Petroleum Geo, Green Field price; market mostly off as stocks slide; ResCap, ATP big losers

By Paul Deckelman and Paul A. Harris

New York, Nov. 9 - Petroleum Geo-Services ASA and Green Field Energy Services, Inc. priced new deals Wednesday, continuing a busy primary week in Junkbondland.

Norway-based seismic services provider Petroleum Geo-Services came to market with $300 million of seven-year bonds, which were seen having traded more than ½ point higher after they were freed and then gaining further in the aftermarket.

In an unusually structured deal, oilfield services provider Green Field priced units consisting of a total of $250 million of 5-year secured notes plus equity warrants for 15% of the company. No aftermarket dealings were seen.

After a recent rampage of drive-by deals, both of Wednesday's offerings had been sold to investors via a road show process - short in Green Field's case, more traditional in Petro Geo's - along with such other forward calendar deals as Health Management Associates, Inc., Cara Operations Ltd., and even, in a sense, Peabody Energy Corp.

Health Management's deal from Tuesday began trading around Wednesday and was actually up in the face of a broad market downturn, but Peabody's formerly robust notes gave back all of the gains they had notched since Monday.

Overall, the junk market was lower across a broad front, taking a cue from the stock market swoon precipitated by the latest debt crisis fears out of Europe.

And some junk names tumbled even more than the average on bad news, such as ATP Oil & Gas Corp.'s weak quarterly numbers, or bankruptcy buzz surrounding troubled mortgage lender Residential Capital LLC.

Two deals for $544 million

The Wednesday dollar-denominated primary market saw $544 million raised by two issuers, each one bringing a single tranche of junk.

Norway's Petroleum Geo-Services priced a $300 million issue of 7 3/8% seven-year senior notes (Ba2/BB/) at 98.638 to yield 7 5/8%.

The yield printed at the tight end of the 7½% area price talk.

Barclays Capital Inc., RBS Securities Inc. and UBS Investment Bank are the joint bookrunners. Barclays will bill and deliver.

Proceeds will be used for general corporate purposes. The company intends to repurchase or repay its outstanding convertible notes on or before maturity with cash on hand plus the proceeds of this offering.

Green Field prices atop talk

Green Field Energy Services raised $247.5 million in a sale of comprised of 13% five-year senior secured notes (Caa2/CCC+/) with attached penny warrants for approximately 15% of the company.

The reoffer price was 99, resulting in a 13.28% yield to maturity on the notes.

The deal priced in line with price talk which specified a 13% coupon at 99 plus 15% of the company in penny warrants.

Jefferies & Co. was the bookrunner.

Proceeds will be used to fund capital expenditures, refinance existing debt, repay the Shell prepayment and for general corporate purposes.

HeidelbergCement taps 91/2s

In the European market, HeidelbergCement Finance BV priced a €200 million add-on to its 9½% senior notes due Dec. 15, 2018 (Ba2/BB/BB+) at 107.5 to yield 8.077%.

The reoffer price came at the rich end of the 107 to 107.5 price talk.

BNP Paribas SA, Banca IMI, Citigroup Inc., Deutsche Bank AG, ING Bank NV, LBBW, Mediobanca and Royal Bank of Scotland Group plc were the bookrunners for the quick-to-market transaction.

The Heidelberg, Germany, building materials company said that it plans to use the proceeds to increase its liquidity and further optimize its maturity profile.

The original €300 million issue priced at 99.304 to yield 9 5/8% on Sept. 28, 2011. Hence the company realized 155 basis points of interest savings with Wednesday's execution versus the print on the original issue.

Pharmaceutical Product launches

One roadshow announcement came during Wednesday's session.

Pharmaceutical Product Development, Inc. plans to price a $700 million offering of eight-year senior notes during the middle part of the week ahead.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and UBS Securities Inc. are the underwriters.

Proceeds will be used to help pay for the $3.9 billion acquisition of the company by Carlyle Group and Hellman & Friedman.

Looking ahead to Thursday's session - which will wrap up the shortened week in the United States ahead of the three-day Veterans Day holiday weekend - Amerigroup Corp. is expected to price its $450 million offering of eight-year senior notes (Ba3/BB+).

The Goldman Sachs-led deal was talked with a yield in the 7% area on Tuesday.

Petroleum Geo pushes upward

When the new seven-year bonds from Petroleum Geo-Services were freed for secondary dealings, a trader saw the Norwegian company's $300 million issue initially trading at 98½ bid, not far from the 98.638 level at which the issue had priced earlier.

He later saw those bonds move up to 99¼ bid, par offered.

A second trader estimated the new issue "up about a point," also in a 991/4-par context.

However, yet another trader quoted the bonds a little later having eased from their peaks to 99 5/8 bid, 100¼ offered.

Traders saw no sign of the Green Field Energy Services deal in the aftermarket.

