Primary quieter; Revlon on tap; new, firmer NRG notes top Most Actives; recent deals less busy

By Paul Deckelman and Paul A. Harris

New York, July 20 – The high-yield primary market was quieter on Wednesday, syndicate sources said.

No new dollar-denominated and fully junk-rated deals were heard to have priced before the session wrapped up. Australian wood supplier TFS Corp. announced the terms of a $250 million 8¾% seven-year secured offering after the close.

Primaryside players meantime were looking forward to the expected pricing on Thursday of a $400 million eight-year offering from cosmetics and beauty products company Revlon Inc.

In the secondary market, traders said that Tuesday’s big new deal from wholesale power generation company NRG Energy, Inc. was easily the busiest credit in Junkbondland, moving up slightly when it hit the aftermarket.

Other recently priced deals were seen remaining well above their initial issue prices, but the traders said there was relatively little volume in such credits as Reynolds Group Holdings, Ltd., Cloud Crane, LLC and Rivers Pittsburgh.

Away from the new deals, musical instrument maker Gibson Brands, Inc.’s bonds were seen having firmed slightly from the lows to which they had plunged on Tuesday but still well below their former levels.

Statistical market performance measures turned higher on Wednesday, after having been mixed Tuesday.

TFS brings secured deal

In the primary market, Australia-based TFS priced a $250 million offering of 8¾% seven-year senior secured notes (expected ratings B2/B+) in a quick-to-market Wednesday transaction.

J.P. Morgan Securities LLC is the bookrunner for the Rule 144A deal.

The notes come with three years of call protection.

The Nedlands, Australia-based sandalwood supplier plans to use the proceeds to redeem its 11% notes due 2018 and for general corporate purposes.

Revlon expected Thursday

Revlon was scheduled to hold a conference call with investors on Wednesday morning as its wholly owned subsidiary, Revlon Consumer Products Corp., attempts to place $400 million of eight-year senior notes, according to a market source.

The Rule 144A and Regulation S offer is expected to price Thursday.

BofA Merrill Lynch, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Macquarie Capital and Barclays are managing the sale.

Proceeds will be used to help fund the acquisition of Elizabeth Arden Inc., which is expected to close by the end of the year.

Revlon is a New York-based consumer products company.

Gamenet talk

Gamenet Group SpA talked its €200 million offering of five-year senior secured notes (B1) to yield 6% to 6¼%, according to a stabilization notes posted on Wednesday.

The Rule 144A and Regulation S for life notes are expected to price before the end of the week.

Credit Suisse is the lead left bookrunner. UniCredit, Banca IMI, Jefferies and UBS are the joint bookrunners.

The notes come with two years of call protection.

The Rome-based gaming company plans to use the proceeds to refinance its 7¼% senior secured notes due 2018.

mydentist roadshow

England-based dental practice chain mydentist plans to start a roadshow on Thursday for a £425 million two-part offering of six-year senior secured notes, according to a portfolio manager.

The Rule 144A and Regulation S deal is coming in tranches of fixed-rate notes that are non-callable for 2.5 years and floating-rate notes that are non-callable for one year. Tranche sizes remain to be determined.

The roadshow wraps up on Monday.

Global coordinator Credit Suisse will bill and deliver. JPMorgan is also a global coordinator. Goldman Sachs, ING, Lloyds, Mizuho, SG CIB and Royal Bank of Scotland are joint bookrunners.

The issuing entity will be special-purpose vehicle IDH Finance plc.

The Manchester, England-based company plans to use the proceeds to repay debt.

New NRG notes active

In the secondary arena, NRG Energy’s new 6 1/8% notes due January 2027 were easily the most active issue in the junk precincts on Wednesday.

A market source said that more than $128 million of those bonds changed hands.

At another desk, a trader saw the bonds in a par-to-100¼ bid context.

Yet another trader pegged the issue at 100 1/8 bid, 100 7/8 offered.

NRG, a Princeton, N.J.-based wholesaler power producer, priced $1.25 billion of those notes at par after the quick-to-market offering was upsized from the original $1 billion.

Recent deals less busy

Among some of the other recently priced issues, Reynolds Group’s 5 1/8% senior secured notes due 2023 edged upward by 1/8 point to 104 1/8 bid.

A trader said that volume was “relatively low” at around $6 million.

The Auckland, New Zealand-based maker of the popular Reynolds Wrap aluminum foil and other consumer food packaging products priced $250 million of the notes at 103.5 to yield 4.331% in a quick-to-market add-on offering to its existing bonds on Monday.

Reynolds had priced the original $1.35 billion of those notes at par back on June 13, along with $800 million of 7% senior notes due 2024 and $750 million of five-year senior secured floating-rate notes due 2021.

Cloud Crane’s 10 1/8% second-priority senior secured notes due 2024 firmed smartly on Wednesday, with a trader quoting those notes having pushed as high as 105¾ bid, a gain of 2 7/8 points on the day, with volume a moderately busy $8 million.

The bonds had traded for most of the day around the same level above 103 bid that they’ve occupied since their pricing, moving sharply higher late in the day on the strength of a pair or round-lot trades.

The Pittsburgh-based heavy construction equipment rental company priced $470 million of the notes at par in a regularly scheduled forward calendar deal on Friday. The new notes quickly moved up to and above the102 bid level in heavy initial aftermarket dealings of more than $44 million and have stayed at or above those lofty levels since then.

Rivers Pittsburgh gains

The other recently priced Pittsburgh-area deal, casino operator Rivers Pittsburgh’s 6 1/8% senior secured notes due 2021, gained on the day. A trader saw them up by 1¼ points at 103¾ bid, though volume was only around $4 million.

The company priced $415 million of those notes off the forward calendar at par last Thursday.

Gibson firms slightly

A trader said that Gibson Brands’ 8 7/8% notes due 2018 moved up to 45 5/8 bid, 46 offered. That was up from closing levels Tuesday around 45 bid, after having fallen 10 points on the session.

The trader suggested that the Nashville-based maker of high-end guitars and other musical instruments eased on poor earnings numbers.

Indicators get better

Statistical market performance measures turned higher on Wednesday, after having been mixed Tuesday. It was the second improving session in the last three trading days.

The KDP High Yield index firmed by 3 basis points, finishing at 69.28, its second gain in the last four sessions, including Tuesday, when it eased by 1 bp, after having been unchanged on Monday.

Its yield meantime came in by 1 bp to 5.5%, its first narrowing after having risen over two sessions and then having been unchanged on Tuesday. It was the second narrowing in the past five sessions.

The Markit Series 26 CDX index moved up by 1/8 point on Wednesday to 104¾ bid, 104 13/16 offered, after having been marginally lower on Tuesday, its second gain in the past three sessions.

The Merrill Lynch High Yield index posted its third straight gain on Wednesday, firming 0.128%, on top of Tuesday’s 0.024% improvement. It was the fourth upturn in the last five sessions.

Wednesday’s advance raised its year-to-date return to 12.388%, a second consecutive new peak year-to-date return, up from the previous zenith of 12.244% set on Tuesday.

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