Mylan add-on prices, moves up, Warner Chilcott, Stats ChipPac slate; secondary quietly easier

By Paul Deckelman and Paul A. Harris

New York, July 30 - Mylan, Inc. came to market Friday with a $300 million add-on tranche to the Pittsburgh-based specialty pharmaceuticals company's existing 7 7/8% notes due 2020. When the deal was freed for the aftermarket, traders saw the bonds rise robustly.

The Mylan deal brought a close to a busy week in the high yield primary sector which saw almost $6 billion of new paper pricing, including billion-dollar-plus deals from Ford Motor Credit Co., Vantage Drilling Co. and Air Canada. Traders said Friday those and other new deals which came to market during the week were generally firmer on the day, and in some cases are up by 1 or more points from their respective issue prices.

The European high yield sector - recently quite busy but pretty much on vacation this week - finally weighed in with a pricing, as British credit provider International Personal Finance came with an upsized euro-denominated offering of five-year bonds.

But there was some calendar-building activity seen from non-U.S. domiciled companies, as Irish pharmaceuticals maker Warner Chilcott plc announced plans for a big new debt issue that will include bonds, while Singapore-based semiconductor maker Stats ChipPac will hit the road Monday with a $600 million five-year deal .

Traders said the secondary market away from the new deals was mostly quiet, with some indexes having a slightly easier tone but nothing of real consequence going on. Nuveen Investments Inc.'s bonds firmed a little, building on the big gain they notched on Thursday.

Mylan brings add-on

Mylan priced a $300 million add-on to its 7 7/8% senior notes due July 15, 2020 (B1/BB-) at 105.50, resulting in a 6.955% yield - Friday's only junk-rated, dollar-denominated deal.

No official price talk was circulated.

Goldman Sachs & Co. ran the books for the quick-to-market deal.

The Pittsburgh-based pharmaceutical company will use the proceeds to fund the pending acquisition of Bioniche Pharma Group Ltd., an Ireland-based manufacturer of injectable pharmaceutical products.

Should the acquisition not be consummated, the proceeds will be used for general corporate purposes, which may include debt repayment.

The original $700 million issue priced at 99.97 to yield 7 7/8%, on May 12, 2010, as part of a $1.25 billion two-tranche deal that also featured a $550 million issue of 7 5/8% notes due July 15, 2017.

The add-on notes are fungible with the existing 7 7/8% notes due July 15, 2020.

Biggest July ever

Friday's session brought down the curtain on the biggest July the in the history of the high-yield primary market, according to a debt capital markets banker.

Prospect News data bears this source out.

With Mylan in the book, July saw high-yield issuers raise just over $20.43 billion of proceeds in 39 dollar-denominated tranches.

That's $6 billion higher than the next-biggest July; in 2003 the corresponding month saw $14.33 billion price.

However July 2003 saw greater deal volume, 43 tranches, compared to July 2010's 39 tranches.

The lowest amount of July issuance came in 2002, when issuers raised a mere $1.3 billion in 7 tranches.

Average July issuance is $8.7 billion, and average volume is 23 tranches, according to Prospect News data.

International Personal upsizes

The European high-yield primary also saw action on Friday.

International Personal Finance priced an upsized €225 million issue of five-year senior unsecured notes (//BB+) at par to yield 11½%.

The yield printed 12.5 basis points wide of the 11¼% area price talk. The size was increased from €200 million.

Citigroup Global Markets Ltd. and HSBC Bank plc were the joint bookrunners.

Proceeds will be used to pay down bank debt.

Viterra brings split-rated deal

From the crossover space, Viterra, Inc. priced an upsized $400 million offering of split-rated 5.95% 10-year senior notes (Ba1/BBB-/) at a 310 basis points spread to Treasuries, tighter than the Treasuries plus 312.5 bps price talk.

The notes priced at 99.481 to yield 6.02%.

J.P. Morgan Securities Inc. and Morgan Stanley & Co. Inc. ran the books for the debt refinancing and general corporate purposes deal which was upsized from $300 million.

Stats ChipPac to sell $600 million

The week ahead figures to be a busy one.

Several dealers polled on Friday professed visibility on multiple transactions that could come, should market conditions remain favorable.

Singapore-based semiconductor maker, Stats ChipPac Ltd. climbed aboard the forward calendar on Friday.

The company plans to conduct an investor roadshow during the week ahead for its $600 million offering of five-year senior notes (Ba1/BB+).

The offering, which is being led by joint bookrunners Credit Suisse and Deutsche Bank Securities via the emerging markets syndicate desk, is expected to price late in the week.

