Jarden prices upsized deal, primary quiets down; new SunGard trades up; GM slides on valuation

By Paul Deckelman and Paul A. Harris

New York, Nov. 2 - Jarden Corp. became the latest borrower to opportunistically take advantage of favorable conditions in the high-yield market by bringing a quickly shopped deal, high-yield syndicate sources said Tuesday, as the Rye, N.Y.-based consumer products company priced an upsized $300 million issue of 12-year notes. However, the pricing occurred late in the day, and there was no aftermarket activity in the issue.

Jarden's was the only domestic new deal to price on Tuesday, in contrast to Monday's busy session, which saw four deals with a total face value of $2.25 billion price - three of them quickly shopped "drive-by" offerings - although the bulk of that session's issuance came from just one of the quick-to-market transactions, SunGard Data Systems Inc.'s upsized and restructured $1.6 billion behemoth.

The Wayne, Pa.-based high-tech firm's super-sized two-part deal meantime began trading in the secondary market, and it moved up between 1 and 2 points, traders said. Monday's other new deals that priced and then moved up in the secondary - New York Times Co., Asbury Automotive Group, Inc. and Quality Distributions, Inc. - were seen hanging on to their Monday gains.

Price talk emerged on Seminole Tribe of Florida's $350 million of seven-year notes, which are expected to price on Wednesday, while market sources heard that Polymer Group, Inc. will sell bonds as part of the financing for the Charlotte, N.C.-based chemical manufacturer's pending leveraged buyout by the Blackstone Group LP.

Outside of the dollar market, a subsidiary of British airports operator BAA Airports Ltd. priced a sterling-denominated offering of seven-year secured notes, while German airline Air Berlin plc began shopping a five-year euro-denominated deal.

Away from the new-issue realm, a trader said that "gazillions" of General Motors Corp. bonds traded as much as 3 or 4 points lower as investors studied the presumed valuation of the carmaker's upcoming initial public stock offering.

Jarden upsizes drive-by deal

Tuesday's primary market session saw a pair of issuers. Each brought a single tranche of notes priced at par.

One deal was upsized, while the other came at the high end of the range at which it was launched.

Both priced at the tight end of price talk.

Jarden priced an upsized $300 million issue of 12-year senior notes (Ba3/BB-) at par to yield 6 1/8%, which was at the tight end of the 6¼% area price talk.

Barclays Capital Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC were the joint bookrunners for the quick-to-market issue, which was upsized from $250 million.

Proceeds will be used for general corporate purposes including possible acquisitions and/or an optional term loan repayment.

The deal was decently oversubscribed, according to an informed source who added that the over-subscription allowed for the issue to be upsized and for the notes to be priced at the tight end of price talk.

BAA, at the tight end

Meanwhile in England, BAA (SH) plc priced a £325 million issue of senior secured notes due March 1, 2017 (Ba3//BB+) at par to yield 7 1/8%, which was at the tight end of the 7¼% area price talk.

The issue size came at the high end of the £250 million to £325 million offering range with which the company came into the market.

Morgan Stanley & Co Inc. and Royal Bank of Scotland were the joint global coordinators.

Morgan Stanley, Royal Bank of Scotland, Barclays Capital, BNP Paribas, ING and Banco Santander were the joint bookrunners.

Proceeds will be used to refinance the remaining £465.8 million of BAA's existing loan facility due 2011.

"This is the first time a U.K. regulated business has been able to access finance for its holding company through the bond markets," Fred Maroudas, BAA's director of treasury, stated in a Tuesday press release.

He noted that the deal was significantly oversubscribed. Orders were received from more than 150 existing and new investors spread equally between the United Kingdom and outside the United Kingdom.

During the past 12 months, BAA has refinanced approximately £3 billion through a range of markets, Maroudas stated in the release.

London-based BAA, which operates London's Heathrow and Stansted airports, is owned by Spain's Grupo Ferrovial.

Air Berlin launches deal

Elsewhere in Europe, Air Berlin began a roadshow on Tuesday for an offering of up to €200 million of 8½% five-year high-yield notes.

The roadshow is expected to conclude on Friday, following which the company intends to price the notes at par.

Quirin Bank has the books.

Proceeds will be used to refinance debt.

Seminole talks split-rated deal

Seminole Tribe of Florida talked its $330 million split-rated offering of first-lien Gaming Division Bonds, series 2010, due 2017 (Ba1/BBB-/BB+) with a 7¾% to 8% yield on Tuesday.

