Triumph Group, BWAY deals price, BWAY moves up, TitleMax slates; ATP trades lower

By Paul Deckelman and Paul A. Harris

New York, June 8 - Tuesday was a triumphant day for the recently struggling high yield primary market, because the appropriately named Triumph Group, Inc., and BWAY Holding Co., became the first junk issuers in three weeks - since May 19, to be exact - to price back-to-back deals in the same session.

Triumph, a Wayne, Pa.-based aerospace company, priced $350 million of eight-year notes as part of the financing for its acquisition of Vought Aircraft Industries, Inc. in a transaction valued at about $1.44 billion, including Triumph's assumption of Vought debt.

Meanwhile, BWAY, an Atlanta-based maker of rigid large metal and plastic containers, priced $205 million of eight-years, to help fund the previously announced $915 million buyout of the company by Madison Dearborn Partners LLC.

New-deal players also heard that Savannah, Ga.-based consumer loan company TitleMax is shopping around an offering of five-year secured notes.

Traders said that the new BWAY bonds firmed solidly when they hit the aftermarket, while Triumph's new paper stayed anchored around their issue price. The recently priced deal from Spectrum Brands Inc. continued to hold its post-pricing gains.

Among established issues, traders saw ATP Oil & Gas Corp.'s beleaguered bonds - which seemed to have stabilized last week in the lower 70s, a few points above their recent lows - falling back down into an upper 60s context.

Junk eases as stocks rise

Otherwise, they saw most names easier on the day, even though stocks ended up having a strong session.

When stock prices improve and Treasuries are off - as was the case on Tuesday - you customarily see a better bid in the high yield, a portfolio manager reflected.

However those circumstances failed to generate demand in junk on Tuesday, the source added, speaking shortly after the close.

"Things feel as though they want to go wider," the manager said.

"The Street doesn't seem to want to be long paper right now."

Also, it would not be too surprising if AMG reports on Thursday that high-yield mutual funds have sustained more weekly outflows. If that happens, it would lengthen a five-week negative streak that has seen the funds undergo $4.3 billion of redemptions.

Triumph prices $350 million

Meanwhile, Tuesday's primary market session was the first in three weeks during which multiple high-yield deals were priced.

Two issuers, each one bringing a single tranche, raised slightly less than $550 million.

Triumph Group, Inc. priced a $350 million issue of 8 5/8% eight-year senior notes (Ba3/B+) at 99.27 to yield 8¾%.

The yield printed at the wide end of the 8½% to 8¾% price talk.

RBC Capital Markets Corp. was the left bookrunner. UBS Investment Bank was the joint bookrunner.

Proceeds will be used to help fund the acquisition of Vought Aircraft.

At Tuesday's close, the bonds were straddling the issue price, market sources said.

Susceptible deals

In a languishing junk bond market such as the present one, two types of deals are apt to underperform the rest of the market, a portfolio manager said on Tuesday.

The most obvious underperformers are the low-rated on-the-run bonds, the source added.

As evidence, the manager proffered First Data Corp., whose bonds were recently off two to three points, as well as Freescale Semiconductor, which also saw its debt off two to three points, and 10 points off recent highs.

The other category of bonds that tends suffer disproportionately in a languishing market are higher-rated notes such as the above-mentioned Triumph Group deal, the source added, commenting that it was not a bad deal, but with an 8¾% yield it was in no way generously priced.

A sell-side source, who said that the order book for the Triumph Group deal was 2.5-times oversubscribed, conceded that had the company offered an additional 25 bps of the deal would likely have been a food fight.

BWAY on top of talk

Elsewhere on Tuesday, BWAY Holding Co. priced a $205 million issue of 10% eight-year senior notes (B3/B-) at 98.658 to yield 10¼%, on top of the price talk.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Barclays Capital Inc. were the joint bookrunners.

Proceeds will be used to help fund the buyout of BWAY by Madison Dearborn Partners LLC in a transaction valued at $915 million, including the assumption of debt.

The BWAY deal likely was something of a food fight, said the portfolio manager, who played it, but who, upon watching the notes trade as much as 1¼ points higher in the secondary, sold the deal back into the market.

For those who didn't play the BWAY bridge loan, allocations were pretty miserable, the manager remarked.

TitleMax marketing $225 million

The primary market heard one new deal announcement on Tuesday.

TitleMax is roadshowing a $225 million offering of five-year senior secured first-lien notes (B2/B+).

That roadshow is set to conclude on June 17.

Jefferies & Co. has the books for debt refinancing deal from the Savannah, Ga.-based auto title lending company.

Apart from TitleMax, one deal remains on the active forward calendar, sources say.

