Goodyear prices upsized $900 million issue; Ashland launches giant deal as calendar builds

By Paul Deckelman and Paul A. Harris

New York, Feb. 20 - Goodyear Tire & Rubber Co. rolled into Junkbondland on Wednesday with a quickly-shopped, upsized $900 million issue of eight-year notes. The new bonds were quoted around their issue price late in the session.

The giant automotive tire manufacturer's deal was the sole dollar-denominated, purely junk-rated offering Wednesday from domestic or developed-country issuers.

But the primary sphere did see several other prospective deals emerge, including a $2.3 billion four-part offering from specialty chemicals manufacturer Ashland, Inc. However, despite the deal's nominal junk rating in the BB area, syndicate sources said that that the huge transaction will price off the investment-grade desks of the various underwriters.

Back among the solidly junk names, road paving materials manufacturer Associated Asphalt Partners LLC was heard to be shopping a $175 million secured debt transaction. Amusement park operator Cedar Fair Entertainment Corp. was not yet actually selling a deal to prospective buyers - but it did announce that it will refinance its $1.13 billion term loan, and will issue senior notes as part of that funding, along with a new credit facility.

Computer powerhouse Dell Inc. was also heard to be planning a bond issue as part of the larger financing package for its going-private transaction.

Price talk emerged on British communications infrastructure company Arqiva Broadcast Finance plc.'s two-tranche offering of dollar- and sterling-denominated bonds, which could price Thursday.

Among recently priced issues, Tuesday's deal from Digicel Ltd. and last week's offerings from RSI Home Products Inc. and American Axle & Manufacturing Inc. were all seen trading lower on the day, as was the overall junk market, though on no real news. Statistical measures of junk market performance, turned mixed, after having been up all the way on Tuesday.

Goodyear upsizes

The primary market saw a single, upsized deal price on Wednesday.

In the face of volatile market conditions sparked by rumors on the Street, and by debate within the Federal Reserve Bank's Federal Open Market Committee on the wisdom and efficacy of continued quantitative easing, the high yield index outperformed the S&P 500 for the first time in 2013, according to an investor.

In the new issue market, Goodyear priced an upsized $900 million issue of eight-year senior notes (B1/B+/B) at par to yield 6½%.

The yield printed on top of talk.

The deal was upsized from $750 million.

Goldman Sachs & Co., Barclays, Citigroup Global Markets Inc., Credit Agricole Securities (USA) Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC were the joint bookrunners.

The Akron, Ohio-based tire company plans to use the proceeds for general corporate purposes, including contributions to pension plans.

Ashland talks $2.3 billion

The Thursday session is set to be busier than either the Tuesday or Wednesday sessions were, with at least two deals set to price.

Ashland set price talk on a restructured $2.3 billion four-part senior notes offer (/BB/).

A tranche of new three-year notes is talked to yield 3%.

A tranche of new five-year notes is talked to yield 3 7/8% to 4%.

A proposed add-on to the company's 4¾% senior notes due Aug. 15, 2022 is talked to yield 4 7/8% to 5%; the original $500 million issue priced at par on Aug. 2, 2012.

And a restructured tranche of new 30-year notes is talked to yield 6 7/8% to 7%; maturity on the long-dated notes was extended from an originally contemplated tenor of 12 years.

The deal launched on Wednesday and is set to price on Thursday.

Citigroup Global Markets is the lead left bookrunner for the Rule 144A with registration rights deal. BofA Merrill Lynch, Deutsche Bank Securities Inc., Scotia Capital, PNC Capital Markets, J.P. Morgan Securities LLC, RBS Securities Inc., US Bancorp, Credit Agricole CIB, Fifth Third Securities Inc., HSBC Securities (USA) LLC, Mitsubishi UFJ, Mizuho Securities, SMBC, SunTrust Robinson Humphrey and Wells Fargo Securities LLC are the joint bookrunners.

The offering is being run from the investment-grade desk.

Proceeds will be used for debt refinancing.

Meanwhile England's Arqiva Broadcast Finance plc set price talk for its £600 million equivalent dual-currency offering of seven-year senior notes (B3).

The dollar-denominated notes are talked to yield 9¼% to 9½%, and the sterling-denominated notes are talked to yield 9½% to 9¾%.

Final tranche sizes remain to be determined.

Books for the dollar-denominated notes closed on Wednesday. Books for the sterling-denominated tranche close at 5 a.m. ET on Thursday.

Deutsche Bank, J.P. Morgan Securities LLC and Royal Bank of Scotland are the physical bookrunners. JPMorgan will bill and deliver for the dollar-denominated notes, while Royal Bank of Scotland will bill and deliver for the sterling-denominated notes.

BofA Merrill Lynch, Barclays, HSBC, Lloyds TSB and UBS are joint bookrunners.

Proceeds will be used to refinance bank debt.

Associated Asphalt sets call

Associated Asphalt Partners plans to host an investor call at 12:30 p.m. ET on Thursday to discuss a $175 million offering of five-year senior secured notes (Caa1/B).

A roadshow began on Wednesday, and is set to wrap up on Feb. 27.

The deal is expected to price in the middle part of the week ahead.

Goldman Sachs & Co., KeyBanc Capital Markets and SunTrust Robinson Humphrey are the joint bookrunners.

The Roanoke, Va.-based liquid asphalt supplier plans to use the proceeds to repay bank debt.

Goodyear seen around issue

In the secondary market, Goodyear's new 6½% notes priced very late in the session. However, a trader saw the Akron, Ohio-based tire manufacturer's drive-by deal in a par to 100 1/8 bid context after it had priced at par earlier.

Digicel dips in trading

A trader said that Tuesday's megadeal from Caribbean wireless provider Digicel was straddling its par issue price in early dealings on Wednesday, as he quoted those 6% notes due 2021 at 99 7/8 bid, 100 1/8 offered.

