Teck trades busily and softer; ATP prices $1.5 billion; Zions steady despite numbers

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., April 19 - The secondary high yield market was "reasonably active" on Monday, according to one trader, but still finished the day weaker than last week's closing.

"The market was down about 1 to 1½ points, depending on the name," a trader said.

Cash bonds underperformed stocks, said a syndicate banker, who added that junk continued a slide that had gotten underway last Friday.

Even Teck Resources Ltd., which took the day's top trading spot, saw its bonds slipping. Its stock was also on the decline, which was attributed to concerns about China's economy and how that could affect demand for commodities.

Meanwhile, Zions Bancorporation released what one trader deemed "pretty good" numbers. However, the weakening marketplace prevailed and the bonds ended, at best, unchanged.

And, Harrah's Entertainment Inc.'s bonds continued to be among the most active credits in the secondary world. Traders saw the casino operator's notes slipping in Monday trading, in line with the rest of the market.

The primary market began its week at a purposeful pace, with two issuers, each bringing a single tranche, combining to price $1.7 billion face amount of bonds.

ATP prices $1.5 billion

ATP Oil & Gas Corp. priced a $1.5 billion issue of 11 7/8% five-year senior secured second-lien notes (Caa2/B) at 99.531 to yield 12%.

The yield printed at the wide end of the 11¾% to 12% price talk.

J.P. Morgan Securities Inc. was the left bookrunner. Credit Suisse Securities was the joint bookrunner.

Proceeds will be used to repay the Houston-based offshore oil and gas development and production company's first-lien term loans and its revolver and to fund general corporate purposes.

Merge Healthcare on top of talk

Merge Healthcare Inc., meanwhile, priced a $200 million issue of 11¾% five-year first-lien senior secured notes (B2/B+) at 97.266 to yield 12½% on Monday.

The yield printed on top of the yield talk. The reoffer price came in line with discount talk of approximately 3 points.

Morgan Stanley & Co. Inc. ran the books.

Proceeds will be used to pay a portion of the Amicas acquisition.

Merge is a Milwaukee-based medical software developer.

CF Industries talks $1.6 billion

Setting the stage for what promises to be a busy Tuesday session in the new issue market, CF Industries Holdings, Inc. revealed price talk for its $1.6 billion offering of non-callable senior unsecured notes (B1/BB+) on Monday.

Notes maturing in 2018 are talked to yield in the 7% area.

Notes maturing in 2020, meanwhile, are talked to yield in the 7¼% area.

Tranche sizes remain to be determined.

The notes, which have been registered with the Securities and Exchange Commission, are expected to price on Tuesday morning.

Morgan Stanley has the books.

Proceeds will be used to repay the company's bridge facility related to its acquisition of Terra Industries Inc., with any excess proceeds going to repay bank debt.

International Wire talks 5-year deal

Meanwhile, International Wire Group, Inc. talked its $140 million offering of five-year senior secured notes (B3/B) to yield in the 10% area, with 1 to 2 points of original issue discount.

Wells Fargo Securities has the books.

Proceeds will be used to redeem the company's existing 2011 notes and to pay a distribution to shareholders and option holders.

New World Resources plans euro deal

New World Resources Corp. talked its €475 million offering of eight-year senior secured notes (Ba3/BB-) to yield in the 8% area.

Goldman Sachs & Co. is the left bookrunner. JP Morgan and Morgan Stanley are joint bookrunners.

Proceeds will be used to refinance bank debt.

The company is an Amsterdam-based central European coal producer.

Syncreon to start roadshow

Word surfaced Monday on a couple of roadshow starts.

Syncreon Global (Ireland) Ltd. will begin a roadshow on Tuesday for a $300 million offering of eight-year senior unsecured notes (B3/B).

JP Morgan and Goldman Sachs & Co. are joint bookrunner for the debt refinancing and general corporate purposes deal from the Auburn Hills, Mich.-based logistics and supply chain solutions service provider.

Telcordia plans secured deal

Meanwhile, Telcordia Technologies, Inc. began a roadshow on Monday for ats $300 million offering of second-lien senior secured notes (/CCC+/).

The roadshow wraps up on Thursday, and the notes are expected to price the same day.

Credit Suisse, JP Morgan and Deutsche Bank Securities are joint bookrunners for the debt refinancing deal.