TransUnion Corp. could price its $645 million offering of eight-year senior unsecured notes deal (B3/B-) as early as Wednesday, a buy-side source said.

No formal price talk has circulated.

However, pricing appears to be coming together in the 11% context, the source said.

Proceeds from the bonds, as well as from the $1.19 billion credit facility, will be used to help fund Madison Dearborn Partners LLC's acquisition of a 51% interest in TransUnion from the Pritzker family.

In the process of marketing the bond and bank deals, the issuer has made concessions.

On Monday TransUnion attached registration rights to the deal, which initially came to market in a Rule 144A for life deal.

Then on Tuesday TransUnion raised price talk on its $940 million term loan to Libor plus 475 basis points to 500 bps from Libor plus 375 bps to 400 bps, and revised the original issue discount to 98½ from the 99 area.

BWAY deal does well

When the new BWAY 10% notes due 2018 were freed for secondary dealings, a trader saw the new bonds move up to 99½ bid, 100½ offered on the break, versus the 98.658 level at which the deal had priced earlier.

A second trader quoted those bonds at 99 7/8 bid, 100 7/8 offered.

Another trader said the new bonds did pretty well, seeing them around the par bid level.

Triumph trades around issue

A trader meantime said that at his shop, they had traded "a bunch" of the new Triumph Group 8 5/8% notes due 2018 "wrapped around the issue" price of 99.27. "They didn't go anywhere," he declared.

Another trader quoted the new bonds in a 99-99½ context.

However, later in the day, a trader saw those bonds going out at 98 7/8 bid, 99 3/8 offered.

Spectrum hangs onto gains

A trader said that Spectrum Brands' recently priced 9½% senior secured notes due 2018 continued to trade at a premium to where the Atlanta-based consumer products company's $750 million offering - upsized from the originally shopped $500 million - had priced last Friday.

He said that the bonds "continue to trade well," pegging them in a 100 1/8-100¼ context. The bonds had priced at 98.634 to yield 9¾%, and had proceeded to gains about a point in initial aftermarket dealings later Friday to about the 99 5/8 level. They then firmed further in Monday's session and in Tuesday's.

"They're holding their gains, and maybe they're a smidge better, but really not much more than that." However, he added that given the somewhat softer tone see in Junkbondland on Tuesday, "that's still impressive."

Another market source quoted the bonds at par bid, 100¼ offered.

Market indicators seen mixed

Back among bonds not related to the new-deal realm, a trader saw the CDX North American HY Series 14 Index gain 1/8 point on Tuesday to end at 92¾ bid, 93¼ offered, after having dropped by a full point on Monday, on top of last Friday's 1 3/8-point loss.

The KDP High Yield Daily Index, meantime, slid by 38 basis points on Tuesday to end at 69.38, after having lost 17 bps on Monday. Its yield rose by 11 bps on the day, to 9.05%, after having moved by5 bps in the previous session.

Advancing issues trailed decliners for a third consecutive session, lagging by a nearly eight-to-five margin, widening from the relative handful of issues - just several dozen out of the more than 1,300 issues tracked - which separated them on Monday.

Overall market activity, represented by dollar-volume levels, jumped by 40% on Tuesday, in contrast to the 12.5% decline seen on Monday and the nearly 28% plunge on Friday.

A trader said that "high yield was definitely a little softer today."

Another characterized Tuesday's market as unchanged to slightly wider.

Junk, which has recently taken its cue on some days from the movements of the equity market, diverged somewhat on Tuesday, trading water at slightly lower levels while stocks posted gains on the day, encouraged by predictions that the United States will probably not fall back into a double-digit recession made by several Wall Street heavyweights - Federal Reserve chairman Ben Bernanke, prominent banking analyst Richard Bove, and perhaps most importantly of all, market guru Nouriel Roubini, whose normally wary, bearish outlook on such things has earned him the nickname of "Dr. Doom," as the apparent successor to the legendary Henry Kaufman.

With that bullish news pacing things, the Dow Jones Industrial Average, which on Monday had closed at its lowest point since November, staged a late rally to close up 123/49 points, or 1.26%, at 9,939.98.

ATP bonds lose ground

A trader said that ATP Oil & Gas' 11 7/8% second lien senior secured notes due 2015 moved lower, seeing "a lot of activity in that name today."

He quoted the Houston-based energy exploration and production company's bonds as having fallen to a 67-69 context, calling them down about 3 points from prior levels.

"There were a lot of quotes there, down about 3-ish points," he said.

The bonds had been volatile last week, but had seemed to steady in the lower 70s over the previous several sessions, before going back on the slide on Tuesday.

