Seagate, Milagro price, gain in trading; Delphi, Xerium slate; Caesars up on loan change news

By Paul Deckelman and Paul A. Harris

New York, May 4 - Seagate HDD Cayman priced a quickly-shopped $600 million offering of 10-year notes on Wednesday, high yield syndicate sources said. When the high-tech manufacturer's new issue began trading, it was seen up modestly.

Also coming to market during the session was Milagro Oil & Gas Inc.'s $250 million of five-year secured paper, which also moved up a little when the issue hit the aftermarket.

The sources heard automotive components maker Delphi Corp. hitting the road to market a $1.1 billion two-part deal, while Xerium Technologies, Inc., a manufacturer of disposable products for the papermaking industry, announced a $240 million bond deal as part of a larger comprehensive debt refinancing.

Besides those domestic deals, the forward calendar grew further as telecom operator Barrett Xplore Inc. began a roadshow for a Canadian dollar deal, while German packaging manufacturer Gerresheimer AG planned to unveil a euro-denominated offering.

Back among the U.S. dollar deals, market sources heard price talk on U.S. Foodservice Inc.'s $400 million bond offering, which could price Thursday after its order books close.

Tuesday's new deal from Charter Communications Inc. traded little changed from its par issue price, while the new deals from Speedy Cash and from Shea Homes LP held onto to their hefty initial secondary gains.

Away from the new deals, Caesars Entertainment Corp. bonds strengthened - some by multiple points - as the gaming operator moved to amend the terms and extend the maturities of its bank debt agreements.

Market performance indicators remained mixed.

Seagate drives by

For the first time in seven market sessions, issuance fell below the $1 billion mark on Wednesday, as two issuers, each bringing a single dollar-denominated tranche, raised $843 million.

Seagate HDD Cayman continued a parade of ultra-familiar high-yield issuers bringing sizable drive-by deals so thus far in the week (DISH DBS Corp. came on Monday and Charter Communications came on Tuesday).

Seagate priced a $600 million issue of 10.5-year senior notes (Ba1/BB+/BB+) at par to yield 7% on Wednesday. The yield printed on top of the 7% to 7¼% price talk.

Morgan Stanley & Co. Inc. ran the books for the quick-to-market deal.

The Scotts Valley, Calif.-based hard disk drive and data storage products company will use the proceeds for general corporate purposes which may include debt repayment, capital expenditures and investments in its business.

Milagro prices five-year deal

Milagro Oil & Gas priced a $250 million issue of 10 ½% five-year senior secured second lien notes (Caa2/B-) at 97.182 to yield 11¼%.

The deal priced in line with price talk specifying a 10½% coupon to yield 11¼%, factoring in a discount of approximately 3 points.

Credit Suisse Securities (USA) LLC and Wells Fargo Securities LLC were the joint bookrunners for the debt refinancing.

U.S. Foodservice sets talk

U.S. Foodservice talked its $400 million offering of eight-year senior notes (Caa2/CCC+) with a yield in the 8¼% area on Wednesday.

The talk is wider than earlier guidance of 7¾% to 8%.

The deal is set to price on Thursday.

Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., J.P. Morgan Securities LLC, Morgan Stanley & Co. Inc. and Wells Fargo Securities LLC are the joint bookrunners.

Although no official price talk has surfaced on Neff Rental LLC's $200 million offering of five-year second-lien senior secured notes (Caa1/B-) the deal is being discussed in the mid-9% range, according to a trader from a high-yield mutual fund.

The deal is expected to price late in the week.

Morgan Stanley & Co. Inc. and Jefferies & Co. are the joint bookrunners

And a source in Europe said that the euro-denominated tranche of Heckler & Koch GmbH's €290 million equivalent two-part offering of seven-year senior secured notes (Caa1) is whispered in the low 9% range.

The notes are in the market via bookrunner Citigroup Global Markets.

Delphi plans $1.1 billion

Delphi Corp. LLP will start a roadshow on Thursday for a $1.1 billion two-part offering of senior notes (Ba3/BB/).

The deal features an equal split of $550 million eight-year notes and $550 million of 10-year notes.

