on Tuesday, although their winning margin remained just a couple dozen issues out of the more than 1,400 tracked for a second straight session.

Overall activity, represented by dollar-volume levels, rose by 59% on Tuesday, on top of a 39% gain on Monday.

However, traders said the vast bulk of the activity in secondary was trading in the new deals that had just priced, either in Tuesday's session or in the couple of days before that, with not much happening with established bonds outside of that.

Appleton off after results

However, among specific issues not connected with the primary, a trader noted that Appleton Papers' 10½% senior secured notes due 2015 dropped at least 2½ points to about to 95½ bid, 96½ offered following Monday's release by the Appleton, Wis.-based paper manufacturer of its second-quarter earnings, versus around 99 bid, par offered before the numbers.

At another desk, a trader saw those bonds "down a couple" post-earnings, in a range of around 96 bid to 98 bid.

While Appleton's second-quarter net sales of $220.8 million were a 12.7% increase versus the second quarter of 2009 due to stronger shipment volumes and increased market share, the company still reported a second- quarter net loss from continuing operations of $17 million, versus $6.5 million of income from continuing operations a year earlier.

It said that its results in the latest quarter were negatively impacted by unfavorable price and mix and increasing raw materials prices. Selling, general and administrative expenses and interest expense increased $5.5 million and $3.9 million, respectively, compared with the second quarter of 2009, whose results had gotten a boost from an $8 million alternative fuels tax credit as a reduction to cost of sales and an $800,000 gain recorded for the recovery of a note receivable associated with its sale of a subsidiary in 2008.

Clear Channel remains active

A market source said that Clear Channel Communications Inc.'s 11% guaranteed senior toggle notes due 2016 opened the day's trading at 77 bid, got as good as 79, and then fell back to around 77 going out, with over $19 million of the bonds traded, making it one of the most active credits in Junkbondland on Tuesday. The source said that was unchanged from Monday's late closing levels.

At another desk, a trader saw those bonds having firmed to about 77 from Monday's close around 75½ bid, 77½ offered, to which they had risen from prior levels at 73 bid, 74 offered; he cited the disclosure in the company's 10-Q report for the latest quarter filed with the Securities and Exchange Commission on Monday that the San Antonio-based media company was electing to pay the interest on the bonds for the current period which began on Aug. 1 in cash rather than in additional notes.

Clear Channel also released quarterly earnings figures on Monday showing revenue gains and a smaller net-loss than a year ago. Its 5½% notes due 2014 were quoted up 1½ points at 63½ bid, the bonds' high print for the day.

A market source called the company's 6¼% notes due 2011 up 1 3/8 points at 99 bid, although quoting the 11s down a point at 77.

Auto names spin their wheels

A trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 unchanged at 35½ bid, 36 offered, while seeing GM domestic arch-rival Ford Motor Co. 's 7.45% bonds due 2031 at 96½ bid, 97½ offered, which he called down ½ point on the session.

In that same sector, Detroit-based drivetrain components manufacturer American Axle & Manufacturing Holdings Inc.'s 7 7/8% notes due 2017 eased 1¼ points to finish at 94½ bid.

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