First Data, Silgan, Office Depot price to cap $9 billion week, new deals firm, secondary stronger

By Paul Deckelman and Paul A. Harris

New York, March 9 - A trio of deals came to market on Friday to wind up another busy primary week in Junkbondland.

Two of the issues were opportunistically timed, quickly shopped "drive-by" offerings, as electronic transaction processor First Data Corp. priced $845 million of seven-year senior secured notes, while packaging maker Silgan Holdings, Inc. wrapped up an upsized $500 million of eight-year notes, just the latest in a slew of recent quick-to-market deals.

There also was one offering that priced after a short roadshow - a relative rarity in this market - as office supplies provider Office Depot Inc. brought in $250 million of seven-year senior secured notes.

All three of the new deals were firmer when they hit the aftermarket, with Office Depot showing particular strength.

The $1.6 billion of bonds capped off a week that saw about $9 billion of new dollar-denominated, junk-rated paper price in 19 tranches - a little behind the $11 billion of new paper that priced in 20 tranches in the previous week ended March 2.

That prior week was the second-busiest week this year in the new-deal arena, lagging only the week ended Feb. 3, which saw more than $15.7 billion come to market in 26 tranches.

On a year- to-date basis, Friday's deals lifted the new issuance total to some $74.6 billion in 146 deals, running about 3.7% ahead of the $71.9 billion in 168 deals that priced by this time last year.

Besides the dollar deals, there was a NOK 1 billion two-part offering from Stolt-Nielsen Ltd., a British provider of integrated transportation solutions for bulk liquid chemicals and other specialty liquids.

Back among the dollar bonds, some of the issues that priced earlier in the week were seen firming up nicely, in line with the overall firmer junk market of the latter half of the week. Those deals included Community Health Systems, Inc., Verso Paper Holdings, LLC, B/E Aerospace, Inc., and from much earlier in the week, Pinnacle Entertainment Inc.

Traders said the secondary market generally was firmer, helped by the better equities of the last several days. Among the big winners was the recently rebounding ATP Oil & Gas Corp.

Statistical measures of junk-market performance were better on the day, but down from levels seen at the end of the previous week.

First Data taps 7 3/8% notes

The Friday primary market saw three issuers raise a total of $1.6 billion, with each issuer bringing a single tranche of notes.

First Data priced an $845 million add-on to its 7 3/8% senior secured notes due June 15, 2019 (existing ratings B1/B+) at 99.50 to yield 7.462%.

The yield printed slightly below the mid-point of the 7½%-area yield talk.

Deutsche Bank Securities Inc. was the left bookrunner for the quick-to-market issue.

Credit Suisse, HSBC, Citigroup and Goldman Sachs & Co. were the joint bookrunners.

The Greenwood Village, Colo., provider of electronic commerce and payment services plans to use the proceeds to repay bank debt.

Silgan upsizes

Silgan Holdings priced an upsized $500 million issue of eight-year senior notes (Ba2/BB-/) at par to yield 5% on Friday, according to a syndicate source.

The yield printed at the wide end of the 4 7/8% to 5% yield talk.

Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC were the joint bookrunners for the quick-to-market issue, which was upsized from $300 million.

Stamford, Conn.-based packaging company plans to use the proceeds to redeem its 7¼% senior notes due 2016 and for general corporate purposes.

Office Depot prices seven-year deal

Office Depot priced a $250 million issue of seven-year senior secured notes (B2/B-/) at par to yield 9¾%.

The yield printed at the wide end of the 9½% to 9¾% yield talk.

Citigroup Global Markets Inc. is the left bookrunner. Bank of America Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and Wells Fargo Securities LLC were joint bookrunners.

The Boca Raton, Fla.-based supplier of office products and services plans to use the proceeds to fund the tender offer for its 6¼% notes due 2013.

The week ahead

In the week ahead, the new-issue market is apt to remain as active as it was in the week past, a syndicate banker said on Friday.

However, when the March 12 week gets underway it will do so with just two deals on the calendar.

Neuberger Berman Group is in the market with an $800 million offering of eight-year senior notes (Ba1/BB+) via J.P. Morgan Securities LLC, Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC.

And Cenveo Corp. plans to price a $450 million issue of senior notes due May 15, 2020 (Caa2/CCC+/) via Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, Macquarie Capital and Barclays Capital.