Meanwhile, the first call premium was increased to 75% of the coupon from 50%. Call protection remains at three years.

Pricing is expected on Wednesday.

Bank of America Merrill Lynch has the books.

Proceeds will be used to fund capital expenditures and for tribal uses.

Norwegian Cruise Lines roadshow

Finally, NCL Corp. Ltd., a financing unit of Norwegian Cruise Lines, will begin a roadshow on Wednesday for its $200 million offering of eight-year senior notes.

The roadshow wraps up on Nov. 11, and the notes are expected to price thereafter.

Deutsche Bank Securities is the left bookrunner for the debt-refinancing deal. Barclays Capital, Goldman Sachs & Co. and UBS Investment Bank are the joint bookrunners.

New Jardin a no-show

The new Jarden 6 1/8% notes due 2022, as mentioned, came to market too late in the session Tuesday for any secondary dealings.

However, the company's existing 7½% notes due 2020 were seen trading down a point on the session at the 105½ bid level.

SunGard shines in secondary

While Jarden never did make an appearance in the aftermarket Tuesday, one name that did show up - finally - was SunGard Data Systems, which had been in a similar situation on Monday, when its bonds priced way too late for any kind of trading.

In Tuesday's dealings, a trader saw SunGard's 7 3/8% notes due 2018 at 100¾ bid, 101¼ offered in morning trading, up from the upsized $900 million offering's Monday par issue price. He also saw its $700 million issue of 7 5/8% notes due 2020 at 101 bid, 101½ offered, also up from par. However, he did not see any activity in either issue after that.

A second trader quoted both tranches of the SunGard bonds at 101 bid, 101½ offered, opining that "those two traded well."

Yet another trader saw the eight-year bonds going home at 101 1/8 bid, 101½ offered, while seeing the 10-year issue at 101½ bid, 102½ offered.

SunGard's existing 9 1/8% notes due 2013 - which are to be repurchased using the new-deal proceeds - were meantime seen by a trader trading up around the 102 5/8 level, about the level at which the bonds would be callable, "so that's trading on a yield-to-call basis right now."

He saw the company's other issues - its 4 7/8% notes due 2014 and 10¼% notes due 2015 - "pretty much unchanged" at levels around 99¼ bid, par offered and 105¼ bid, 105½ offered, respectively.

Other Monday deals do well

Traders also saw the other bond issues that came to market on Monday, and that did in fact trade around in that session's aftermarket, hold on to those initial gains.

"There was nothing going on with any new deals today," one said, although that was before the Jarden deal priced. "The ones that priced [Monday] continued to do well."

He saw New York Times' 6 5/8% notes due 2016 trading at 102 3/8 bid, 103 offered.

The New York-based publishing and media company's quick-to-market $225 million issue - upsized from its originally announced $200 million size - had priced at par on Monday and then shot up to above the 102 level.

A trader likewise saw Asbury Automotive Group's 8 3/8% senior subordinated notes due 2020 having moved up as high as 103 bid.

The Duluth, Ga.-based automotive retailer had "driven by" with its $200 million issue on Monday, and those bonds priced at par. After that, they quickly moved to 102 bid, 103 offered in the aftermarket.

And Quality Distribution's 9 7/8% second-priority senior secured notes due 2018 were seen by a trader having moved up, "but not much." He quoted the Tampa, Fla.-based bulk transportation carrier's $225 million issue at 99½ bid, 99¾ offered, versus the 99.324 level at which those bonds had priced on Monday to yield 10%.

Other recent deals do well ...

Traders said that most other recently priced deals were also continuing to do well in the aftermarket, with one quoting Friday's $275 million offering of 9¼% notes due 2018 from Viking Acquisition Inc./Global Autocare Inc. continuing to trade around the 102½ bid level.

Those bonds had priced at par and then had risen more than 2 points on the break.

Doing even better was Fayetteville, Ark.-based poultry producer and wet pet-food manufacturer Simmons Foods Inc., whose $265 million offering of 10½% second-lien senior secured notes due 2017 had priced at par and then had traded as well as 103¾ bid, 104¼ offered.

A trader said that on Monday, he had heard those bonds quoted as high as a wide 105 bid, 107 offered context, although he did not know what the catalyst for that was.

