J.B Poindexter, Global Geophysical price to cap $3.8 billion week; Solo Cup again busy

By Paul Deckelman and Paul A. Harris

New York, March 23- The high-yield primary sphere priced a pair of deals on Friday to close out a generally lackluster week that saw new-issue volume fall from last week's levels and largely featureless secondary dealings.

J.B. Poindexter & Co., a manufacturer of diversified products like truck bodies, limousines, funeral hearses and foam packaging material, priced a $200 million issue of 10-year notes, which pushed sharply higher in the aftermarket.

There also was a $50 million add-on to the 2017 notes from Global Geophysical Services Inc., a provider of seismic data to the energy industry.

Those deals brought the week's new-issuance tally to $3.82 billion of new dollar-denominated, junk rated paper, pricing in 12 tranches. That's less than half the volume of the $8.46 billion of new paper that came to market in 15 tranches in the previous week ended March 16.

On a year-to-date basis, Friday's deals lifted the new-issuance total to some $87.902 billion in 175 deals, running about 2.8% ahead of the $85.45 billion in 198 deals that priced by this time last year.

Traders saw some activity Friday in the new deals that priced too late for trading around on Thursday.

For instance, the new deals of Alliance Data Systems Corp. and Cimarex Energy Co. firmed solidly from their par issue price. Terex Corp., whose new issue did trade on Thursday after it priced, hung onto most of its initial gains.

But Cenveo Corp.'s troubled new deal, which priced at a steep discount to par on Thursday only after sharp downsizing and restructuring, was quoted at even lower levels in Friday's market. The printing company's busiest existing bond issue also was sharply lower with traders citing changes in the company's pending tender offer for those outstanding bonds.

Elsewhere in the secondary arena, there was a third straight day of relatively heavy dealings in Solo Cup Co.'s bonds, still riding the momentum from news that the plastic and paper disposable products company agreed to be sold.

KB Home's bonds and shares fell Friday after the homebuilder reported surprisingly bad quarterly numbers.

Statistical market performance measures were mixed on the day, but down on the week for only the second time this year.

J.B. Poindexter prices on top

The dollar-denominated primary market saw two issuers, each one bringing a single tranche of notes, raise a combined total of $247 million on Friday.

J.B. Poindexter priced a $200 million issue of 10-year senior notes (B2/B/) at par to yield 9% on Friday, according to an informed source.

The yield printed on top of yield talk.

J.P. Morgan ran the books. RBC was the co-manager.

The Houston-based owner and operator of transportation-related manufacturing businesses plans to use the proceeds to fund a tender offer for its notes maturing in 2014 and for general corporate purposes.

Global Geophysical 10½ notes

Global Geophysical Services priced a $50 million issue of notes mirroring its 10½% senior notes due May 1, 2017 (B3/B+/).

Barclays Capital Inc. was the left bookrunner for the debt-refinancing deal. Citigroup Global Markets and Credit Suisse Securities (USA) LLC were joint bookrunners.

Lowell prices a £200 million

Also finishing a deal on top of price talk was England's Lowell Group Ltd., which priced a £200 million issue of seven-year senior secured notes (B1/BB) at par to yield 10¾%.

JPMorgan and Lloyds TSB were the joint bookrunners.

The proceeds will be used to repay bank debt and a shareholder loan.

The issuer is a consumer debt services provider based in Leeds, England.

Harron brings $225 million

The final week of March gets underway with a relatively thin new issue calendar, but the dealers warn that it promises to be a busy week.

The latest to climb aboard the calendar is Harron Communications, LP, which plans to price a $225 million offering of eight-year senior notes (Caa1//) during the week ahead.

SunTrust Robinson Humphrey and Wells Fargo Securities LLC are the joint bookrunners.

The Frazer, Pa.-based cable services provider plans to use the proceeds to fund the redemption of the remaining 25% equity interest of BV Investment Partners and repay a portion of its outstanding term loans.

Poindexter pops up

Traders saw the new J.B. Poindexter bonds firming smartly when the diversified manufacturing company's new deal was freed for trading.

One trader saw the $200 million issue of 10-year paper as high as 102¼ bid, after pricing at par earlier in Friday's session.

A second trader said the new deal "did decently," quoting them at 101½ bid, 102 offered.

Yet another trader later on in the session saw the bonds going home at 102 ¼ bid, 102 ¾ offered.

Traders saw no aftermarket activity in Friday's other new deal - the smallish ($50 million) add-on offering to its existing 2017 notes from Global Geophysical Services.