Proceeds will be used to fund a cash distribution to shareholders and to finance a tender offer and consent solicitation for the company's 6¾% senior notes due 2011.

Busy ahead

With Stats ChipPac in the mix, the active deal calendar at Friday's close featured $2.08 billion in six tranches. All are expected to price before Friday's close.

The final week of July saw issuers raise $6.8 billion in 14 junk-rated dollar-denominated tranches.

The previous week came in at $7 billion in 12 tranches.

The primary ought to continue to see that kind of volume until late August, when the junk market makes its traditional transit from summer to fall, sources say.

"We've had pretty consistent issuance over the past two weeks, and we can expect that to continue because a lot of companies have reported earnings, and they can start hitting the market," a syndicate banker said on Friday.

Meanwhile, the mists of May - when issuance came to a meager $7.3 billion, versus April's $34.7 billion - have lifted, sources say.

The new issue market is now fully revitalized.

For evidence, one banker pointed to Range Resources Corp.'s sale on Thursday of an upsized $500 million of 10-year senior subordinated notes (Ba3/BB/) which priced at par to yield 6¾%, at the tight end of the 6¾% to 7% price talk.

"For them to get that deal done with a six-handle tells me we're back to April," the banker remarked.

New Mylan bonds better

Traders said that as has been the case all this week, much of investors' focus Friday was on newly priced bonds, or those out for just a session or two.

One such name was Mylan. A trader its new bonds trading at 106 bid, 106½ offered, up from the 105½ level at which the add-on had priced.

But at another desk, a trader quoted the new bonds going home even better than that, seeing them having gotten as high as 107¾ bid, 108¼ offered.

"It was a great jump," he proclaimed, "absolutely, very good."

He meantime saw Mylan's 7 5/8% notes due 2017 - $550 million of which had also priced back in May with the 7 7/8s - at 106¼ bid, 107¼ offered.

Tenneco trading fades

A trader quoted Tenneco Inc.'s 7¾% notes due 2018 as having traded as well as 101½ bid, 101¾ offered early in the session - but then said the Lake Forest, Ill.-based automotive components maker's issue "kind of died this morning" and never really got back on track.

The company had priced Thursday's $225 million drive-by issue at par, and the bonds had firmed in initial aftermarket dealings that session to 101 bid, 102 offered.

Range Resources rises slightly

A trader saw Range Resources Corp.'s new 6¾% senior subordinated notes due 2020 having traded as high as 100¾ bid early in the morning- but after that, he said, the Fort Worth,, Tex.-based natural gas exploration and production company's issue "faded a little" after that, going out at 100½ bid, 100 7/8 offered.

"They're never an active trader," he said.

The company had priced $500 million of the bonds in a drive-by deal on Thursday, upsized from the originally announced $350 million size. The bonds priced at par, and were trading at par bid, 101 offered at the end of Thursday's dealings.

Ford Credit holds gains

A trader saw the new Ford Motor Credit Co.'s new 6 5/8% senior notes due 2017 hovering around the 99 1/8 area. That was up from the 98.485 level at which the company - the in-house auto loan agency for Ford Motor Co. - had priced its $1.25 billion behemoth on Wednesday.

inVentiv Health holds at higher levels

inVentiv Health Inc.'s 10% notes due 2018 were trading at 101 bid, 101½ offered. The Somerset, N.J.-based provider of services to the pharmaceutical and healthcare industries priced its $275 million of new paper on Wednesday at par, so a trader characterized their aftermarket experience as "not bad, I guess."

Vantage comes off highs

A trader saw Vantage Drilling's new 11½% senior secured first-lien notes due 2015 at 99 1/8 bid, 99 7/8 offered. He acknowledged that was down from the 100 1/8 bid level the bonds have pretty much held since the $1 billion issue priced on Monday - but still solidly higher than the 96.361 level at which the bonds had actually priced, to yield 12½%.

Market indicators turn mixed

Away from the new deal sector, a trader saw the CDX North American HY Series 14 index off by 1/8 point on Friday to end at 97 5/8 bid, 97 7/8 offered, after having gained ¼ point on Thursday. The index still ended up a little from the 97¼ bid, 97¾ offered level seen at the close of trading the previous Friday, July 23.

The KDP High Yield Daily index meantime fell by 12 basis points on Friday to 72.29, after having gained 7 bps on Thursday. Its yield rose by 5 bps to 8.12%, after having narrowed by 2 bps on Thursday. The index was still a little ahead of the previous Friday's 72.09 reading, and its 8.21% yield.

