NOVA, Wynn and Solutia deals price, Solutia trades up; Tronox adds to gains as holiday looms

By Paul Deckelman and Paul A. Harris

New York, Oct. 9 - NOVA Chemicals Corp., Solutia Inc. and Wynn Las Vegas LLC/Wynn Las Vegas Corp. were heard by high yield syndicate sources to have successfully priced new offerings on Friday, turning what would normally be expected to be a fairly sedate day - the session immediately before the three-day Columbus Day holiday break - into a much busier one. Solutia and NOVA were each upsized from the deal amounts announced previously. The Wynn deal, a secured piece of paper, was a quickly shopped and opportunistically priced drive-by offering.

When the new Solutia bonds - the day's first deal to have priced - were freed for secondary dealings, traders saw the St. Louis-based chemical manufacturer's new paper having firmed by several points from its par pricing level. There also was some upside in the new NOVA Chemicals two-part issue, while Wynn's bonds were quoted staying around their issue price.

Traders also saw continued strength in Hercules Offshore Inc.'s new senior secured issue, which had priced during Thursday's dealings.

Among the established issues not involved in the new-deal market, Tronox Worldwide LLC's bonds - which had surged nearly 10 points in heavy trading on Thursday - continued to push higher on Friday, in apparent investor response to favorable financial projections released at mid-week.

Traders saw reduced activity in two of the week's otherwise busiest names, CIT Group Inc and Energy Future Holdings Corp. The latter bonds, however, were seen lower on reports the Dallas-based electric power producer's efforts to line up bondholder support for its proposed debt-exchange offer are running into some opposition from holders unhappy with the announced terms.

Overall, the market was seen little changed, and quieter, as most of the action took place during the morning hours; trading slackened off as the day wore on and participants left early to get a jump on the three-day weekend.

NOVA upsizes

Friday's primary market saw three issuers price $1.6 billion of new junk in four tranches.

NOVA Chemicals Corp. priced an upsized $700 million two-part senior notes transaction (expected B1/B-).

The deal included $350 million of 8 3/8% seven-year notes that priced at 99.34 to yield 8½%, on the tight end of the 8½% to 8¾% price talk, and $350 million of 8 5/8% 10-year notes that priced at 99.168 to yield 8¾%, also on the tight end of the 8¾% to 9% price talk.

Barclays Capital Inc., HSBC Securities (USA) Inc., RBC Capital Markets Corp., Scotia Capital (USA) Inc. and TD Securities (USA) LLC were joint bookrunners.

Proceeds will be used to repay debt and for general corporate purposes.

Wynn Las Vegas brings drive-by

Wynn Las Vegas priced an upsized $500 million issue of 7 7/8% eight-year first-lien notes (Ba2/BB+) at 97.823 to yield 8¼%.

The quick-to-market deal, which was upsized from $350 million, priced on top of yield talk and coupon talk.

Deutsche Bank Securities and Bank of America Merrill Lynch were joint bookrunners.

Proceeds will be used to repay debt.

Solutia upsizes

Elsewhere Solutia Inc. priced an upsized $400 million issue of eight-year senior notes (B2/B) at par to yield 8¾% on Friday, according to information from a company press release.

The yield came at the tight end of the 8¾% to 9% price talk, according to an informed source.

Solutia upsized the deal from $300 million.

Deutsche Bank Securities Inc., Jefferies & Co. and Citigroup Global Markets Inc. and JP Morgan were joint bookrunners.

Proceeds will be used to repay $200 million of term loan debt and for general corporate purposes.

With Friday's deals in the tally, the Oct. 5 week saw issuers raise $3.2 billion of proceeds in nine junk-rated dollar-denominated tranches.

That ups year-to-date issuance to $107.7 billion of proceeds in 251 tranches, according to Prospect News data.

The week ahead

When the market reopens on Tuesday after the Columbus Day weekend, Trico Shipping AS will start a roadshow for its $400 million offering of five-year first-lien notes.

The roadshow concludes on Friday, Oct. 16, and the deal will price that day or on Monday, Oct. 19.

Barclays Capital is the bookrunner.

Credit ratings remain to be determined.

Proceeds will be used to repay bank debt.

Meanwhile Alon Refining Krotz Springs, Inc., which has been on a roadshow, set price talk for its $205 million offering of five-year senior secured notes (/expected BB/) on Friday.

The notes are talked to price with a 13¼% coupon, discounted by 4 to 5 points, to yield 14½%, plus or minus 25 basis points.

Pricing is set for Tuesday afternoon.

Jefferies & Co. is the bookrunner for the deal to refinance the Louisiana-based refiner's existing term loan and for general corporate purposes.

