Crestwood Midstream, Alliant Techsystems price; upsized Crestwood firms; RadioShack gyrates

By Paul Deckelman and Aleesia Forni

New York, Oct. 22 - Crestwood Midstream Partners LP came to market on Tuesday with an upsized $600 million 8.5-year offering, high-yield syndicate sources said.

Traders said that the energy operator's new deal firmed when it hit the aftermarket.

The primaryside also saw a $300 million issue of eight-year notes from defense contractor Alliant Techsystems Inc., although that deal came later in the day and was not seen immediately trading around.

Apart from the new deals that actually priced, CTP Transportation Products LLC announced plans for a new bond issue as part of the financing for the automotive tire and wheel manufacturer's pending buyout.

In the non-new-deal secondary market, there was some activity in RadioShack Corp.'s bonds, with news of a third-quarter loss wiping out early gains generated by news of the retailer's planned debt refinancing.

Overall, though, traders said the market tone was better, taking a cue from stocks and bonds helped by a weaker September jobs-creation number - which is seen likely to delay the start of the Federal Reserve's feared tapering of its quantitative easing stimulus program.

Statistical market performance indicators turned higher across the board after having been mixed on Monday.

Crestwood prices $600 million

Two new high-yield issues from Crestwood Midstream Partners LP and Alliant Techsystems Inc. came to Tuesday's primary market as the Labor Department reported weaker than expected job data.

The report stated that 148,000 jobs were added in September, lower than the predicted 180,000.

The weaker numbers reaffirmed beliefs that the Federal Reserve will delay tapering its stimulus program.

The primary did see Crestwood Midstream Partners and Crestwood Midstream Finance Corp. sell an upsized $600 million of 6 1/8% senior notes (B1/BB/) at par, according to a syndicate source.

The notes priced at the tight end of the 6¼% area talk.

Proceeds will be used to finance a portion of the company's acquisition of Arrow Midstream Holdings LLC, pay down borrowings under the company's revolving credit facility and pay related fees and expenses.

The bonds will settle into escrow if the Arrow acquisition does not close on Nov. 8 and will be redeemable from escrow at par plus accrued interest if the acquisition does notes close by Dec. 31.

Citigroup Global Markets Inc. was the left lead bookrunner.

BofA Merrill Lynch, Barclays, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets LLC, RBS Securities Inc., SunTrust Robinson Humphrey Inc. and Wells Fargo Securities LLC were the joint bookrunners for the Rule 144A with registration rights and Regulation S deal.

Crestwood Midstream is a Houston-based master limited partnership that owns and operates midstream businesses in multiple unconventional shale resource plays. Arrow is a Tulsa, Okla.-based midstream company.

Alliant prices tight

The session also saw Alliant Techsystems Inc. price $300 million of 5¼% senior notes (/B+/) due 2021 at par, according to a market source.

The notes came in at the tight end of talk, which was set at 5¼% to 5½%.

BofA Merrill Lynch was the left lead bookrunner.

Mitsubishi UFJ Securities (USA) Inc., RBC Capital Markets, SunTrust Robinson Humphrey, U.S. Bancorp Investments Inc. and Wells Fargo Securities were the joint bookrunners for the Rule 144A with registration rights deal.

Proceeds will be used to help fund the acquisition of Bushnell Group Holdings Inc. for $985 million in cash, to refinance existing senior term loan and revolving credit facilities, to pay fees and expenses and for other general corporate purposes.

Alliant Techsystems is an Arlington, Va.-based aerospace, defense and commercial products company.

CTP plans senior notes

Meanwhile, CTP Transportation Products LLC announced plans to get an up to $150 million asset-based revolving credit facility and to issue $225 million of senior secured notes to help fund its buyout by American Industrial Partners, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

SunTrust Robinson Humphrey is leading the financing.

Other funds for the transaction will come from up to $130 million in equity.

American Industrial is buying CTP from Carlisle Cos. Inc. for $375 million.

Closing is expected in the first quarter of 2014, subject to customary conditions, including regulatory clearances.

CTP is a manufacturer and distributor of bias-ply and radial tires, stamped and roll-formed steel wheels and tire and wheel assemblies to non-automotive customers, and power transmission belts and related components to industrial customers.

Crestwood climbs in secondary

In the secondary market, traders saw Crestwood Midstream Partners' new 6 1/8% notes firm after the energy midstream company's upsized offering priced.

