Univision, Ferrellgas lead $2.7 billion day; Atlas up on buyout, Dean down on bad Q3, CFO exit

By Paul Deckelman and Paul A. Harris

New York, Nov. 9 - A pair of $500 million drive-by offerings from Univision Communications Inc. and Ferrellgas Partners, LP set the pace on Tuesday as the high-yield primary market had another busy session, with over $2.7 billion of new paper pricing.

Besides those deals, other issuers coming to market included MedAssets, Inc., Omega Healthcare Investors Inc., Frontier Oil Corp., Checkout Holding Corp. and WEST Corp. All except MedAssets and Checkout were opportunistically timed, quick-to-market offerings; Omega's was also an add-on to an existing tranche of notes. MedAssets and Ferrellgas were upsized.

When they hit the secondary market, the new MedAssets notes were heard by traders to have firmed smartly.

The same could not be said for Affinion Group Inc.'s new issue, which priced late Monday and broke on Tuesday morning. The Norwalk, Conn.-based marketing company's new bonds tumbled several points from issue.

Away from the issues which actually priced, HCA Corp., Global Crossing Ltd., Star Gas Partners, LP, and Covanta Energy Corp. announced new deals, and several could price on Wednesday. Mylan Inc. priced very late in the day.

In the secondary realm, Dean Foods Co.'s bonds fell badly, in line with its shares, after the Dallas-based processed foods company's worse than expected third-quarter results and the unexpected announcement that its chief financial officer will leave at the end of the month.

On the upside, Atlas Energy, Inc.'s bonds jumped on news that energy major Chevron Corp. will buy the Pennsylvania-based shale natural gas operator.

Aftermarket performance indexes ended mixed on the day.

WEST prices $650 million

The Tuesday session saw a formidable march of deals, with six issuers - each bringing a single tranche of dollar-denominated junk - raising $2.6 billion.

There was some softness in the market late Tuesday, as investors appeared to be selling recent issues in order to become involved in the newest deals, a syndicate official said.

WEST Corp. priced a $650 million issue of eight-year senior notes (B3/B) at par to yield 7 7/8%, at the wide end of the 7¾% area price talk.

Deutsche Bank Securities was the left bookrunner for the quick-to-market deal. Goldman Sachs & Co., Bank of America Merrill Lynch, Morgan Stanley and Wells Fargo Securities were the joint bookrunners.

The Omaha, Neb.-based call-center services provider will use the proceeds to fund a tender for its 9½% notes due 2014.

Ferrellgas upsizes

Meanwhile Ferrellgas Partners priced an upsized $500 million issue of 10.5-year notes (Ba3/B+) at par to yield 6½%, at the tight end of the 6½% to 6 5/8% price talk.

J.P. Morgan Securities LLC, Bank of America Merrill Lynch and Wells Fargo Securities were the joint bookrunners for the quick-to-market debt refinancing deal.

Univision brings $500 million

Univision Communications priced a $500 million issue of 10.5-year senior notes (Caa2/CCC+) at par to yield 8½%, on top of the price talk.

Deutsche Bank Securities was the left bookrunner for the quick-to-market deal. Bank of America Merrill Lynch, Barclays Capital, Credit Suisse and Wells Fargo Securities were the joint bookrunners.

The Los Angeles-based Spanish-language media company will use the proceeds to fund a partial tender for its PIK toggle notes due 2015.

Omega taps 6¾% notes

Omega Healthcare Investors priced a $350 million add-on to its 6¾% senior notes due Oct. 15, 2022 (expected ratings Ba2/BB+) at 103.

The reoffer price came on top of the price talk.

Bank of America Merrill Lynch, Deutsche Bank Securities, Jefferies & Co. and UBS Investment Bank were joint bookrunners for the quick-to-market debt refinancing deal.

MedAssets at the tight end

MedAssets priced a downsized $325 million issue of eight-year senior notes (B3/B-) at par to yield 8%, at the tight end of the 8% to 8¼% price talk.