Finally, Deluxe Entertainment Services is expected to finish its deal during the post-Columbus Day week.

The Hollywood, Calif.-based digital cinema services company talked its $600 million offering of eight-year senior secured first-lien notes (B1/B) to yield 12%, and to price with 2 to 3 points of original issue discount, on Thursday.

The company also introduced further covenant changes on Thursday.

The order book was set to close on Friday morning, and market-watchers were expecting the deal to price.

However word circulated on Friday morning that the deal, which could be subject to further modifications, would be post-Columbus Day business.

Credit Suisse Securities and J.P. Morgan Securities Inc. are joint bookrunners for the debt refinancing deal.

New Solutia bonds solidly higher

When the new Solutia 8¾% notes due 2017 were freed for secondary dealings, a trader saw the bonds push up to 102 bid, 103 offered, well up from the par level at which the bonds had priced.

He said the people at his shop saw that level "first thing this morning" after the actual pricing, "then the offering was pulled a few minutes later. Other than that, we haven't heard much from it.

"Once it priced at par, it looks like it ran up a good 2 or 2½ points, at least. " After that, "it just kind of quieted down."

At another desk, a trader pegged them as having traded as high as 102 5/8. After that, he said, "there was a 102½ lock - and I never saw another trade."

New NOVA notes mixed

NOVA Chemicals' new seven-year notes were seen having not really gone anywhere, while its new 10-year paper was being quoted at better levels.

A trader saw the $350 million of 8 3/8% notes due 2016 at 99 3/8 bid, 100¼ offered, not far removed from the 99.34 level at which those bonds priced earlier.

But its 8 5/8% notes due 2019 were seen at par bid, 100½ late Friday - up from 99.168, where the $350 million issue priced.

New Wynn bonds don't venture far

Las Vegas-based gaming powerhouse Wynn's 7 7/8% secured first mortgage notes due 2017, upsized from $350 million originally, were seen by a trader having not ventured far from the 97.823 level at which the bonds priced.

He quoted them at 97¾ bid, 98¾ offered.

Another trader noted, however, that many of the market's participants were already gone, to get an early start on the holiday weekend, by the time the Wynn bonds freed up.

Several said that the Wynn issue would probably be very well received in the aftermarket when things got back to normal in the upcoming week, given Wynn's perceived status as probably the best-run and financially strongest of the major gaming companies, as opposed to such problem-plagued peers as Trump Entertainment Resorts Inc., Station Casinos Inc., MGM Mirage, Las Vegas Sands Corp. and Harrah's Entertainment Inc. - all either already bankrupt or if not, constantly scrambling for new money to stave off a default or keep from falling behind on construction.

"They are top of the line," one said, adding that the Wynn properties on the Las Vegas Strip are "absolutely beautiful. They just 'trump' everything else."

Recent Hercules bonds hover around issue

A trader saw Hercules Offshore's 10½% senior secured notes due 2017 hitting a 98½ bid, "and that's the last thing I saw. It's just weird - really quiet."

Another trader said the bonds opened up at 98½ bid, 99 offered, "then a few minutes later, somebody hit the 98½ bid."

The Houston-based provider of offshore energy drilling support services had priced its $300 million of notes on Thursday at 97.383 with an 11% yield. Those bonds had moved up to 98¼ bid, 98¾ offered in initial aftermarket activity.

The first trader said Friday that he "wasn't in love with that one at first - but natural gas prices have moved up a little from where they were, so the HEROs are up a little bit over a point. Natural gas prices are higher, and they look pretty good for next year, so that should generate some strong activity in the Gulf of Mexico."

GEO holds gains

GEO Group Inc.'s 7¾% notes due 2017 were seen around the 100¾ bid, 101¼ offered level on Friday, holding most of the gains which they had notched earlier in the week.

The Boca Raton, Fla.-based private corrections and mental health facilities operator's $250 million offering had priced on Wednesday at 98.547 to yield 8%, and then moved all the way up to around 101 bid, 102 offered, on decent volume.

Little Comstock activity

A trader saw little action in Comstock Resources Inc.'s recently priced 8 3/8% notes due 2017, which had priced at 98.571 this past Tuesday to yield 8 3/8%.

"Nothing huge has traded - less than $1 million at 98 5/8 bid, 98¾ offered."

While the Frisco, Tex.-based energy exploration and production operator's new issue had generated considerable activity around mid-week - $59 million of them had traded in a 981/2-99 context on Wednesday, the most of any junk bond - by Friday that had pretty much run its course.

"There were some odd lots trading around the 98 7/8 - 99 area," the first trader said, "but that was all."