New Cenveo seen lower

Among the bonds that priced too late in the session on Thursday for any kind of trading at that time, the most notable was Cenveo's $225 million offering of 11½% notes due 2017.

The Stamford, Conn.-based company's deal priced at a sizable discount to par. It came at 96.328 to yield 12½%. Even that poor execution was delayed fully a week after the deal wrapped up its roadshow and after it was radically downsized from the originally announced $450 million size and substantially restructured to meet investor objections.

What started out as an eight-year offering with four years of call protection was chopped down to a five-year bond with just three years of non-call status.

The company also offered more yield to its balky would-be buyers, as price talk increased to 12¼% to 12½% from last week's level of 11½% to 11¾%.

The changes made the deal more palatable to the buyers, but not by very much.

One of the traders quoted the new bonds as falling to bid levels as low as 89¼ to 891/2. However, he cautioned that it could be a too-low figure, as he had not seen any right side on the new deal.

"And sometimes, people just throw out low bids in the Street," the trader said.

At another shop a trader - who did not see any bids on those bonds - heard them offered "as cheap as 92."

Existing Cenveo bonds battered

The first trader saw the fate of the new deal closely tied to the company's existing bonds since the company plans to use the proceeds of the new deal, together with credit facility borrowings, to fund its pending tender offer for its outstanding 7 7/8% senior subordinated notes due 2013, its 8 3/8% senior subordinated notes due 2014 and 10½% senior notes due 2016.

But that tender offer also ran into trouble with Cenveo announcing earlier in the week that rather than tendering for all $271 million of its 7 7/8s as originally announced, it only will buy a maximum of $45 million of that particular issue. That reduction matches almost exactly the downsizing of the bond deal, which would have been used to take the extra bonds out.

"There was a lot of excitement today in Cenveo," the trader said. He saw those 7 7/8% notes swoon to 95 bid on Friday from Thursday's levels of 1001/4.

"They're down five points from the high because they're not taking them all out," the trader declared. "So, that one has caused a little stir and excitement."

A market source at another desk also saw those Cenveo bonds plunge some 5¼ points to the 95 level, on round-lot volume of more than $10 million, making it one of the busier bonds on the session.

Those bonds started the week trading just under par, hitting lows during the week in the 92 area, before settling in at their current levels.

He saw Cenveo's 8 7/8% notes due 2018, which are not affected by the tender offer, actually a point better on the day, also at around that 95 level, with more than $ 7 million of the bonds changing hands.

Other Thursday deals do well

Cenveo was really the only source of drama among the deals that came to market on Thursday, as the others did fairly well when they began trading around.

A trader said that Cimarex Energy's new 5 7/8% notes due 2022 did okay, quoting the Denver-based oil and gas exploration and production company's bonds at 101 bid, 101¼ offered. That was the same level that a second trader saw.

That quickly shopped deal came to market on Thursday at par, after being upsized to $750 million from an originally announced $650 million.

Alliance Data Systems' new 6 3/8% notes due 2020 were seen at 101 5/8 bid, 102 1/8 offered in morning trading Friday, although not after that.

The Dallas-based business services company's $500 million offering priced off the forward calendar on Thursday at par, after having been upsized from an originally planned $350 million.

The star of Thursday's aftermarket session, Terex's 6½% notes due 2020 were well received, a trader said, after that quickly shopped $300 million offering from the Westport, Conn.-based construction and industrial machinery manufacturer priced at par.

The bonds moved up to around 101¼ bid, 101½ offered on Thursday. In Friday's dealings, the bonds pretty much stayed around 101 bid, 101¼ offered, the trader said. Another trader on Friday saw them at 101¼ bid, 101½ offered.

Surgical surge continues

One of the well performing new deals from earlier in the week, United Surgical Partners International, Inc. was seen on Friday continuing to hold strong aftermarket levels.

"That one was good from the get-go," a trader said, quoting them Friday at 102¾ bid, 103¼ offered.

A second trader acknowledged Friday that the Dallas-based surgery center operator's bonds did well earlier in the week, but he had not seen them in several days.

The company priced its $440 million of 9% notes due 2020 off the forward calendar on Tuesday at par.

Those bonds immediately moved to 101½ bid on the break and then got even better, eventually pushing up to 102 bid and continuing to strengthen as the week wore on.

Some deals struggling

"Some of the deals from earlier in the week and the last couple of weeks aren't doing that great," a trader said.

For instance, he saw AK Steel Corp.'s 8 3/8% notes due 2022 trading in a 99- to 991/4-bid range.