One trader quoted those new notes at 101½ bid, 101¾ offered, up from their par issue price.

A second pegged the bonds at 101 3/8 bid, 101 7/8 offered.

The day's other new deal, from aerospace and defense contractor Alliant Techsystems, came to market too late in the day for any kind of real aftermarket action once those bonds had priced at par.

William Lyon, Solera gain

Among other recently priced deals, a trader said that William Lyon Homes' 8½% notes due 2020 gained ¾ point on the session, in line with the market's overall better tone.

He quoted those bonds going out at 107¼ bid, 107¾ offered.

The Newport Beach, Calif.-based homebuilder priced a $100 million add-on to its existing bonds on Monday.

That drive-by deal priced at 106½ to yield 6.952% after having been upsized from an originally announced $75 million. The bonds traded around their issue price in initial aftermarket dealings.

A trader meantime saw Solera Holdings Inc.'s $850 million two-tranche deal having moved up.

The Westlake, Texas-based provider of software and other services to the automobile insurance claims industry priced its quick-to-market offering last Thursday via its Audatex North America, Inc. unit, bringing a $510 million add-on to its existing 6% notes due 2021 and a $340 million stand-alone tranche of new 6 1/8% notes due 2023.

The add-on priced at 101.75 to yield 5.631% and then moved up to 102 7/8 bid, 103¼ offered when the notes were freed for trading on Friday morning. On Tuesday, they had moved up to 103½ bid, 104 offered, the trader said.

The 10-year notes priced at par and were seen on Friday afternoon at 101 bid, 101½ offered.

They were going home on Tuesday at 101 3/8 bid, 101 7/8 offered.

RadioShack bounces around

Away from the new deals, a trader saw many issues moving around at firmer levels, reflecting an overall better market tone.

For instance, he said that RadioShack's 6¾% notes due 2019 were up by more than 3 points on the day, at least in the early goings, presumably helped by the news that the Fort Worth, Texas-based consumer retail chain operator announced that it had lined up commitments from its lender consortium for $850 million in new credit facility financing, which it will use to refinance existing term loan and revolving credit debt. (See related story elsewhere in this issue.)

However, later on in the session, those gains faded, as investors looked beyond the funding news and analyzed the underperforming company's weak third-quarter financial results, including a wider net loss.

A market source said that the bonds fell from early peak levels in the lower 70s to go home at 67½ bid, down more than 5 points on the session.

Another source said that they had fallen as much as 6¼ points on the day.

During the quarter, RadioShack's net sales fell to $805.4 million from $898 million in the year-earlier third period. The decline was driven by an 8.4% decrease in comparable store sales due to reduced sales for each of RadioShack's product platforms, although it did continue to see increased sales of prepaid mobile phones in its "mobility" platform and in certain product lines sold under what it calls its "signature" platform, including portable speakers, Apple Lightning-compatible cables and adaptors.

Its operating loss widened to $118 million from $34 million of red ink on an operating basis a year ago.

Its net loss was $112 million, or $1.11 per diluted share, versus a net loss of $47 million, or 47 cents per share, last year.

Market turns better

But RadioShack's slide seemed to be atypical.

For instance, a trader reeled off a list of names doing better, including Toys 'R' Us, Inc., which he said was up 3¼ points, Best Buy Co., Inc. (up 1 point), Linn Energy, LLC (up 1 point) and even the recently struggling TXU complex (up 2 points).

Statistical junk-market performance indicators were meantime seen having turned higher across the board on Tuesday, after having been mixed on Monday - and that had followed seven consecutive higher sessions.

The Markit Series 21 CDX North American High Yield index was up by 13/32 point on Tuesday to end at 107 5/32 bid, 107 9/32 offered. It had lost 7/32 point Monday, breaking a string of three consecutive higher sessions and several unchanged sessions before that.

The KDP High Yield Daily index notched its eighth straight improvement, rising by 8 basis points for a second straight session to close at 74.27.

Its yield came in by 3 bps to 5.75%, its eighth consecutive narrowing. On Monday, the yield had declined by 5 bps.

And the widely followed Merrill Lynch High Yield Master II index posted its ninth straight advance on Tuesday, gaining 0.142%, on top of the 0.189% improvement seen Monday.

The latest gain lifted its year-to-date return to 5.864% from 5.713% on Monday.

Tuesday's cumulative return was the highest it has been all year, eclipsing the old high-water mark of 5.835%, recorded on May 9.

Sara Rosenberg contributed to this review.

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