New issues dominate high-yield market; Ryerson's new deal volatile; Dean Foods loses ground

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., Sept. 28 - New issues continued to crank out in the high-yield bond market on Friday as the banks brought $2.47 billion of dollar-denominated deals.

Still, "the market was a little off today," a trader said.

Leading the day's activity was Lender Processing Services, Inc., which priced a $600 million issue of 10.5-year senior notes.

Also coming to market were Alpha Natural Resources, Inc., PDC Energy, Inc., Nufarm Australia Ltd. and International Wire Group, Inc. All came on top of talk or at the wide end.

In the secondary, one new issue saw particularly volatile trading during the last trading session of the month and the quarter. Late Thursday, Ryerson Inc. and Joseph T. Ryerson & Son, Inc. priced a $900 million two-part offering of notes. One part, the 11¼% notes due 2018, "traded way off initially," a trader said on Friday.

However, the paper came back to close at its issue price.

Meanwhile, Dean Foods Co.'s bonds traded off after running up in the previous session on news the company was exploring a sale of its Morningstar unit, according to a trader. But another trader said the issue was unmoved on the day.

RadioShack Corp. bonds were also on the softer side, as the company announced it had secured a new $100 million term loan.

Lender Processing atop talk

A busy Friday session saw six issuers each bring a single dollar-denominated tranche.

Lender Processing Services priced a $600 million issue of 10.5-year senior notes (Ba2/BB+) at par to yield 5¾%, on top of yield talk.

Wells Fargo was the left bookrunner for the quick-to-market deal. J.P. Morgan, Bank of America Merrill Lynch, SunTrust, US Bancorp and Goldman Sachs were joint bookrunners.

Proceeds will be used for debt refinancing.

Alpha at a discount

Alpha Natural Resources priced a $500 million issue of 9¾% senior notes due April 15, 2018 (B2/B+) at 98.959 to yield 10%, also on top of yield talk.

Citigroup was the left bookrunner. Barclays, J.P. Morgan, Bank of America Merrill Lynch and RBS were the joint bookrunners.

The Bristol, Va.-based coal producer plans to use the proceeds to tender for a portion of its existing $659.1 million 3¼% convertible senior notes due 2015 and to add liquidity to its balance sheet.

PDC Energy at wide end

PDC Energy priced an upsized $500 million issue of 10-year senior notes (B3/B-) at par to yield 7 ¾%.

The yield printed at the wide end of the 7½% to 7¾% yield talk. The amount was increased from $400 million originally.

J.P. Morgan, Bank of America Merrill Lynch, Wells Fargo, BMO, Credit Agricole, RBS and Scotia Capital were the joint bookrunners.

The Denver-based independent exploration and production company plans to use the proceeds to redeem its 12% notes due 2018, to repay bank debt and for general corporate purposes.

Nufarm Australia upsizes

Nufarm Australia priced an upsized $325 million issue of seven-year senior notes (Ba3/BB-) at par to yield 6 3/8%, in the middle of the 6¼% to 6½% yield talk. The size was raised from $300 million.

Credit Suisse, Deutsche Bank, Jefferies and UBS were the joint bookrunners for the debt refinancing deal.

International Wire restructures

International Wire Group priced a restructured $250 million issue of five-year senior notes (B3/B) at par to yield 8½%.

The yield printed at the wide end of the 8¼% to 8½% yield talk.

Structural changes included the extension of call protection to three years from two years, and the elimination of a special call provision that would have allowed the issuer to redeem up to 10% of the notes annually at 103 during the non-call period.

The deal also underwent covenant changes.

J.P. Morgan, Wells Fargo and Jefferies were the joint bookrunners.

The Camden, N.Y.-based wire products manufacturer plans to use the proceeds, along with advances under its revolver, to retire all of its senior notes due 2015, and all of International Wire Group Holdings, Inc.'s PIK notes, as well as to fund a special distribution to Holdings, the proceeds of which will be used by the holding company to make a distribution and/or a stock repurchase.

Agrokor's dual-currency deal

Croatia's Agrokor dd priced a $300 million tranche and an upsized €325 million tranche of senior notes due January 2020 (expected ratings B2/B).

The dollar-denominated tranche priced at par to yield 8 7/8%, at the tight end of price talk set in the 9% area.

The euro-denominated tranche, which was upsized from €250 million, priced at par to yield 9 1/8%, at the tight end of price talk set in the 9¼% area.

JPMorgan will bill and deliver for the dollar-denominated notes. BNP Paribas will bill and deliver for the euro-denominated notes.

BNP, JPMorgan and UniCredit were the joint bookrunners.

The Zagreb, Croatia-based consumer food products company plans to use the proceeds to refinance debt.

Algeco restructures

Algeco Scotsman restructured its dual-currency, multi-tranche high-yield bond deal, and hiked the price talk on Friday, according to market sources.

The deal now includes two tranches of senior secured notes due 2019 (B1/B+), non-callable for three years.