The Merrill Lynch High Yield Master II index showed a year-to-date gain of 8.37% on Friday - a new peak level for the year, eclipsing the previous mark of 8.328% seen on Thursday. The index was up from its 7.573% year-to-date reading the previous Friday.

Advancing issues led decliners for a 20th consecutive session on Friday, although their winning margin had dwindled to just a couple of dozen issues out of the nearly 1,400 tracked, versus their seven-to-five advantage seen the previous two sessions.

Overall activity, represented by dollar-volume levels, nose-dived by almost 40% on Friday, on top of declines of about 13% on Thursday and 17% on Wednesday.

"It was a little quiet this afternoon, with not too much going on," a trader said, commenting that it seemed like the typical summer Friday afternoon. "We were not getting a lot done."

Nuveen adds to big gains

A market source saw Nuveen Investments' 10½% notes due 2015 up 3/8 point at 98½ bid, on top of the roughly 6-point gain seen on Thursday on the news that the Chicago-based asset-management company had acquired US Bancorp's long-term asset management business, FAF Advisors, for $80 million in cash and a 9½% stake in Nuveen .The deal will allow Nuveen - which already provides investment services to high-net-worth investors - to boost its assets under management by $25 billion to $175 billion at the close of the transaction.

A&P hangs in after advance

A trader said that bonds of Great Atlantic & Pacific Tea Co. were "hanging in there" at the higher levels to which they had moved over the previous several sessions after cratering a week ago when the Montvale, N.J.-based operator of the iconic A&P supermarket chain and several other store brands like PathMark and Waldbaum's reported poor quarterly numbers and announced the sudden ouster of its chief executive officer only six months into his tenure .

The trader quoted the 11 3/8% senior secured notes due 2015 at 69½ bid, 70 offered, which he called "maybe up ¼ to ½ point, nothing too much;" those bonds had fallen to lows around 60 a week ago from prior, pre-news levels around 83 bid, 84 offered.

He also saw the company's 6¾% convertible notes due 2012 trading at bid levels between 53½ and 541/2, off a little from the peak of 55 on Thursday; a week ago, those bonds had swooned to around 45 bid from previous levels in the mid-70s.

Those bonds, along with the company's shares, had gotten crushed the previous Friday (July 23) after A&P reported a net loss of $122.6 million, or $4.83 per share in the fiscal first-quarter ended June 19, on revenue of $2.54 billion - far worse than its year-ago results, a net loss of $65.2 million, or $3.64 per share, on sales of $2.79 billion. Wall Street meantime had been shocked out of its socks, since analysts had been only expecting a loss of about 70 cents per share on revenue of $2.6 billion.

Gulf energy names fall mostly silent

A trader saw not much going on Friday in bonds of companies connected to or impacted by the BP oil well disaster in the Gulf of Mexico. Those bonds of such companies as BP plc, Anadarko Petroleum Corp. and Transocean Inc., among others, busy until recent days, seem to have now retreated to the back burner more than 100 days after the explosion which ruptured a BP well.

The trader said that that ATP Oil & Gas Corp.'s 11 7/8% second-lien senior secured notes due 2015 were trading around 73¾ bid, 74¾ offered, little changed from the levels which the bonds had held over the past few sessions. The bonds are up from recent lows around 70 or 71, and before that, in the upper 60s, to which the bonds slid in the aftermath of the April 20 Deepwater Horizon sinking, which in turn ruptured a BP plc deepwater well 40 miles off the Louisiana coast, spewing millions of gallons of oil into the water and threatening wildlife and the tourism and seafood industries there. Ironically, the bonds had only been priced just below par on April 19, the day before the disaster. Even though ATP had no direct role in the maritime mishap that paper slid down to current levels on investor fears that tough government limitations on offshore drilling imposed in the wake of the debacle could hurt the Houston-based energy E&P operator, which has most of its proven petroleum reserves in the deepwater sections of the Gulf.

Autos' upside ride fades out

Automotive benchmark bonds were ending the week on Friday continuing to fall back from the higher levels at which they had started the week, when they were helped by the news that General Motors Corp. was bolstering its competitive position by acquiring AmeriCredit Corp., giving it an in-house arranger of auto loans for car buyers for the first time in several years, and by strong quarterly numbers posted by GM's domestic arch-rival, Ford Motor Co.

A trader saw GM's benchmark 8 3/8% bonds due 2033 down ½ point on the session at 34¼ bid, 34¾ offered. Those bonds had traded as high as 37 bid earlier in the week before losing their upside momentum.

Meanwhile,.he saw Ford's 7.45% bonds due 2031 which had been quoted approaching the 98-99 level earlier in the week, off by ¼ point at 96¾ bid, 97½ offered.

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