Ardagh, Radio One, Westmoreland lead $1.7 billion primary; new Radio One bonds solidly firmer

By Paul Deckelman and Paul A. Harris

New York, Jan. 29 - The high-yield primary arena kept churning out new deals on Wednesday, with syndicate sources seeing more than $1.7 billion of new dollar-denominated, fully junk-rated paper having priced on the day.

The big deal of the session was Irish glass and metal container producer Ardagh Group's $830 million two-part offering of five- and seven-year notes. Those bonds were modestly better in the aftermarket.

Broadcasting and diversified media company Radio One, Inc. did a $335 million offering of six-year subordinated notes, which were seen to have firmed smartly when they began trading in the secondary arena.

The day also saw a pair of add-on offerings to existing bonds, from Westmoreland Coal Co. and from Ancestry.com Holdings LLC. The new Westmoreland bonds were quoted well above their issue price.

The syndicate sources also heard that Chrysler Group LLC was getting ready to take to the road to market a planned $2.7 billion bond deal. The carmaker's existing bonds were meantime seen a little lower on the news.

The junk market was generally easier, traders said, with bonds pushed down in line with a slide in equities after the Federal Reserve elected to cut back further on its quantitative easing bond-buying program.

Statistical indicators of market performance fell across the board on Wednesday after having been higher all around on Tuesday.

Ardagh prices tight

Four issuers brought a combined five tranches of dollar-denominated high-yield notes to raise a total of $1.72 billion during a busy Wednesday session in the primary market.

Despite overall heaviness in the markets, the executions were crisp. Four of the five tranches came at the tight end of talk.

One deal came in a drive-by.

And one of the five was upsized.

Ardagh Packaging Finance plc and Ardagh Holdings USA Inc. priced $830 million of senior notes (Caa1/CCC+) in two tranches, both of which came at the tight end of yield talk.

The deal included a $415 million tranche of five-year notes that priced at par to yield 6¼%, at the tight end of the 6¼% to 6½% yield talk.

In addition the Dublin-based company priced a $415 million tranche of seven-year notes at par to yield 6¾%, at the tight end of the 6¾% to 7% yield talk.

Citigroup is the bookrunner for the acquisition deal.

Earlier in the month, Ardagh released escrowed proceeds to buy back about $1.5 billion equivalent of high-yield notes from investors, which came in a January 2013 deal also backing the Verallia NA acquisition.

The buyback was triggered by the passage of the closing date for the acquisition.

The closing of the acquisition was delayed due to an antitrust complaint related to the acquisition, which went before the U.S. Federal Trade Commission.

Westmoreland Coal upsizes

Westmoreland Coal priced an upsized $425 million add-on to its 10¾% senior secured notes due Feb. 1, 2018 (confirmed Caa1/existing B-) at 106 7/8 to yield 6.975%.

The deal was upsized from $400 million.

The reoffer price came at the rich end of price talk in the 106¾ area.

BMO and Deutsche Bank Securities Inc. were the joint bookrunners.

Proceeds would be used primarily to fund the acquisition of coal mining operations of Sherritt International Corp. and to prepay the outstanding senior notes issued by subsidiary Westmoreland Mining, LLC.

Radio One atop talk

Radio One priced a $335 million issue of six-year senior subordinated notes (Caa2/CCC) at par to yield 9¼%.

The yield printed on top of yield talk.

Credit Suisse was the sole bookrunner for the refinancing deal.

Ancestry.com at the rich end

Ancestry.com Holdings priced a $100 million add-on to its 9 5/8%/10 3/8% senior PIK toggle notes due Oct. 15, 2018 (Caa1/CCC+) at 103 to yield 8.648%.

The reoffer price came at the rich end of the 102½ to 103 price talk.

Morgan Stanley, Credit Suisse, Deutsche Bank, Goldman Sachs and RBC were the joint bookrunners.

Proceeds will be used to pay cash dividends on, and/or make other payments in respect of, the issuer's or its subsidiaries' equity interests.