J.P. Morgan Securities LLC, Citigroup Global Markets are the joint bookrunners for the stock repurchase deal.

Germany's Gerresheimer plans to present a euro-denominated notes deal to investors via a brief roadshow set to begin on Monday.

The size, structure and tenor of the deal have not been disclosed.

Commerzbank, Deutsche Bank, Royal Bank of Scotland and UniCredit are the leads.

And Barrett Xplore began a roadshow on Wednesday for a C$230 million offering of six-year senior secured notes with warrants.

UBS Investment Bank is the left bookrunner. BMO Nesbitt Burns is the joint bookrunner.

The Woodstock, N.B., Canada-based rural broadband provider plans to use the proceeds to repay and discharge certain existing credit facilities, to fund an escrow account for serving certain interest payments on the notes, and for general corporate purposes.

Seagate seen up slightly

When Seagate HDD Cayman's new offering of 10-year paper was freed for secondary dealings after pricing late in the session, a trader saw the drive-by issue at 100¼ bid on the break, versus its par issue price.

Shortly afterward, another trader saw two-sided markets at par bid, 100½ offered, and, after that, as wide as 100¼ bid, 101 offered.

Yet another trader a little later on saw the computer disk-drive maker's deal heading home at 100 3/8 bid, 100 5/8 offered.

Milagro moves slightly

The day's other new deal from the domestic market, Milagro Oil & Gas, priced at a sizable discount to par - 97.182 - and remained near there in the aftermarket.

While a buyside source said he had heard the new bonds offered around 99, he added that "I would suspect that in reality, they're lower," and sure enough, a little later on, he saw markets in them around 97¼ bid, 98½ offered, which then tightened to a 97-97½ context.

A trader at another shop quoted them "marginally higher" at 97½ bid, 98½ offered, but added that he "didn't see any trading right out of the box."

Marfrig a little better

A junk trader meantime saw a little dealing in a name which priced off the emerging markets desks - a $750 million issue of 8 3/8% notes due 2018 from Marfrig Holdings (Europe) BV, a unit of the big Brazilian meat packer Marfrig Alimentos SA.

The bonds priced at 98.835, and he saw them a little later between ½ and ¾ point above issue.

Charter little changed

Back in the domestic market, traders saw Charter Communications Inc.'s $1.5 billion issue of 6½% notes due 2021 - which had priced too late in the session on Tuesday for any aftermarket - begin trading around on Wednesday.

However, those bonds - officially issued by the St. Louis-based cable and broadband operator's CCO Holdings, LLC and CCO Holdings Capital Corp. subsidiaries - "didn't really go anywhere," in the words of one trader.

He saw "a bunch of them trading" but said that they were actually below their par issue price in morning dealings, before managing to climb back up to a par-100¼ context later on.

Another trader saw the bonds going out straddling issue in a tight 99 15/16 bid, 100 1/16 offered pattern.

And a third saw the Charters - which had been massively upsized from their originally announced $1 billion size - at 99 5/8 bid, 99 7/8 offered.

"There were just too many bonds," he theorized.

"The price was right - but there were just too many [Charter] bonds."

'Nothing compelling'

One of the traders said that "in high yield, none of these deals are compelling."

For instance, he said that Seagate was "a boring deal, a deal and a company looking for a home." Noting the 7% to 7¼% price talk which had circulated earlier on Seagate, he continued, "you look at where Celanese [Corp.] priced, and some of these other deals, and you say 'what's the deal with this one?' It's just not a compelling story. I think it's meaningless - a so-so-response."

He agreed with the suggestion that there seemed to be nothing in the current pipeline that investors would be chomping eagerly at the bit for, "nothing compelling."

Dallas-based chemical maker Celanese's $400 million of 5 7/8% notes due 2021 priced at par on Monday and end got as good as 100 7/8 bid, 101 3/8 offered in the immediate aftermarket - but on Wednesday, he said, "we saw some sellers in Celanese, and other low-coupon stuff."

Some new bonds hold up

However, the easing in new or recently issued bonds was by no means across the board.