J.P. Morgan Securities LLC and Barclays Capital Inc. were the bookrunners for the issue, which was downsized from $360 million, with $35 million shifted to the bank loan.

Proceeds will be used to pay a portion of the $850 million acquisition of the Broadlane Group.

Zero-coupon dividend deal

Checkout Holding Corp., the parent of Catalina Marketing Corp., raised $260 million by selling zero-coupon five-year senior discount notes at 59.276 to yield 10¾%.

The yield printed on top of the price talk.

J.P. Morgan Securities LLC and Bank of America Merrill Lynch led the dividend-funding deal.

Frontier Oil at the tight end

Finally, Frontier Oil priced a $150 million issue of eight-year senior notes (Ba3/BB) at par to yield 6 7/8%, at the tight end of the 7% area price talk.

UBS Investment Bank was the left bookrunner for the quick-to-market debt refinancing deal. Credit Suisse was the joint bookrunner.

The European primary

In Europe, FCE Bank plc priced a £400 million issue of five-year notes (Ba2/BB-/BB-) at 99.168 to yield 5¼% on Tuesday.

The yield printed on top of the price talk.

Barclays Capital, BNP Paribas, HSBC and The Royal Bank of Scotland managed the quick-to-market deal.

Meanwhile France-based poultry processor Doux SA talked its €400 million offering of seven-year senior notes with a 10% area yield.

HSBC, SG CIB and Barclays Capital are the global coordinators for the debt refinancing issue, which is set to price on Wednesday.

HCA talks $1.525 billion

Setting the stage for what could turn out to be a $5 billion Wednesday in the primary market, HCA Holdings, Inc. talked its $1.525 billion offering of 10.5-year senor notes (/B-/) with a 7¾% area yield on Tuesday.

Citigroup is the left bookrunner for the dividend-funding deal. Bank of America Merrill Lynch, JP Morgan, Barclays Capital, Credit Suisse, Deutsche Bank Securities, Goldman Sachs & Co., Morgan Stanley and Wells Fargo Securities are the joint bookrunners.

Berry talks $800 million

Meanwhile, Berry Plastics Corp. talked its $800 million offering of 10-year second-priority senior secured notes (Caa1/CCC) with a 9½% to 9¾% yield.

Credit Suisse and Barclays Capital are the joint bookrunners for the quick-to-market deal, which is also Wednesday business.

Mylan restructured $800 million

Late in the session, Mylan priced its restructured $800 million offering of eight-year senior notes (expected ratings B1/BB-) with a 6% at an issue price of 98.45.

Further details were not immediately available.

The quick-to-market notes had been talked earlier in Tuesday's session with a 6% area yield, according to an informed source.

J.P. Morgan Securities LLC, Bank of American Merrill Lynch and Citigroup are joint bookrunners for the debt refinancing deal, which launched with an anticipated $400 million 12-year notes tranche.

In a restructuring the company shifted those proceeds to the eight-year tranche, increasing its size to $800 million from $400 million.

Precision talks upsized deal

Precision Drilling Corp. upsized its 10-year senior notes offer (Ba2/BB+) to $650 million from $550 million on Tuesday.

The notes are talked with a 6 3/8% area yield.

Credit Suisse and RBC Capital Markets are the joint bookrunners for the deal, which is expected to price on Wednesday.

Calfrac sets talk

In other expected Wednesday business, Calfrac Holdings LP talked its $400 million offering of 10-year senior notes (confirmed B2/current B+) with a 7½% area yield.

RBC Capital Markets and Morgan Stanley are the joint bookrunners.

Mercer at 9¼% to 9½%

Mercer International Inc. talked its $300 million offering of seven-year senior notes (B3/B) with a 9¼% to 9½% yield.

Again, it is RBC Capital Markets on the left, with the joint bookrunner being Credit Suisse.

Global Crossing for Wednesday

Global Crossing talked its $150 million offering of nine-year senior notes with an 8½% area yield.

Credit Suisse and Goldman Sachs & Co. are the joint bookrunners.