The original $300 million issue priced at 99 to yield 9 7/8% on Sept. 11, 2013, so the add-on yield represents 123 basis points of interest savings for the Provo, Utah-based company.

Chrysler $2.7 billion starts Monday

Chrysler Group plans a Monday-Tuesday roadshow for a $2.7 billion offering of high-yield bonds.

The deal, which is coming in the form of add-ons to a pair of issues that the company sold in May 2011, is set to price on Wednesday.

The offer consists of add-on notes to the 8% senior secured notes due June 15, 2019 and add-on notes to the 8¼% senior secured notes due June 15, 2021.

Tranche sizes remain to be determined.

BofA Merrill Lynch, J.P. Morgan, Barclays, Citigroup, Goldman Sachs, Morgan Stanley and UBS are the joint bookrunners for the debt refinancing.

Also on Wednesday, credit ratings circulated for the deal, including a downgrade from Standard & Poor's, a trader noted.

S&P lowered the ratings on Chrysler's senior secured second-lien notes to B from B+ and revised the recovery rating to 6 from 5. The ratings agency said that the 6 recovery rating, which indicates 0% to 10% expected default recovery, results from the proposed increase in priority debt through the term loan transactions and from the larger outstanding amount of second-lien notes pro forma for the transaction, which reduces recovery prospects for the noteholders.

Moody's, meanwhile, assigned its B1 rating to the deal.

HSS prices £200 million

The Wednesday session also came with news from the sterling- and euro-denominated primary markets.

HSS Financing plc priced a £200 million issue of 5.5-year senior secured notes (B2/B) at par to yield 63/4.

The yield printed on top of yield talk.

JPMorgan, Barclays and HSBC were the joint bookrunners for the debt refinancing from the Heathrow, United Kingdom-based tool and equipment rental company.

Safari roadshowing €265 million FRN

German arcade operator Safari Holding Verwaltungs GmbH began a roadshow on Wednesday in London for a €265 million offering of six-year senior secured floating-rate notes.

The roadshow travels to the European continent later in the week, and the deal is set to price early in the week ahead.

Joint bookrunner Jefferies will bill and deliver. Credit Suisse is also a joint bookrunner.

Proceeds will be used to repay debt and to repay shareholder loans.

New Radio One rolls

In the secondary market, a market participant saw Radio One's new 9¼% senior subordinated notes due 2020 trading as high as 102 bid when the Silver Spring, Md.-based broadcaster and diversified media company's deal was freed, after having priced at par.

He saw the bonds later come in a little to around 101 7/8 bid.

A second trader saw the new deal trading in a 101¼ to 101¾ bid context.

The company's existing 12½% notes due 2016 - which are to be repaid with the proceeds from the new deal - edged up to around the 101 bid mark. Volume of over $12 million put that credit squarely among the busiest Junkbondland issues.

Westmoreland a winner

Traders saw Westmoreland Coal's new 10¾% senior secured notes due 2018 trading above the 108 bid level on Wednesday - well up from the 106 7/8 level at which the Englewood, Colo.-based thermal coal producer and power generation company priced its upsized $425 million of the notes.

One saw the bonds trading between 108 and 109 bid, before tightening to 108¼ bid, 108 3/8 offered.

A second pegged them at 108¼ bid, 108 ¾ offered.

Ardagh improves a little

Both halves of the big new deal from Ardagh Group, done through a pair of financing subsidiaries, were seen having firmed modestly when they began trading in the aftermarket.

Its 6¼% notes due 2019 were seen by one trader having moved up to 100 5/8 bid, 100¾ offered from their par issue price.

Two other traders from different shops each saw the bonds at 100¼ bid, 100½ offered.

The glass and metal beverage container manufacturer's 6¾% notes due 2021 also traded around 100¼ bid, 100½ offered, a trader said. A second saw them at 100 1/8 bid, 100 3/8 offered.

Chrysler off ahead of new deal

The news that automotive giant Chrysler plans to bring a $2.7 billion two-part offering of add-on notes to its existing paper pushed some of that paper lower on Wednesday.