Calendar deals come back

A market participant noted that besides both of the day's new offerings being from energy-related companies - Lysaker, Norway-based Petroleum Geo provides seismic and geophysical services to the energy industry, while Lafayette, La.-based Green Field is an oilfield services concern - both also represented a break from the recent pattern of opportunistically timed drive-by offerings, which had dominated the junk secondary over the past several weeks., including big offerings for such issuers as Cablevision Services Corp., Sprint Nextel Corp., LyondellBasell Industries BV and even this week's WPX Energy Inc.

Traders had said that traditional road show deals coming off the forward calendar had been supplanted by the quick-to-market transactions in the face of the recent extreme market volatility, particularly as encouraged by the tumultuous turn of events in Europe.

Europe has been as front-and-center as ever this week, and especially Wednesday - but that didn't stop pricings by issues that had surfaced in the market a couple of days ago and were pitched to investors via a short roadshow process like Green Field, or those from last week, or even before, which had started the week on the forward calendar, including Petroleum Geo, first on the radar screens this past Friday, Health Management Associates, which first came to people's attention more than a week ago.

Going back still further, restaurant chain Cara Operations' Canadian-dollar-denominated deal that priced on Tuesday, had been expected since surfacing in mid-to-late October.

That was also when people first became aware that St. Louis-based coal provider Peabody Energy might do a big bond offering - although its greatly upsized two-part mega-deal, which priced Monday, also had elements of a drive-by attached to it when it finally did come, the same day as it was announced.

Health Management holds up

A trader said that Health Management Associates' $875 million offering of 7 3/8% notes due 2020 was trading at 100½ bid, 100¾ offered, and noted that the Naples, Fla.-based hospital operator's deal - which had been downsized from its originally announced $1 billion amount - was actually trading above the par level where it had priced late Tuesday, "so it was up slightly today while just about the whole rest of the market was down."

A second trader pronounced that the new deal had done "okay," by moving as high as 100 5/8 bid, before coming in a little but still ending mildly on the plus side of the ledger at 100¼ bid, 100 3/8 offered.

Other new deals easier

That wasn't the case with the other recently priced new deals trading around in the aftermarket on Wednesday.

A trader saw UPCB Finance V Ltd.'s 7¼% notes due 2021 at 99¾ bid, par offered.

That was down from the par level at which the company had priced its quickly shopped $750 million deal on Tuesday, after having upsized it from the originally planned $500 million. Those bonds had traded as high as 100½ bid, 100¾ offered in Tuesday's aftermarket. UPCB is a unit of Dutch cable and broadband operator UPC Holding BV and the latter's ultimate parent, Englewood, Colo.-based Liberty Global, Inc.

Peabody Energy's two new tranches - its $1.6 billion of 6% notes due 2018 and its $1.5 billion of 6¼% notes due 2021 - were seen by a trader on Wednesday both around 99 7/8 bid, 100 1/8 offered. That was little changed from the par level at which the deal priced on Monday but well down from the 101 bid, 101 ½ offered level seen in Tuesday's dealings.

Tulsa, Okla.-based natural gas and oil exploration and production company WPX Energy's two tranches were both trading on Wednesday at 99½ bid. 99¾ offered, a market source said. Those bonds - $400 million of 5¼% notes due 2017 and $1.1 billion of 6% notes due 2022 - had each priced at par Monday in a drive-by offering, and had gotten up to around 100 1/8 bid, 100¼ offered when they were freed for trading on Tuesday.

A trader saw Windstream Corp.'s 7½% notes due 2022 going home Wednesday at 98 bid, 98¾ offered. That was well down from the par level where the Little Rock, Ark.-based telecommunications company had priced its quickly-shopped $500 million issue on Monday, and down still further from initial aftermarket levels as high as 101 and after that 1011/4.

Last week's 6¼% senior secured notes due 2018 from Dallas-based hospital operator Tenet Healthcare Corp. traded on Wednesday 99¾ bid, par offered. The $900 million drive-by issue - upsized from an originally announced $750 million - priced last Friday at par, and then had gotten as good as 100 5/8 bid, 100¾ offered when the bonds began trading around later that session.

One of the traders opined that "given where the market in general is today, all of these have still held up pretty well, if they're only down a half-point or a point from where they had been."

Indicators head south

Away from the new-deal arena, a trader succinctly summed up Wednesday's session as "kind of a bad day today."

Statistical secondary market performance indicators, which had been mixed on Tuesday and for several sessions before that, moved decidedly to the downside on Wednesday.

A trader said the CDX North American series 17 High Yield index dropped by 2½ points on Wednesday to end at 91 bid, 91¼ offered, after having risen by ½ point on Tuesday.

The KDP High Yield Daily index swooned by 72 basis points on Wednesday, finishing at 72.32, after having eased by 1 bp on Tuesday.

Its yield ballooned out by 20 bps, to 7.47%, after having inched up about 2 bps on Tuesday.

And the Merrill Lynch U.S. High Yield Master II index dropped by 0.621% on Wednesday - its third straight loss, including Tuesday's 0.014% backtracking.

The latest loss moved the index's year-to-date return down to 3.249% from Tuesday's 3.891%.