Market indicators a mixed bag

Back among the existing bonds not connected with the new-deal market, a trader saw the CDX Series 13 index up ¼ point Friday at 93 bid, 93½ offered, after having risen by ½ point on Thursday. The market measure thus ended the week well up from the 91¼ bid, 91¾ offered seen at the end of the previous week, on Friday, Oct. 2.

The KDP High Yield Daily Index was unchanged Friday to remain at 69.09, after having zoomed by 26 bps the session before. Its yield was essentially unchanged at 8.75%. A week earlier, the index stood at 68.51, with a yield of 8.56%.

In the broader market, declining issues managed to push ahead of advancers by a small margin of a couple of dozen issues out of the nearly 1,200 tracked, breaking a five-session winning streak in which the advancing issues had led.

Overall market activity, as measured by dollar-volume levels, fell by nearly 43% on Friday from Thursday's pace.

"It's gotten really quiet," a trader observed around mid-day.

Even though Junkbondland was technically open for a full session of business - the Securities Industry and Financial Markets Association having earlier this year dispensed with the customary recommendation for an abbreviated session leading into the three-day Columbus Day holiday break - he said the reality was that "if anything was going to get done, it was getting done in the first hour or two."

Tronox trades upward again

A trader saw Tronox Worldwide LLC's 9½% notes due 2012 move up sharply for a second straight day in apparent reaction to favorable financial projections which the bankrupt Oklahoma City-based pigments manufacturer released on Wednesday.

"There's a lot of volume," he said, "and they jumped more, to the low to mid 50s today, and they ended up at 54 - which is up 5 to 6 points."

That sharp rise comes on top of the roughly 10-point jump the bonds took, in heavy round-lot trading on Thursday, when they started the day in the mid 30s and ended it at 47, with nearly $40 million of the notes having changed hands that session.

In Friday's dealings, a market source saw at least another $13 million having traded as of mid-afternoon, making it one of the busiest issues in the junk market.

The first trader saw no fresh news out that might explain the surge, other than the projections released Wednesday. "That was it, two days ago, but right now, there's more buyers than sellers, and here they are, up another 5 or 6 points.

"Tronox gave guidance that was better than expected," another said. "It must have been A LOT better than expected."

At yet another desk, a trader noted that "they're up nearly 20 points over two days," adding that the rise was all the more noticeable because the issue is not all that large or liquid - about $350 million outstanding.

He noted that when the bonds rose sharply on Thursday, "they traded up at almost every quarter-point," rather than jumping 4 or 5 points in one fell swoop. "They marched on upward, and traded up another 6 points today, all before 11 a.m. [ET]," before finishing at 54.

"Almost every [trade] was $1 million plus," he said. Somebody's buying them. Somebody really likes this name."

Lear bonds firmer

Apart from the Tronox climb, a trader said that he "looked at the sheets here, and I don't see anything that moved up all that much today," with the possible exception of Lear Corp. He saw the bankrupt Southfield, Mich.-based automotive components supplier's 8½% notes due 2013 move up to 71¾ bid from their opening at 691/2, and well up from the 66 level seen on Monday and the 67 level seen Thursday.

"They've been moving up pretty good all this week," he said. "I guess they're getting close to winding this thing [i.e. the latest phase of the Chapter 11 proceedings] up."

The company - which went into Chapter 11 in July - this week announced that it had received terms which could be considered reasonable, on its recently announced exit financing plan. "They must be getting closer to exiting, and people are getting more bullish on whatever they're going to get."

TXU off as plan seen in danger

Though the general market was largely unchanged to firm, Energy Future Holdings - more commonly referred to as TXU Corp. - saw its debt dipping some on reports that bondholders were objecting to its recently announced debt exchange.

A trader quoted the 10¼% notes due 2015 at 69¼ bid, 69½ offered, down "probably a half," he said. The 10 7/8% notes due 2017 - "another active one" - ended nearly a point lower at 72 bid, 72½ offered.

Another source pegged the 10¼% notes at 69 bid, 70 offered, also down ½ point.

Earlier in the week, TXU said it would issue up to $4 billion of 9¾% notes due 2019 in exchange for about $6 billion in existing notes. Bondholders would receive about half the face value if they participate in the exchange.

But news reports indicate that lenders owning as much as 50% of the 2017 paper are opposing the plan. Among that group is Franklin Advisers of San Mateo, Calif., which confirmed to Bloomberg news that they were not supportive of the offer.

The Dallas-based energy producer is looking to cut its massive debt load incurred in a 2007 leveraged buyout. Private equity firms KKR & Co. and TPG Inc. paid $43 billion for the company using a combination of high-yield, high-risk debt.

Some estimates show the company as having as much as $44.5 billion in loans and bonds, with about half of that coming due in 2014.

Stephanie N. Rotondo contributed to this report.

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