A trader reported its 8¼% notes due 2021 down 1 point, at 112¼ bid, on brisk volume of over $11 million.

Its 8% notes due 2019 were seen likewise easier around the 108 mark, with over $7 million having traded.

Walter gets whacked

A trader said that the trouble spot of the day was "in coal-land," as he saw Walter Energy's 9 7/8% notes due 2020 trading around 76 bid, "so those continue to slide."

He said that the Birmingham, Ala.-based metallurgical coal producer's bonds had dropped below 75 bid at one point during the session, although they did manage to come off their lows, he said.

Those levels compare with levels around 77½ on Tuesday and north of 80 bid last week.

"A week ago, it was trading at 831/2-84, so it's down 8 to 9 points over the last week."

A trader at another shop meantime saw the bonds on Wednesday at 74¾ bid, calling them down nearly 3 points on the day, on brisk volume of over $9 million.

The bonds, as well as the company's New York Stock Exchange-traded shares, have been on the slide since at least Monday, when Citigroup analyst Brian Yu warned in a research note that Walter and sector peer Alpha Natural Resources stood to be hurt more than most other coal companies by the fall in prices for met coal, which is used in the production of steel and other metals. Those prices, which had already been considered low at $132 per ton, have now slid to $125 per ton, and some analysts think they could come down even further.

Bristol, Va.-based ANR's 6¼% notes due 2021 were meantime down 1 point on Wednesday, going out at 82½ bid.

In his note, Yu said that coal companies like Peabody Energy Corp. were better positioned to ride out the downturn in met coal.

The St. Louis-based coal producer's 7 7/8% bonds due 2026 gained nearly 2 points on the day Wednesday to close just below 105 bid.

Session a mixed bag

A trader described the overall session as "kind of mixed."

"I guess you could say that in general, the market was a little bit softer, given what equities were doing," he said.

Stocks were lower across the board, reacting to the announcement from the Federal Reserve that it would continue to throttle back on its quantitative easing bond-buying program, reducing the amount of Treasury and mortgage-backed securities it will buy to help keep the economy liquid and interest rates low to $65 billion a month starting in February - down from $75 billion per month currently and well down from the $85 billion per month that it had been buying before the current round of tapering off began this month.

The bellwether Dow Jones Industrial Average slid by 189.77 points, or 1.19%, to end at 15,738.79. The broader Standard & Poor's 500 index lost 18.3 points, or 1.02%, to finish at 1,774.2. The even broader Nasdaq Composite index dropped by 46.53 points, or 1.14%, to go out at 4,051.43.

Market indicators all fall

Statistical junk-market performance indicators turned lower across the board on Wednesday after having gotten better all around on Tuesday, which in turn had followed a mixed session on Monday.

The Markit Series 21 CDX North American High Yield index lost 13/16 point on Wednesday to finish at 106 3/16 bid, 106 5/16 offered. It had gained 5/8 point on Tuesday, its second straight advance.

The KDP High Yield Daily index slid by 15 bps points to end Wednesday at 74.45, after having edged upward by 1 bp on Tuesday to break a three-session losing streak.

Its yield rose to 5.6% after having been unchanged on Tuesday. It had widened out in the three sessions before that.

And the widely followed Merrill Lynch High Yield Master II index dropped by 0.035% on Wednesday - its fourth setback in the last five sessions. On Tuesday, it posted a 0.044% gain to break a three-session skid.

The loss lowered its year-to-date return to 0.707%, down from 0.742% on Tuesday and down as well from last Wednesday's 1.185%, its high point of the year so far.

The index's yield to worst rose to 5.601% from 5.574% on Tuesday, and it remained well above its low level for the year, last Wednesday's 5.386%.

Its spread to worst widened out to 430 bps over comparable Treasuries, a new wide point for the year, surpassing the previous mark of 425 bps, which had been set on Monday. The spread had been 423 bps over on Tuesday.

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