The company had originally priced $1.5 billion of the 11 7/8s at 99.531 to yield 12% on April 19 -- the day before the oil drilling rig Deepwater Horizon, owned by Swiss contract driller Transocean Inc. and under lease to international oil major BP plc, exploded, burned and capsized in the Gulf of Mexico, about 40 miles southeast of the Louisiana coast. The mishap killed 11 workers and injured 17 others and started a massive oil leak, which has still not been brought under control some seven weeks later.

While the ATP bonds had initially shrugged off the bad news and had even firmed to the 102-103 region in the days after the pricing, they started to come down in the weeks that followed when it became apparent that the oil-rig explosion and resulting environmental problems had been far more serious than initially thought, leading to a government-ordered moratorium on new drilling in the Gulf - a potentially severe blow to a company like ATP, which has most of its proven reserves there.

While the bonds had rallied just before Memorial Day on investor hopes that BP could cap the well and end the environmental damage, that proved not to be the case, and the bonds slid badly last Tuesday, June 1, when the market reopened after Memorial Day, falling sharply into the mid 60s from prior levels in the mid-70s. They appeared to come back later last week to that same mid-70s context, with traders surmising that the sell off in the credit had been overdone. While the bonds had held in the low 70s on Monday, they slid on Tuesday to their new, lower levels

Transocean off modestly

A trader meantime said that while Deepwater Horizon owner Transocean's bonds were a little lower, in line with the overall softer market, "they really haven't cracked that much" since their initial fall about a week ago, right after the Memorial Day weekend failure of BP's "top kill" effort to stop the leak became known. That's when high-grade accounts started to dump them despite their nominally still-investment-grade rating and junk accounts began to dabble in them. The several issues of Transocean bonds at that time fell as much as 6 or 7 points in busy trading before coming off those lows to steady down about 4 or 5 points from their prior levels.

The trader saw one of those issues, the 6.80% bonds due 2038, in an 85-86 range Tuesday, noting that they were trading at a yield of around 8%.

At another desk, a market source said the 6.80s had moved as low as 85 on Tuesday from prior levels in the 87 area, before ending around 86.

Transoceans's New York Stock Exchange-traded shares, meantime, fell to a new 52-week low of $44.05 on an intraday basis before coming off that low to end at $46.33 - still down $2.84, or 5.78%, on volume of 37.9 million shares, about triple the norm. The shares were hurt by a Goldman Sachs downgrade to "neutral" from "buy" previously. In downgrading the shares, Goldman cautioned that "we think that the current six-month moratorium on deep water drilling in the U.S. could be extended and now assume that it lasts 12 months with limited activity until 2012; deep-water day rates [charged by drillers like Transocean] are likely to face pressure."

Transocean got some more bad news Tuesday as Standard & Poor's announced that it may cut the company's ratings, which are currently at BBB+. It also put several other energy-related names under watch for a possible downgrade, explaining that "the negative rating actions are based on various concerns and possible operating disruptions for companies operating in the Gulf of Mexico due to the moratorium and the flow of oil from the well disaster. "

Also in the energy realm, Compton Petroleum Corp.'s 7 5/8% notes due 2013 were seen by a trader around the 80 mark, little moved from where they had finished on Monday, when they rose 4 points on news of a pending asset sale.

The Calgary, Alta.-based company is selling a portion of its natural gas assets located in the Niton and Gilby areas of Central Alberta, according to a press release. The proceeds from the sales will be used to reduce outstanding debt and to provide additional capital for Compton's 2010 development program.

GM off amid recall news

A trader said that General Motors Corp.'s benchmark 8 3/8% bonds due 2033 closed out the day down ½ point at 31½ bid, 32½ offered, with as much as $40 million of the bonds having possibly changed hands, after GM announced a recall of 1.5 million 2007-2009 vehicles.

The Detroit-based top U.S. automaker's recall effort is due to a heated washer fluid system module that could pose a fire risk. The company is offering a $100 payment to owners and lessees of each vehicle.

"While our analysis shows the number of incidents is very small compared with the number of vehicles on the road, we want our customers to have complete peace of mind," said Jeff Boyer, executive director of safety, in a press release. "We always want to make sure customers can count on the safety and quality of their GM vehicle.

"This was a unique technology available from only one supplier, and that supplier has stopped manufacturing, which left no opportunity to collaborate on an improved design," Boyer added. "We want to be clear that the voluntary payment to customers is for the loss of the feature, not the recall."

A trader meantime said that GM domestic arch-rival Ford Motor Co.'s 7.45% bonds due 2031 were off by ½ point at 86 bid, 88 offered.

But another trader said that the Dearborn, Mich.-based Number-Two U.S. carmaker's bonds were down 3 points on the day at 86 bid, 87 offered.

-Stephanie N. Rotondo contributed to this report

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