"Some of that stuff got hurt a little bit," the trader said.

The West Chester, Ohio-based maker of steel alloys priced its $ 300 million drive-by issue on Monday at par, after upsizing it from $250 million. But after initially trading right at their issue price, those bonds dropped down to about the 99 bid level and stayed there.

A trader at another shop actually saw the bonds early Friday bid as low as 981/4, then "there were some odd pieces," he said, around 98½ before they came back up to the 99 area.

The first trader said, "I thought that one would fly," since AK Steel is a well-known name in Junkbondland.

Also, the coupon would seem to be pretty generous by current standards, given a spate of recent deals pricing to at historically un-junk-like yields, for instance 5¾%, 5½% or even 5¼% and 5%.

"I thought it would go - but I was totally wrong," the trader said.

He also saw QEP Resources, Inc.'s bonds 5 3/8% notes due 2022 struggling, quoting them at 99¼ bid, 99½ offered.

The Denver-based energy exploration and production company priced its quick-to-market $500 million deal at par on Feb. 27 and the bonds got as good as the 101 area in the immediate aftermarket.

Since then, the trader said the bonds have come down, recently bottoming to 98¾ bid, 99 offered, before bouncing back to the current levels above 99.

Solo still strong

Away from the new-deal arena, traders called Friday's session "mostly pretty boring," as one put it.

"Things were not thrilling," a second agreed.

But as was the case on both Wednesday and Thursday, Friday saw brisk activity in Solo Cup's bonds, particularly its 8½% notes due 2014.

Those bonds were seen by a trader starting the day at just under the par level and then pushing up to 100¾ bid going out with volume at more than $18 million, making it one of the most widely traded junk issues.

On the week, those bonds were up at least 2 or 3 points, getting a boost from Wednesday's announcement that Lake Forest, Ill.-based Solo, a maker of disposable plastic and paper cups, agreed to be acquired by Dart Container Inc. in a $1 billion deal that includes Dart's assumption of nearly $1 billion of Solo debt.

Solo's 10½% notes due 2013 eased about one-eighth point on Friday to just under 102 bid, on volume of more than $9 million, but were up around 1 point on the week.

Traders noted that the 8½% paper is currently callable at par.

"It's trading on a yield-to-call basis, so they're not likely to go much further," one trader said.

But they were "hanging right in" as investors positioned themselves for the paper possibly being taken out.

KB Home gets hammered

On the downside, KB Home's 8% notes due 2020 dropped more than 2 points on the day to 99¾ bid on volume of more than $16 million, putting it near the top of the junk most-actives list.

That mirrored a slide in the Los Angeles-based homebuilder's New York Stock Exchange-traded shares, which fell 95 cents, or 8.5%, to close at $10.29, their lowest level in nearly two months.

The bonds and shares swooned after the company shocked Wall Street by reporting a first-quarter net loss of $45.8 million, or 59 cents per share. While that was better than the year-ago red ink of $114.5 million, or $1.49 per share, the loss was nearly double the roughly 24 or 25 cents a share that analysts were expecting.

The company also reported that revenue rose 29% from a year ago to $254.6 million, but that was still well below expectations in the $335 million to $340 million area.

Market indicators turn lower

Statistical measures of junk-market performance turned mixed on Friday, after being lower on Thursday. However, they were mostly lower versus last Friday's finish.

A market source said that the CDX North American Series 17 High Yield index was up around 3/16 point on Friday to end at 98¼ bid, 98½ offered, after having been down 15/16 point on Thursday.

But it was about unchanged from where it had closed the previous Friday, March, 16.

The KDP High Yield Daily Index meantime lost ground for a sixth straight session, easing by 5 basis points to end at 73.99, after giving up 2 bps on Thursday. Its yield rose by 2 bps to end at 6.59%, after rising by 1 bp in each of the previous two sessions. Those levels compare unfavorably with a week ago, when the index closed at 74.19 with a 6.5% yield.

And the widely followed Merrill Lynch High Yield Master II Index was off by 0.016% on Friday, its second consecutive loss. It was down by 0.109% on Thursday.

The latest loss left the index's year-to-date return at 5.027%, down from Thursday's 5.043% reading and down further from its peak level for 2012 of 5.361%, recorded on March 2.

The index showed a one-week loss of 0.079%, compared with the previous week's 0.137% gain, which left the year-to-date return at 5.109%.

The latest week's loss was only the second weekly loss this year, against 10 weeks in which the index finished ahead.

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