On Tuesday, he said that the bonds were trading off those levels, but at a still very respectable 104½ bid area.

... but some don't

However, a trader said that "some new deals still can't get out of their own way," citing as an example the recent new deals from MGM Resort International, Boyd Gaming Corp. and Accellent Inc., all of which continue to trade just at, or even below, the bonds' respective issue prices.

Secondary stays strong

Away from the new-deal world, a trader saw the CDX North American Series 15 HY index up ¼ point on Tuesday to end at 100 5/8 bid, 100 7/8 offered, after having been off about 1/8 point on Monday.

The KDP High Yield Daily index meantime edged up by 1 basis point Tuesday to close at 74.68 after having risen by 5 bps on Monday. Its yield came in by 1 bp Tuesday to 7.11% after having tightened by 2 bps on Monday.

The Merrill Lynch High Yield Master II index gained 0.095% on Tuesday after having firmed by 0.018% on Monday. The latest advance pushed its year-to-date return up to 14.603%, its ninth consecutive new 2010 peak level, eclipsing the old mark of 14.495% recorded on Monday.

Advancing issues led decliners on Tuesday for a fourth straight session, although their margin of victory was just a couple of dozen issues out of the nearly 1,500 that traded, versus the six-to-five advantage they held on Monday.

Overall activity, represented by dollar-volume levels, jumped by 43% on Tuesday after having risen by 4% on Monday.

A trader said that "it was a boring day, except for the equities doing nicely," as Wall Street awaited the election results and tech stocks were firmer.

He reflected that so much of the market's time had recently been spent on new deals, and he expressed amazement when he found that junk issuance this year - which long ago shattered the old new-deal volume record of about $161 billion set last year - continues to reach stratospheric and previously uncharted territory, now north of $235 billion.

"Simply amazing," he said of the figure. "I was shocked."

GM gyrates lower

Among specific issues not linked to any new-deal activity, General Motors' bonds - or, more accurately, the bonds of the entity now known as Motors Liquidation Co., the new name for the "old" GM that was left behind holding all of the carmaker's debt and other unwanted leftover liabilities while the "new" GM, consisting of the company's profitable brands, emerged from bankruptcy last year - were racking up some impressive volume figures of their own on Tuesday. They were seen down between 3 and 4 points on the day as bondholders tried to figure out what the "new" GM's upcoming IPO would mean for them.

By some estimates, over $200 million of GM bonds traded on Tuesday in blocks of $1 million or more, with by far the busiest issue being the widely traded 8 3/8% benchmark bonds due 2033. A trader said that "north of $160 million" of those bonds changed hands on Tuesday, with the bonds falling as low as 32 bid from late Monday levels around 37 bid, leaving the bonds at 32½ bid, 33 offered.

He marveled at what a difference a day made, since "a day ago, we were talking about how those bonds were higher than 37 and just kept grinding ever higher."

Another trader said that "gazillions" of GM's bonds traded, "huge volume."

He saw the Detroit-based top U.S. carmaker's benchmark paper down at least 3½ to 3¾ points on the day, at 32½ bid, 33 offered.

Another trader, seeing the benchmarks trading at 32½ bid, 32 7/8 offered, exclaimed that the drop was "unbelievable," estimating a 4-point fallout from Monday's levels around 36½ bid, 37½ offered.

Other GM issues also traded actively and at the same kinds of lower levels, although none could match the 8 3/8s for sheer volume.

A market source said that mid-afternoon, almost $30 million of the 7.2% notes due 2011 had traded, pegging the bonds at 323/4, while over $20 million of the 8¼% notes due 2023 had moved, at around that same level.

Ugly-duckling Motors Liquidation is slated to get about a 10% stake in the beautiful and profitable swan that the "new" GM is supposed to become once it does its IPO and otherwise raises capital to pay back all of the government loans that kept GM from going out of business altogether during its crisis period in 2008 and 2009. So the bondholders are keenly interested in the valuation for the company implied in the pricing of GM's IPO.

Official guidance on the size of the IPO and the likely price of the shares that the federal government and other GM stakeholders will sell has not been released yet, but unofficial estimates making the rounds of the market extrapolate it to between $50 billion and $60 billion. This is lower than some previously circulated analysts' estimates, sending the bondholders - the size of whose recovery will depend upon as high a valuation as possible for the "new" GM - into a blue funk Tuesday.

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