Goodyear prices add-on, new bonds rise; Western Alliance brings small deal, Mueller firm

By Paul Deckelman and Paul A. Harris

New York, Aug. 20 - Goodyear Tire & Rubber Co. priced a $100 million add-on tranche Friday to the $900 million of 10-year notes which the Akron, Ohio-based tire making giant brought to market earlier in the month.

After the quickly shopped bond offering began trading, traders reported that the Goodyears had firmed smartly from their issue price.

The week - certainly not so busy by the standards of the record-active week before - closed out with one other drive-by deal coming to market, even smaller than the Goodyear offering, from Las Vegas-based Western Alliance Bancorporation. The $75 million of five-year notes was not seen in the aftermarket.

The new Mueller Water Products, Inc. 10-year notes which priced Thursday and then firmed in trading, were seen having added to those initial gains on Friday. Other of the week's new deals, such as NRG Energy, Inc. and Toys 'R' Us - Delaware, Inc. were meantime seen holding onto the aftermarket gains recorded earlier in the week.

Traders said that outside of the activity in recently priced credits, secondary market dealings were flat, featureless, or in the words of one trader, "blah."

Goodyear taps 8¼% notes

The Friday primary market saw two small issues price for a total of $175 million.

Goodyear priced a $100 million add-on to its 8¼% senior notes due Aug. 15, 2015 (B1/B+) at 100.75 to yield 8.119%.

There was no official price talk.

Deutsche Bank Securities ran the books for the debt refinancing deal.

The original $900 million issue priced at 99.163 to yield 8 3/8% on Aug. 10.

Western Alliance brings five-years

Meanwhile, Western Alliance Bancorporation priced a $75 million issue of 10% five-year senior notes at 98.50 to yield 10.39%.

Keefe, Bruyette & Woods, Inc. and Goldman Sachs & Co. were the joint bookrunners.

The issue has not yet been rated.

Moody's assigns its Ba3 corporate credit rating to the issuer, which is the Las Vegas-based holding company for Bank of Nevada, First Independent Bank of Nevada, Alliance Bank of Arizona, Torrey Pines Bank, Alta Alliance Bank, Shine Investment Advisory Services, and Premier Trust.

The transaction was not a typical high-yield execution in that the notes are non-callable, and come with no equity clawback or change-of-control features, according to the source.

Proceeds will be used for general corporate purposes, including purchasing nonperforming assets from the issuer's bank subsidiaries and making capital injections into the subsidiaries.

$600 million shy of record

With Friday's two small transactions in the tally, the Aug. 16 week saw $1.95 billion of issuance in six junk-rated, dollar-denominated tranches.

That extends year-to-date issuance to $161.2 billion, which is still $600 million shy of 2009's all-time record annual issuance of $161.8 billion.

We may have to wait until September to see that $600 million gap close and a new record set, sources said on Friday.

Among market sources, a belief seems to have taken hold that new issue business is largely wrapped up for the summer.

"Never say 'Never,'" a debt capital markets banker warned.

However, the source added, it would be a surprise if anything sizable turned up before the Labor Day weekend, the traditional summer-fall boundary in the bond market.

The buy-side audience for any sizable deal will probably not be on hand again until September, the official added.

A good break for Goodyear

With activity levels well down from the week before, the star of the day, by default, was a $100 million add-on issue - the Goodyear deal, and people looking for a little pizzazz were not disappointed. A trader saw the new bonds having jumped to 102½ bid, 103½ offered on the break, well up from the 100.75 level at which the deal had priced.

At another shop, Goodyear's new bonds, as well as the $900 million of identical notes which had priced at 99.163 to yield 8 3/8%, back on Aug. 10, had gotten as good as 102¾ bid, 103½ offered.

Bond investors aren't the only ones who like the giant tire company; analyst Shelly Lombard of the Gimme Credit advisory service, in noting how Goodyear was able to upsize its original deal to $900 million from the initially announced $750 million, despite the "moodiness" of the market, pointed out the company's "solid long-term prospects and very strong near-term results," with revenues getting a big boost as "pent-up demand for replacement tires finally materialized." Lombard took further note of how "OEM demand [i.e. tires for new cars] is improving worldwide and the number of miles driven in the U.S. is also increasing," boding well for the replacement tire business.

The analyst also saw improved credit metrics, including rising EBITDA, and a leverage ratio of under 4 times.

Mueller Water deal firmer

A trader said that the new Mueller Water Products 8¾% notes due 2020 "caught a little bid" on Friday to end the session "a touch better," quoting them as having moved up to 100 5/8 bid, 100 7/8 offered, and then, to 100¾ bid, 101 offered.

The Atlanta-based maker of piping and water-flow control equipment priced its $225 million deal on Thursday at 98.37 to yield 9%, on top of price talk. After that pricing, the new bonds shot up to around the 100 3/8 bid, 100¾ offered level in initial trading.

NRG, Toys deals stay above 101

Among the deals priced earlier in the week, a trader saw NRG Energy's 8¼% notes due 2020 "hanging right in there" and trading at 101¼ bid, 101½ offered. The Princeton, N.J.-based power generating company priced $1.1 billion of those bonds on Tuesday at par, upsized from the originally announced $700 million, which then .initially moved up to around 100¾ bid, 101 3/8 offered when they were freed for the secondary, and which had firmed further to 101 1/8 bid, 101½ offered by Thursday.