The cumulative return remains below its high-water market for the year of 6.362%, which was set on July 26 but is still well up from its 2011 low point, a 3.998% deficit recorded Oct. 4.

Junk followed the lead of stocks, which had one of their worst days in a long time, on renewed investor worries about how Europe's banks and governments are going to get out of their latest jam. Market players were disheartened to hear that Italy's prime minister, Silvio Berlusconi, who on Tuesday had announced his intention of resigning, did not immediately appoint an interim government, but instead scheduled an election, which could take several months to sort out that country's troubled leadership muddle.

The bellwether Dow Jones industrial average, which had risen by 101.79 points on Tuesday, its second modest gain in a row, gave it all back and then some on Wednesday, falling 389.24 points, or 3.20%, to finish at 11,780.94.

The Standard & Poor's 500 index fell by 3.67% on the day, while the Nasdaq Composite index lost 3.88%.

Maybe not that bad?

Despite the scary sounding numbers, a junk trader said that "you have stuff trading down - but you don't have a ton of it."

He added that "when you get someone that's interested to come in and try and buy it, maybe there's 500 [thousand] or a million there, you just really can't buy any substantial size at these lower levels"- a pattern quite inconsistent with any kind of a real sell-off.

A second trader said "your typical high-beta stuff" was getting knocked around - he saw the 10% notes due 2018 of Las Vegas-based gaming giant Caesars Entertainment Corp. move back down below 70, a loss of more than 4 points on the day.

He said that "go-go high yield stuff - the stuff the dealers kind of jockey around - was clearly under pressure."

But he added that "you still don't get the feeling that there's a lot of real money selling in high yield right now. The story names trade, and the go-go names trade, but it doesn't feel as if there's a lot of real account, real money accounts, that are selling high yield."

He suggested that "I think they still have a lot of cash - they haven't bought into this 'need to sell'."

ResCap in retreat

Among those "story names" which were clearly doing worse than the average junk bond on Wednesday was Residential Capital.

A trader said its bonds plummeted down to around the 55-57 area after parent Ally Financial Inc. was reported to have hired Centerview Partners LLC to advise it on restructuring the money-losing Minneapolis-based mortgage lending unit of Detroit-based Ally, the automotive and residential lender formerly known as GMAC.

ResCap "got hit," he said, citing the Centerview news. He called it the disaster of the day.

Its 9 5/8% notes due 2015 dropped by nearly 23 points to 56¾ bid, from previous levels around 80.

ResCap's 8½% notes due 2013 were being quoted down by as much as 43 points to the 55 level, but a market source said he had seen no actual trades in that paper.

ATP slips after numbers

A trader said ATP Oil & Gas' 11 7/8% notes due 2015 were down 6½ points after the company reported earnings. He pegged the issue around the 77 level.

The Houston-based oil exploration company posted a net loss of $5.6 million, or 11 cents per share, versus a loss of $58.4 million, or $1.15 per share, the year before.

The company said the narrowed loss was due to increased production from new wells. The company is relying heavily on said new wells to increase revenues in order to raise its cash flow.

In September, Moody's Investors Service has claimed there was a "high likelihood" the company would have to restructure, given its high debt levels. For its part, the company has said it should have more than enough funds to service its debt obligations.

MF is mauled again

A trader said that MF Global Holdings Inc. was among "names that have been down big today."

He saw its bonds, such as the 6¼% notes due 2016, down by 3½ points.

He said there was "a lot of trading" in the bankrupt New York-based broker-dealer's paper around the 35 bid level.

He also said Jefferies & Co. Inc. - which he said had "tied its wagon to it" [MF Global]," by holding a position in some of MF's debt, as well as having also at least dabbled in the type of European bonds which brought MF Global down - was lower on the session, seeing its bonds down between 2¾ and 3¼ points "across the board," depending on which issue.

He said that the company's bonds traded more than $100 million on Wednesday.

While he quoted most of the New York-based investment bank's bonds - still nominally high-grade instruments - as 2 to 3 points lower all around, he said that the 7¾% notes due in March of 2012 eased by ½ point to 99 bid. But he said that at just four-month duration, that still translated to a spread of "over 1,000" basis points above comparable Treasuries on that piece of paper, putting it above the traditional demarcation line for distressed debt.

A market source at another desk saw those short bonds ending down even lower, pegging them going home at 981/4, down 1¼ points on the day, which translates to both a yield and a spread of over 1,300 bps. Volume was about $35 million.

Another active Jefferies issue was its 6 7/8% notes due 2021, which fell some 2¾ points to 85 bid, or a yield of 9.2%, and a spread of around 600 bps, on volume of nearly $30 million.

Jefferies' bonds and shares fell in line with a general financial-sector downturn, spurred by the latest wrinkle in the European debt crisis - the ballooning out of yields on Italian government debt, in which the company is a market-maker.

Jefferies spent much of last week, after the fall of MF Global due to the latter's massive bad bets on European government bonds, trying to reassure investors that its own exposure to eurozone debt was considerably more limited.

Stephanie N. Rotondo contributed to this report

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