Another trader saw the Kingston, Jamaica-based company's deal - which had been upsized to $1 billion from an originally planned $700 million - doing worse than that; he pegged the bonds at just under 99 23/32 bid, 99 31/32 offered, around 9/16 point off from the 100¼ bid, 100½ offered level where they had finished Tuesday when they were freed to trade after pricing.

RSI in retreat

Looking at a few of the deals that priced last week, a trader said that RSI Home Products' 6 7/8% senior secured second-lien notes due 2018 were trading at 100½ bid, 100¼ offered.

That was down ¼ point from the 100¾ bid, 101¼ offered levels seen on Tuesday, which, in turn, were about unchanged from where they were in initial aftermarket dealings on Friday, after the Lincolnton, N.C.-based maker of kitchen cabinets, bathroom vanities and medicine chests had priced its $525 million issue at par.

Axle is active

A trader said that while the overall market was fairly quiet, the new American Axle 6¼% notes due 2021 "were active around 1001/2."

That was actually little changed from the 100½ bid, 100¾ offered levels seen on Tuesday.

A second trader, though, saw the bonds off by 3/8 bid, at 100 1/8 bid, 100 3/8 offered.

The Detroit-based maker of wheel axles and other automotive drivetrain components had priced its quick-to-market $400 million transaction at par this past Thursday, and it initially firmed around ½ point when it was freed for aftermarket activity.

Flextronics trades off

Going back a little further, both tranches of Flextronics International Ltd.'s $1 billion two-part offering were seen having come off the gains they notched after that quickly shopped deal had priced last Tuesday and then moved up.

The Singapore-based contract electronics manufacturer's $500 million of 4 5/8% notes due 2020 were seen by a trader having eased on Wednesday to 100 3/8 bid, 100 7/8 offered, down from their recent levels around 101 bid, 102 offered.

He also saw the other half of that megadeal - the $500 million of 5% notes due 2023 - dip to par bid, 100¾ offered, off 3/8 point from recent levels.

PolyOne pop continues

However, not all of the recent deals were losing ground. A trader saw PolyOne Corp.'s 5¼% notes due 2023 at 101 5/8 bid, 102 1/8 offered on Wednesday.

That was up by ¾ point from the levels around 100 7/8 bid, 101 1/8 offered where the Avon Lake, Ohio-based chemical manufacturer's $600 million drive-by offering had traded after pricing at par last Wednesday.

He also saw NII International Telecom SCA's 11 3/8% notes due 2019 improve by 5/8 point to close at 105 bid, 106 offered. On Tuesday, he had seen those notes at 104 3/8 bid, 105 1/8 offered.

That, in turn, had been down from bid levels near 105 at which that $750 million deal had finished out last week.

The NII bonds had, in fact, been the sweetheart of the secondary market last week, trading strongly after the Reston, Va.-based provider of wireless service to customers in Latin America had priced its scheduled forward calendar offering last Monday at par. NII had upsized that deal to meet robust investor interest not once but twice, having first upsized the offering to $600 million from an originally announced $400 million, and then having enlarged it again, to $750 million. The bonds immediately jumped to around the 102½ bid level after they were freed for secondary trading, and continued to firm smartly as the week wore on.

DuPont higher

In line with euro high-yield bonds "trading OK this week" in the secondary market, DuPont Performance Coatings' euro-denominated 5¾% senior secured notes due 2021 were higher at 101 bid, 102 offered, a trader in London said on Wednesday.

DuPont sold €250 million of the notes at par on Jan. 16.

The Wilmington, Del.-based supplier of vehicle and industrial coating systems had also sold $750 million of 7 3/8% notes due 2021 at par as part of that transaction.

'It is what it is'

Away from trading in the new or recently priced deals, several traders opined that Wednesday's session was very quiet.

"It's too quiet," one said, calling the day's activity "one-off - very situational."

Right now, he continued, "it's a really tough time to be on the sell-side. There's no volatility out there. But we'll see what happens."

He said that the junk market "did feel a little heavy at the end of the day. But hey - it is what it is."

A second trader added that "things have been relatively quiet the last couple of days," including both the run-up to Monday's Presidents Day holiday as well as the post-holiday sessions on Tuesday and Wednesday.

At another desk, a third market source said that "we're not seeing a lot of activity or inquiry.

He did say that during the morning, "it looked like one of the transition groups for the ETFs were selling some stuff - but other than that," nothing was going on.

He summed it up by pronouncing that there was a weaker tone in the bond market, but not a heck of a lot was going on."

Market indicators turn mixed

Statistical junk market performance indicators were mixed on the session on Wednesday, after having been higher across the board on Tuesday.

The Markit Series 19 CDX North American High Yield Index lost 7/16 point on Wednesday to end at 102 3/8 bid, 102½ offered, after having risen by 11/32 point on Tuesday, continuing the recent choppy pattern of alternating gains and losses.

But the KDP High Yield Daily Index was up by 3 basis points on Wednesday to end at 75.34, its fifth consecutive gain; the index had risen by 6 bps for a second consecutive session on Tuesday.

Its yield narrowed by 2 bps on Wednesday, its fourth consecutive decline, to finish at 5.65%. The yield had come in by 3 bps on Tuesday.

And the widely followed Merrill Lynch High Yield Master II index meanwhile notched its eighth consecutive advance on Wednesday, as it rose by 0.065%, on top of Tuesday's 0.042% improvement.

The latest increase raised the index's year-to-date return to 1.538% on Wednesday from Tuesday's 1.472% reading, although it still remained well down from its peak level for 2013 so far of 1.991%, set on Jan. 28.

-Cristal Cody contributed to this review

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