Thermon starts roadshow

Finally, Thermon Industries, Inc. began a roadshow on Monday for a $200 million offering of seven-year senior secured notes.

Jefferies & Co. is the bookrunner.

Proceeds will be used to partly fund the acquisition of the company by Code Hennessy, and to repay existing debt.

Thermon Industries is a San Marcos, Tex.-based industrial company that serves global infrastructure end-markets through its full line of heat tracing solutions. Its end markets include energy, chemical processing, power generation and industrial and commercial infrastructure

Market takes a hit

The secondary market took a turn from last week and ended with a softer tone, traders reported.

One market source called the CDX High Yield Index off ¼ point to par 1/8 bid, par 3/8 offered.

The KDP High Yield Index also ended down, in its case at 72.58, with a 7.66% yield. That compared to 72.75, yielding 7.60% on Friday.

"It was a reasonably subdued day, although there was plenty of volume," a trader said. "It kind of ended flat to maybe down a little bit. It wanted to be infinitely weaker this morning, but it didn't quite get there."

He also opined that last week's Goldman Sachs news was still "distracting" market players.

Teck takes day's top spot

Teck Resources was dubbed the day's most active credit, with one trader seeing a total of $50 million to $60 million of the company's paper trading.

The trader placed the 10¾% notes due 2019 around 124½ and the 10¼% notes due 2016 around 1201/2.

Another trader said the bonds were down anywhere from ¼ to ½ point. He also pegged the 10¾% notes and 10¼% notes at 124½ and 1201/2, respectively, and also saw the 9¾% notes due 2014 around 121.

The Vancouver, B.C.-based mining company also saw its stock (NYSE: TCK) declining in Monday trading, falling 35 cents, or 0.83%, to $41.75. The weakness in the equity was attributed to concern that China's recent steps to slow increasing property prices would lessen commodities demand.

Last week, Standard & Poor's upgraded Teck to BBB from BB+.

"We base our upgrade on our view that, following the recent debt reduction initiatives, Teck has improved its financial risk profile to a level commensurate with an investment-grade rating and that its better-than-average cost profile will enable it to maintain intermediate credit metrics in the medium term, using our credit neutral price assumptions for base metals," said S&P analyst Maude Tremblay in a statement.

Zions steady despite 'good' numbers

Zions Bancorporation debt "didn't look much different," a trader said, even as the company posted first quarter results that were "pretty good."

The trader said he saw the 5½% notes due 2015 offered around the 95¾ level, while the 6% notes due 2015 were quoted at 94 bid, 95 offered. He also saw the 7¾% notes due 2014 around 1041/2.

At another desk, the 5½% notes were placed around 951/4, which was "best I can tell, right about where they have been," a trader said.

The Salt Lake City-based banking company posted a first-quarter net loss of $86.5 million, or 57 cents per share. That compared to a net loss of $176.5 million, or $1.26 per share, the year before.

"We are encouraged by recent credit trends, particularly the significant decline in gross loan charge-offs during the quarter, and by a reduction in loss severity across the major loan categories," said Harris H. Simmons, chairman and chief executive officer, in the earnings release. "We're also pleased with the continued strengthening of the composition of our core deposit base and the strong net interest margin. Finally, we are pleased that both our allowance for credit losses and our capital ratios continued to strengthen this quarter."

Harrah's still active, but weaker

Harrah's Entertainment's bonds continued to be active, though they ended several points softer than Friday's levels.

A trader called the 10% notes due 2018 down a deuce around 851/2. Another trader echoed that level, but called it down just a point.

The second trader added that $25 million to "$30-odd million" of the notes traded.

Yet another source claimed the paper had lost somewhere in the neighborhood of 3 points, seeing the debt at 851/4.

Last week, the Las Vegas-based casino operator priced $750 million in new debt to repay existing debt. The new issue is just one more in a long list of things the company has done of late to refinance its debt, which has also included amending certain credit facilities.

Broad market slips

In the broader market, Smurfit-Stone Container Corp.'s 8¼% notes due 2012 dipped ½ point to end at 92, a trader said.

Clear Channel Communications Inc.'s 10¾% notes due 2016 were also weaker, closing around 80¾ versus 81¼ previously.

And, NewPage Corp.'s 11 3/8% notes due 2014 were "reasonably active," a trader said, around the 101 3/8 mark.

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