Star Gas plans $125 million

Star Gas Partners' $125 million of senior notes due 2013 (B2//) comes with initial guidance of the 9% area, according to a trader at a high-yield mutual fund.

The deal, via JP Morgan Securities LLC, is expected to price on Wednesday.

Covanta roadshows $400 million

Covanta Holding Corp. will start a roadshow on Wednesday for its $400 million offering of 10-year senior notes (existing ratings Ba3/B).

The deal is expected to price during the week ahead.

JP Morgan, Bank of America Merrill Lynch and Citigroup are joint bookrunners for the debt refinancing and general corporate purposes deal.

MedAssets moves up

A trader said that as has been the case most days in recent weeks - and particularly during Monday's busy $2 billion-plus primary session - new deals "absolutely, were clearly the market's focus [on Tuesday], no question."

A trader said that MedAssets' new eight-year notes "did very well," seeing the bonds going out at 102½ bid, 103 offered.

A second trader quoted the bonds from the Atlanta-based company, which provides supply chain consulting and revenue-cycle management services to hospitals and other healthcare facilities, at 102 bid, 103 offered, up from their par issue price.

Omega up a little

Also on the financial side of the healthcare industry, a trader said that Omega Healthcare Investors' new 6¾% add-on notes "improved marginally after they priced."

He saw the Hunt Valley, Md.-based healthcare facilities real estate investment trust's quickly-marketed deal trading at 103¾ bid, 104 offered, up from their 103 issue price earlier in the day.

A second trader saw those bonds at 103½ bid, 104½ offered.

Ferrellgas little moved

One of the traders said that Ferrellgas' new 101/2-year issue "really hasn't gone anywhere," quoting the Overland Park, Kan.-based propane distributor's new issue at par bid, 100½ offered, versus the par level at which the issue priced.

However, at another desk, the bonds were seen at 100½ bid, 101½ offered.

Other deals no-shows

Traders said that the new offerings from Checkout Holding, WEST Corp., Frontier Oil and Univision all came to market too late in the session for any kind of secondary activity.

Seneca deal sizzles...

Seneca Gaming Corp.'s 8¼% senior notes due 2018, which had priced late in the session on Monday, began trading around on Tuesday, market participants said, and promptly moved up by more than a point from the par level at which that $350 million deal - upsized from the originally shopped $325 million - had priced.

At least two traders saw the Niagara Falls, N.Y.-based tribal gaming operator's deal firming to 101½ bid, 101¾ offered.

An analyst meantime said he was a little surprised that the Seneca bonds did not price tighter, even though they did come at the tight end of pre-deal price talk envisioning a yield between 98¼% and 8½%.

"I thought the Senecas were going to be in a 7ish context," even with the company also lining up a new $225 million five-year senior secured credit facility, he said.

One possible factor keeping the yield higher could be investor unease over headline risk posed by the Senecas tribe's current impasse with New York State over exclusivity payments the tribe was supposed to make to the state over the summer but did not. The Senecas claim Albany had breached the terms of its agreement giving the tribe exclusive gaming rights in western New York State by allowing private businesses and state-run racetrack casinos to operate slot machines in the region.

Moody's Investors Service last month cited the dispute in dropping Seneca's ratings by two notches to B1, while Standard & Poor's lowered the outlook to negative while affirming a BB rating.

But the dispute over the payments apparently did not diminish aftermarket investors' support for the Seneca bonds.

...but Affinion fizzles

However, investors were by no means as forgiving when it came to Affinion Group's new $475 million offering of 7 7/8% notes due 2018, which priced late Monday at 99.247 to yield 8%.

"The first thing this morning, a block of them was being offered at 99," said a trader who saw the bonds going out later no better than 97¾ bid, 98¼ offered, well below issue.

"This was some direct marketing that people just weren't buying," he said, noting Affinion's role as a direct marketer and operator of customer loyalty programs for a variety of different kinds of companies.

At another desk, a trader bluntly declared that Affinion was "the biggest pig we've seen in a while," adding that while most of the other recent new deals seemed to be at least holding their own, "there's always one runt in every litter."

