Building Materials, FelCor price; AK Steel earnings boost debt; Nortek slips on tender results

By Paul A. Harris and Stephanie N. Rotondo

Portland, Ore., April 26 - Drive-by business dominated the Tuesday primary market. Four issuers, each bringing a single dollar-denominated tranche, priced a combined face amount of $2.075 billion.

Decent earnings helped the secondary high-yield market gain traction Tuesday.

AK Steel Holdings Corp. released numbers that were better than the market had expected, according to a trader. That resulted in gains for its bonds.

Also up on quarterly results was Ford Motor Co. The company posted its highest first-quarter profit in over a decade, giving the automaker's debt a boost.

Meanwhile, Nortek Inc. reported the early results of its tender offer and consent solicitation for its 11% notes due 2013. Though the company received more than enough tenders to allow it to amend the notes, the company's other issues traded down.

Select Medical Holdings Corp., however, saw its bonds trading up in the wake of Monday's tender offer announcement.

In junkier credits, Dynegy Inc. finished the day higher, though on no news. NewPage Corp. was unsteady to weaker, though trading volume was significantly less than it has been of late.

Building Materials drives by

Building Materials Corp. of America priced a $1 billion issue of 6¾% 10-year notes (Ba3/BB+) at 99.106 to yield 6 7/8%.

The yield printed on top of the price talk.

Deutsche Bank Securities Inc. was the left bookrunner for the quick-to-market issue. Merrill Lynch and Citigroup Global Markets Inc. were joint bookrunners.

Proceeds will be used to repay bank debt and to fund a distribution to the parent.

FelCor upsizes

FelCor Escrow Holdings, LLC and FelCor Lodging LP priced an upsized $525 million issue of eight-year senior secured notes (B2/B-) at par to yield 6¾%, on top of price talk.

J.P. Morgan Securities LLC, Merrill Lynch, Deutsche Bank Securities, Credit Suisse (USA) Securities LLC and Goldman Sachs & Co. were the joint bookrunners for the quick-to-market issue, which was upsized from $500 million.

Proceeds will be used to fund the pending acquisition of two hotels in midtown Manhattan and for general corporate purposes.

Sanmina prices $500 million

Sanmina-SCI Corp. priced a $500 million issue of eight-year senior notes (B1/B) at par to yield 7%.

The yield printed at the wide end of price talk that had been set in the 6 7/8% area.

Merrill Lynch, Deutsche Bank, Goldman Sachs and Morgan Stanley & Co. Inc. were the joint bookrunners for the quick-to-market debt-refinancing deal.

Clayton Williams prices add-on

Finally, Clayton Williams Energy, Inc. priced a $50 million add-on to its 7¾% senior notes due April 1, 2019 (Caa1/B) at 99.

The reoffer price renders a 7.919% yield to worst.

RBS Securities ran the books for the quick-to-market add-on.

The company originally issued $300 million of the bonds in March.

A trader quoted the issue at 99 bid, par offered.

The Midland, Texas-based independent energy company plans to use the proceeds to repay borrowings outstanding under its revolving credit facility.

Amounts repaid under the revolver may be reborrowed, and the company may use those proceeds to redeem its 7¾% senior notes due 2013 and/or for general corporate purposes.

Iasis talks $935 million

Iasis Healthcare LLC and Iasis Healthcare Corp. talked a $935 million offering of eight-year senior notes (Caa1/CCC+) with an 8¼% to 8½% yield, including about one point of original issue discount, on Tuesday.

Merrill Lynch, Barclays Capital Inc., Citigroup, Goldman Sachs and J.P. Morgan Securities LLC are the joint bookrunners.

Allison starts brief roadshow

Allison Transmission, Inc. began a brief roadshow on Tuesday for its $500 million offering of eight-year senior notes.

The company also held an investor call on Tuesday.

The books are set to close on Wednesday afternoon.

Citigroup is the left bookrunner for the Rule 144A and Regulation S for life notes. Barclays, Deutsche Bank and UBS Investment Bank are the joint bookrunners for the debt-refinancing deal.

Broad market firms

The high-yield market, buoyed by earnings, traded upward during Tuesday's session, though a few players remained away from their desks.

The KDP High Yield index moved up to 75.94 with a 6.52% yield from 75.91 with a 6.54% yield. The Markit CDX North American High Yield index gained a quarter-point, closing at 102 5/8 bid, 102 7/8 offered.