A $1.04 billion tranche is talked at 8¼%, revised wider from earlier talk of 7¾% to 8%.

The €250 million senior secured notes is talked to price 50 basis points behind the dollar tranche, implying a yield of 8¾%, revised wider from previous talk of 8% to 8¼%.

Meanwhile a $750 million tranche of senior unsecured notes, which come with four years of call protection, is talked to yield 10½%. That talk represents an upward revision from the previous 9¾% to 10% yield talk.

A proposed euro-denominated tranche of unsecured notes was withdrawn.

The deal has also been subject to extensive covenant changes, market sources say.

The order books were scheduled to close on Friday, following which the deal was expected to price. However no terms were available at press time.

Deutsche Bank, RBS, Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch, Barclays, Citigroup, UBS and Wells Fargo are the joint bookrunners.

Proceeds will be used to repay debt and to fund the acquisition of Ausco Modular.

Algeco Scotsman is a Baltimore-based company focused on modular space and secure storage solutions.

Market eases

In the secondary, market indexes mostly held in Friday as the third quarter came to an end.

A market source said the CDX North American High Yield index was unchanged at 99¾ bid, 99 15/16 offered. The KDP High Yield index fell to 74.24 from 74.25, though the yield was steady at 6.04%.

Ryerson new issue gyrates

A trader called trading in Ryerson's new 11¼% notes "interesting," as the newly priced notes gyrated throughout the session.

"It was pretty volatile intraday," he said, seeing the notes fall to 96 initially. But the paper "snapped back" by day's end, closing at par.

On Thursday, the Chicago-based distributor and processor of metals and other materials brought a $600 million tranche of five-year senior secured notes (Caa2/CCC+/) priced at par to yield 9%, on top of price talk, as well as a $300 million tranche of six-year senior unsecured notes (Caa3/CCC/) priced at par to yield 11¼%, also on top of price talk.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Jefferies & Co., UBS Securities Inc. and Wells Fargo Securities LLC are the joint bookrunners.

Proceeds will be used to refinance the outstanding notes at Ryerson Inc. and Ryerson Holding Corp. and to repay borrowings on the company's ABL facility.

Dean comes off

Earlier in the week, Dallas-based food manufacturer Dean Foods said it was exploring the possibility of selling off its Morningstar unit.

The news initially gave the bonds a boost, but the securities came back down in Friday trading.

One trader saw the 9¾% notes due 2018 falling a deuce to 114. Another trader also placed the bonds at that level, but deemed them unchanged.

Dean said Wednesday that it was considering selling off Morningstar, which could bring is as much as $1 billion. The company said the possible sale would maximize shareholder value.

But not everyone thought the potential sale a positive.

Standard & Poor's affirmed its current ratings on Dean, but said that could change if a sale were to occur. S&P noted that Morningstar is one of Dean's higher margin businesses and that a divesture of it could negatively impact Dean's bottom line.

RadioShack softens

RadioShack's 6¾% notes due 2019 were "definitely softer," a trader said, as the company announced it had secured a new term loan.

The trader pegged the notes at 59 bid, 60 offered, down from 62 bid, 63 offered previously.

Another trader said the debt had fallen 2½ points on Friday, to 601/4.

The Fort Worth-based electronics retailer said it had secured a $100 million 11% five-year term loan via Wells Fargo. The funds will be used to refinance and pay down debt.

Kodak unfazed by news

Despite news of more job cuts, Eastman Kodak Co.'s debt was hanging in Friday.

A trader said the second-lien issues - the 9¾% notes due 2018 and the 10 5/8% notes due 2019 - were "kind of unchanged" at 63½ bid, 64½ offered.

Another trader echoed that market, also calling the paper unchanged.

The bankrupt Rochester, N.Y.-based company said Friday that it planned to ax another 200 jobs as it prepares to stop selling consumer inkjet printers next year. The layoffs are in addition to 3,700 that were announced earlier in the year.

Kodak recently said that it was planning to sell its consumer-film, photo-kiosk and commercial-scanner businesses. A planned auction for a patent portfolio has yet to reach a conclusion and the company has said it may instead decide to keep the patents and establish a licensing company to generate revenues from them.

ATP under pressure

A trader said ATP Oil & Gas Corp.'s 11 7/8% notes due 2015 were "getting clobbered," seeing the bonds fall to around 19.

"Every day, it just goes lower," he said, adding that he had not seen any particular news out to explain the dips. "There's a lot of hearings going on, a lot of fluid information out there."

Whatever it was, "clearly somebody was a motivated seller."

The trader further remarked that he was not sure if news regarding an injunction slapped against Transocean Ltd. had anything to do with the declines.

Transocean said Thursday that it had been ordered by the Brazilian government to halt drilling at its nine rigs off the coast of the South American country. The injunction came amid pending lawsuits over the Frade field oil spill that occurred in November 2011.

At the time of the spill, Transocean was running a rig for Chevron Corp.

Transocean was also involved in the April 2010 Deepwater Horizon disaster.

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