He quoted the bonds as having fallen to 96½ bid, 97 offered.

Secondary indicators remain mixed

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index ending down ½ point on Tuesday to close at 101 7/8 bid, 102 3/8 offered, on top of Monday's 5/16 point retreat.

The KDP High Yield Daily index meantime fell by 7 basis points Tuesday to finish at 75.24, after having risen by 10 bps on Monday. Its yield rose by 3 bps on Tuesday, after having declined by the same amount on Monday.

However, the Merrill Lynch High Yield Master II index continued to climb, rising by 0.043% on Tuesday after having gained 0.127% on Monday. The latest advance pushed its year-to-date return up to 15.602%, its 14th consecutive new 2010 peak level, eclipsing the old mark of 15.552% just recorded on Monday.

Advancing issues led decliners on Tuesday for a ninth straight session, although for a second straight day, their winning margin was just a few dozen issues out of the more than 1,400 that traded.

Overall activity, represented by dollar-volume levels, jumped by 80% on Tuesday, showing no sign of a lull in the run-up to Thursday's Veteran's Day legal holiday, which will see the U.S. fixed-income markets closed. That was in marked contrast to Monday's session, which saw volume slide by 33% from the previous day's level.

Dean Foods heads downward

Among specific issues, a trader said that Dean Foods' 7% notes due 2016 were on the slide after the dairy products producer reported considerably weaker than expected third-quarter numbers and also unexpectedly announced that its chief financial officer will leave at month's end.

He saw the Dean bonds, which previously had been trading at or above par, fall as low as 95 in Tuesday's early goings. While they occasionally edged up to around 97½ during the session, by the end of the day, he said, they were going out at 96 bid, with most of the trading in a 951/4-96 context, which he called down "5 or 6 points."

There was, he said, "some pretty good volume in that."

"The equity got hit hard," another trader said, seeing the Dean bonds down 5 points on the day around the mid-90s.

A market source meantime said that looking just at large-block trades and disregarding the pages and pages of smaller transactions which showed up on Trace, the bonds went home at 96 bid, down some 4 3/8 points on volume of more than $18 million.

Dean's New York Stock Exchange-traded shares meantime plunged by $1.86, or 17.95%, to end at $8.50, on volume of 31 million shares, more than eight times the norm.

Dean's bonds and shares swooned after the company reported that third-quarter net income totaled $24.3 million, compared with $49.7 million in the 2009 third quarter, as lower operating income at the company's Fresh Dairy Direct-Morningstar unit, its largest, and a rise in interest expense from its amended credit facility offset better results at its considerably smaller WhiteWave-Alpro division. Adjusted net income for the quarter was $23.3 million, a decrease of 62% from $61.2 million in the 2009 third quarter. Per-share earnings slid 61% year-over year to 13 cents per share, well below Wall Street's expectations of around 20-21 cents per share

In addition to releasing the results, Dean separately announced on Tuesday that Jack F. Callahan will step down from the CFO position he has held for 4½ years effective at the end of the month, to take a similar position at an as-yet unidentified publicly traded company. He will be replaced by Shaun Mara, currently Dean's chief accounting officer.

Atlas strong on buyout news

Going the other way, a trader noted that Atlas Energy's 10¾% notes due 2018 zoomed up to the 124 level, a 12-point gain on the session, on the news that the Moon Township, Pa.-based company, which prospects for natural gas in the Marcellus Shale formation in the western part of the state, is to be bought by petroleum giant Chevron Corp., giving that California company a foothold in the shale sector of the industry.

A market source at another desk saw over $7 million of the bonds traded in round lots on Tuesday at that 124 level, and saw the company's 12 1/8% notes due 2017 rise to 133 bid from prior levels at 117, although on only a couple of million bonds traded.

Atlas' NYSE-traded shares leaped $10.78, or 33.98%, to end at $42.50. Volume of 25.8 million shares was 36 times the usual daily handle.

Chevron said it would pay $3.2 billion for Atlas and assume the latter's $1.1 billion of debt.

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