Another trader quoted the NRGs at 101 bid, 101½ offered.

As for Toys 'R' Us, a trader pegged the bonds at 101¼ bid, 101½ offered, while a second had them at 101 1/8 bid, 101½ offered. The Wayne, N.J.-based specialty retailer's $350 million issue had priced at par on Monday, and then swiftly moved to aftermarket levels above the 101 bid level.

Rite Aid robust, Chesapeake still a champ

Going back a little further, one of the traders said that Rite Aid Corp.' s recent offering of 8% senior secured notes due 2020 "stayed strong," trading at 100 1/8 bid, 100¼ offered.

The Camp Hill, Pa.-based drugstore chain operator's $650 million drive-by issue had priced on Aug. 9 at par.

He also saw Chesapeake Energy Corp.'s recent deal "continuing to trade well."

The Oklahoma City-based natural gas exploration and production company's $2 billion two-part deal, upsized from an originally announced $1.6 billion, also priced on Aug. 9, with its $1.4 billion of 6 5/8% notes due 2020 and $600 million of 6 7/8% notes due 2018 each pricing at par.

Market indicators end week mixed

Away from the new-deal sector, a market source saw the CDX North American HY Series 14 index lose down ¼ point on Friday to 96¾ bid, 97 offered, after having retreated ½ point on Thursday. The index thus ended the week down from the 97¼ bid, 97½ offered at the close the previous Friday, Aug. 13.

The KDP High Yield Daily index meantime pushed up by 3 basis points Friday to end at 71.93, after having eased by 2 bps on Thursday, while its yield held steady at 8.24%, after having risen by 1 bps on Thursday. That showed a small improvement from the previous Friday's index reading of 71.81 and yield of 8.28%.

The Merrill Lynch High Yield Master II index edged downward on Friday after four straight sessions on the upside, losing 0.107% to finish with a year-to-date return so far of 8.58%, down from Thursday's 8.696%. The index remains below its peak level for 2010 so far, the 9.085% recorded on Aug. 9. However, it gained 0.297% on the week to top the previous Friday's 8.259% return.

Advancing issues remained narrowly behind decliners for a second consecutive session on Friday. As was the case on Thursday, just a couple of dozen issues out of more than 1,200 tracked separated the two groups.

Overall activity, represented by dollar-volume levels, plunged nearly 45% on Friday, on top of the 24% fall seen in Thursday's dealings.

A trader described Friday's session as "miserable. Quiet. Blah."

It was, he said, "very boring - it was an August Friday. A lot of people left early."

A second trader said "there was not too much going on today. It's been slow for most of the day. Everything empties out early on Friday."

At another shop, a trader agreed that "it was one of the most boring days in high yield" seen in a long time, and quite a contrast to the previous week, when new issues were clattering down the chute at a record pace - more than 30 deals pricing, having a collective principal amount of over $15 billion - and were then mostly heading into the aftermarket.

Friday, on the other hand was "a lackluster day - a TGIF day."

NewPage easier

A trader saw NewPage Corp.'s bonds "continuing to drift lower," in line with the downside movement seen most of the week in the Miamisburg, Ohio-based coated-paper manufacturer's debt.

He quoted the 11 3/8% senior secured notes due 2014 at 78 bid, 79 offered. "They were down 2 or 3 points [on Thursday]," he said, "and they stayed down at those lows today."

Auto names spin their wheels

A trader saw General Motors Corp.'s benchmark 8 3/8% bonds due 2033 "lower on the day," seeing them finish at 34 bid, which he called down ½ to ¾ point "on very little activity.

"Normally, there's a lot of trading in it," he said, "but today, just a couple of big trades. Call them 'down' and 'inactive'," he added.

GM's bonds have traded unchanged to lower over the past two sessions, as investors digested the import of the Detroit giant's announcement late Wednesday that it had filed a registration statement for an initial public sale of stock expected to take place some time in the fall, although the company offered no specifics as to how much it was looking to raise from the stock sale in order to reduce the level of federal government ownership of the carmaker.

The trader also saw the 7.45% bonds due 2031 of GM domestic arch-rival Ford Motor Co. unchanged at 98 bid.

At another desk, a trader saw the benchmarks of both iconic automakers unchanged from Thursday's levels, which he estimated at 33½ bid, 34½ offered for GM and 96½ bid, 97½ offered for Ford.

Nuveen bonds seen off

A trader saw Nuveen Investments Inc.'s 10½% notes due 2015 at 95½ bid, 96 offered, which he called down a point on the day, "but not on very active trading."

There was no fresh news out on the Chicago-based financial services company that might explain the decline.

Dynegy steady after week's gyrations

A trader said that Dynegy Holdings Inc.'s bonds "have been quiet" after the flurry of activity earlier in the week, which saw the Houston- based power producer's bonds first fall by multiple points last Friday on the news that the company is to be bought out by Blackstone Group - once the bondholders realized that Blackstone is under no contractual obligation to repurchase Dynegy's outstanding bonds - and then move back up to around their pre-news levels during the earlier part of this week as bondholders got used to the $4.7 billion deal.

He noted that the 8 3/8% notes due 2016 were still around the same 77 level to which they had crept back up earlier in the week from last week's lows around 75-76, while its 7¾% notes due 2019 were hanging in around the 67ish mark, to which they had risen after having plunged to around 64 bid last Friday from pre-news levels around 70.

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