But while sources said there were better buyers in the market, sellers continued to be absent.

"There is not as much going on in the secondary market," a trader said. "Everybody is waiting for this flurry of new issues to price."

"Everyone is bracing themselves for the new issues that are coming," said another trader.

AK Steel numbers boost bonds

AK Steel Holdings' debt strengthened after the company released earnings that "beat estimates," a trader said.

He called the 7 5/8% notes due 2020 up half a point around 105.

"I didn't think they could move any higher," the trader said. "That's a pretty big jump for a bond with that premium."

Another trader said the issue gained three-quarters of a point, ending at 104½ bid, 105½ offered.

A third source pegged the notes at 104¾ bid, up half a point.

For the quarter, the West Chester, Pa.-based steel company saw sales of $1.6 billion on shipments of 1.4 million tons, a 14% gain year over year. Net profit was also higher at $8.7 million, or 8 cents per share.

AK Steel said it expects its second-quarter shipments to exceed 1.5 million tons.

Ford up on earnings

In other earnings news, Ford's debt experienced "a big jump," a trader said, after the company reported its best first-quarter profit in 13 years.

The trader called the benchmark 7.45% notes due 2031 up 1½ points at 111 bid, 112 offered.

Another trader said the credit was "fairly active," with five- to 10-year paper up about half a point. The 7.45% notes he deemed up 1½ points around 112.

The Dearborn, Mich.-based automaker posted a 22% increase in net income at $2.6 billion. Revenues were 18% better at $33.1 billion.

Revenues were particularly good in Asia, which saw a 31% jump in revenues to $2.1 billion.

Ford attributed the gains, in part, to a strong lineup of fuel-efficient vehicles. Consumers looked for cheaper transportation as gas prices have skyrocketed.

Nortek notes slip

Nortek released the early results of its tender offer for its 11% notes due 2013, and its remaining issues traded down.

A trader said the 10¾% notes due 2016 slipped to 91 3/8. The 10 1/8% notes due 2013 were also weaker, also at 91 3/8.

The Providence, R.I.-based company said it had received tenders for 88.5% of its $753.33 million issue as of the consent deadline, which was 5 p.m. ET on April 25.

With the needed consents in hand, Nortek intends to go forward with an amendment to the debenture, which will eliminate substantially all of the restrictive covenants and events of default and provide for a shorter notice period for voluntary redemptions.

The company will pay $1,052.50 for each $1,000 principal amount of notes, including a consent fee of $30.00 for notes tendered by the consent date.

Additionally, Nortek intends to call the remaining 11% notes.

Select Medical trades up

Among other tender offers, Select Medical's 7 5/8% notes due 2015 were seen moving up to the tender price, according to a trader.

He pegged the issue at 102.872, up half a point.

The tender price is "roughly 102 7/8," the trader said. "They're not going to go anywhere from there."

The Mechanicsburg, Pa.-based company announced the tender offer on Monday. It will expire on May 20.

The tender offer and a concurrent consent solicitation are being done in connection with Select Medical's attempts to secure a new senior credit facility. Proceeds from the new facility will be used in part to fund the tender.

Dynegy debt gains

A trader said Dynegy's debt was up a point across the board, though there was no fresh news out about the Houston-based power producer.

He saw the 8 3/8% notes due 2016 at 85¾ and the 7½% notes due 2015 at 861/2.

Another source placed the 7¾% notes due 2019 at 771/4, up a half point.

A third trader said the 8 3/8% and 7½% notes were both a point better at 85½ bid, 86 offered and 861/2, respectively.

Earlier in the month, Dynegy said it hired Lazard Ltd. and the law firm of White & Case LLP to advise it on debt restructuring and possible asset sales. The hiring came just over a month after the company warned that a bankruptcy filing might be imminent if it could not get its finances in order.

NewPage action dwindles

After spending many recent sessions as the top-trading credit, there were "not many bonds trading" under the NewPage moniker, a trader said.

He called the 10% notes due 2012 unchanged at 59 bid, 59½ offered. The 11 3/8% notes due 2014 were about half a point weaker at 983/4.

Like Dynegy, NewPage is also looking to restructure with the help of Lazard. The company announced it hired the advisers not long after it said that its chief financial officer had resigned to pursue other opportunities.

The CFO's resignation marks the fourth executive departure in less than a year.

NewPage is a Miamisburg, Ohio-based coated papermaker.

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