A trader, for instance, said that both the Speedy Cash Intermediate Holdings Corp. and the Shea Homes bonds which priced on Tuesday "were holding their gains."

He saw Speedy Cash's 10¾% senior secured notes due 2018 actually adding a little to their gains, moving up to 102¼ bid; the Wichita, Kan.-based provider of alternative financial services to the un-banked had priced its $250 million deal, upsized from the originally shopped $230 million, at par, and they had risen later Tuesday to around 102 bid, 102½ offered.

Likewise, the Shea Homes $750 million offering of 8 5/8% senior secured notes due 2019, co-issued with Shea Homes Funding Corp., had also priced at par on Tuesday and had firmed to around 102 bid, 102¼ offered, around the same level where he saw the bonds trading on Wednesday.

"They didn't go anywhere, but they did hold their gains."

And the trader saw DISH DBS Corp.'s 6¾% notes due 2021 "continuing to grind higher," ending around 101 bid.

The Englewood, Colo.-based satellite television broadcaster's $2 billion issue - massively upsized from the originally announced $1 billion - had priced late Monday at 99.093, to yield 6 7/8%. They had moved up a little in initial aftermarket dealings, to 100¼ bid, 100½ offered on Tuesday, and they continued to gain altitude on Wednesday.

Indicators stay mixed

Away from the new-issue realm, a trader saw the CDX North American Series 16 HY index retreat by ¼ point on Wednesday to end at 102¾ bid, 102 7/8 offered, after having eased by 3/16 point on Tuesday.

The KDP High Yield Daily Index meantime rallied by 10 basis points on Tuesday to finish at 76.25, after having given up 4 bps on Tuesday. Its yield declined by 4 bps, to 6.40%, after having moved up on Wednesday by 1 bp.

The Merrill Lynch High Yield Master II Index notched its 11th consecutive upturn on Wednesday, gaining 0.063%, on top of Tuesday's 0.03% rise. That lifted its year-to-date return to 5.70%, a new peak level for the year, from 5.633% on Tuesday, the previous zenith.

Advancing issues beat decliners for a sixth straight session on Wednesday, though only by a few dozen issues out of more than 1,300 traded, while overall market activity, as measured by dollar-volume levels, was up solidly for a second straight day from the previous session's totals.

Even with the nominal volume increase, a trader said that it seemed to him that Wednesday's market was "very quiet, with many people just posturing around" and waiting for the day's new deals.

"There aren't a lot of sellers - and not many buyers either."

Instead, he said that it seemed almost like the market was "in suspended animation, where if you really pushed on a bid, it would be lower."

"It was just a yuck day," he continued. "When the high yield market sees equities open down 100-plus points, and the ISM [Institute for Supply Management survey measuring economic activity] declining from 57.3% in March to 52.8% in April, and you put that together with the ADP [measure of private-sector employment] coming in below expectations" - the payroll company reported that companies added 179,000 jobs in April, down from the 207,000 new private-sector hires seen in March - "those things served to really knock equities down," with Junkbondland taking its cue from soggy stocks.

Caesar's seen up on news

Among specific credits, a trader said that "obviously, the name of the day is Harrah's [i.e. Caesars Entertainment Corp.], on the back of their amend-and-extend solicitation that's out there."

He said some of the Las Vegas-based gaming giant's paper were up by as much as 7 points on the session in response to the news that the company has asked its lenders to amend the terms and extend the maturity of its bank debt, for instance, pushing the maturity on its senior secured credit facilities out by three years, to January of 2018.

He saw the 10% notes due 2018, generally the company's most actively traded bond, going out at 94½ bid, 95½ offered, and called that up 2 to 3 points on the session.

A market source at another desk had the 10s going out at 95 ¼ bid, up nearly 2 points on the day, while Caesars' 5 5/8% notes due 2015 jumped some 4¼ points to end at 89¼ bid.

The first trader meantime said that Caesars' cross-town rival MGM Resorts International's bonds were better by ¼ to ½ point pretty much across the board, after the big casino company reported improved first-quarter numbers.

MGM's 6 5/8% notes due 2020 gained ½ point to finish just above 97 bid. \

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