Office Depot up solidly

When Office Depot's new seven-year senior secured bonds were freed for secondary dealings, "they did extremely well," said a trader, who quoted the issue 102 bid, 102½ offered, up from the par price at which that $250 million issue had come to market.

A second trader also pegged the bonds there, while a third saw a wider 102-103 context.

Silgan, First Data rise

The Silgan and First Data deals, which priced a little later on in the day after Office Depot's early bird transaction, also were seen better on the session, although not by the two points or more that Office Depot had gained.

A trader said that Silgan's eight-year notes firmed to around 100½ bid on the break, after the upsized $500 million had priced at par.

A trader who later saw two-way flows quoted the packaging maker's new bonds at 100¼ bid, 100¾ offered.

A trader quoted First Data's seven-year senior secured notes at 100¼ bid in the brokers' market. "They could be better elsewhere," the trader said.

Another trader later saw a two-sided market in the area of 100¼ to1001/2.

Thursday deals move up

The traders saw good movement in the bonds that came to market during Thursday's $1.445 billion pricing session.

A trader said that B/E Aerospace's $500 million of 5¼% notes due 2020 "are doing pretty well," quoting the Wellington, Fla.-based company's deal at 101 bid, 101¼ offered.

The maker of aircraft interior cabin components priced its offering at par, after upsizing the quickly-shopped transaction for an originally announced $375 million.

Another Thursday deal seen doing well on Friday was Verso Paper's 11¾% senior secured notes due 2019, which quoted at 100¾ bid, 101¼ offered.

The Memphis-based paper manufacturer had priced its $345 million deal at 98.896 to yield 12%.

Those bonds were seen trading up in initial aftermarket deals to levels as high as 99 5/8 bid, 99 7/8 offered and continued to gain on Friday.

A trader exclaimed "Wow," when he looked up Covanta Holding Co.'s new 6 3/8% notes due 2022 and saw the new bonds trading in a 101½ bid, 101 5/8 offered context.

The Fairfield, N.J.-based renewable energy and waste-disposal company had priced its quick-to-market $400 million deal at par.

Community Health is robust

A trader said that Community Health Systems' $1 billion offering of 8% notes due 2019 - the junk market's biggest deal of the week - "is doing really well."

He quoted the Franklin, Tenn.-based hospital operator's same-day megadeal add-on to its existing $1 billion at 103¾ bid 104¼ offered.

That was up from the 102.5 level at which the bonds priced on Wednesday to yield 7.447%, after having been upsized from an originally announced $750 million.

A second trader saw the bonds at 103¾ bid, 104¾ offered.

Gaming wins some, loses some

Going back to the early part of the week, a trader said that Pinnacle Entertainment's $325 million of 7¾% notes due 2022 "was a real winner this week," quoting the Las Vegas-based casino operator's deal at 103½ bid, 104 offered.

That quick-to-market deal priced at par on Monday after being upsized from the originally announced $250 million.

But sector peer Wynn Las Vegas LLC's $900 million of split-rated 5 3/8% first-mortgage notes due 2022 "couldn't get out of their own way," he said. Those bonds were seen well below their par issue price, trading at 98 bid, 98¾ offered on Friday.

Overall market better

Away from the new deals, a trader said the junk market overall was stronger, taking its cue from equities, which rose for a third consecutive day.

"Everything turned around," a trader said from the doldrums seen earlier in the week, when junk followed stocks down as Wall Street had its worst session of 2012 on Tuesday.

"A lot of uncertainty coming out of Europe was alleviated," the trader said with Greece having come to an agreement with private bondholders on a debt-swap plan.

The junk market began to move higher on Wednesday and then continued that momentum on Thursday and Friday.

"We had more inflows," another trader said, "and everything definitely feels better."

Many non new-deal names were up by multiple points, among them ATP Oil and Gas, which was probably the most actively traded junk issue of the session with volume of more than $44 million recorded, including more than $33 million of round-lot transactions.

The Houston-based offshore oil and gas company's bonds, which rose solidly last week on news that one of its Gulf of Mexico wells struck oil, continued to firm on Friday, going as high as just under 75 bid before closing at 73¾ bid, up nearly 4 points on the day.

Market signs up on day

For a second straight session, statistical measures of junk-market performance were mostly on the positive side on Friday, but were unable to make up for all of the ground the measures lost earlier in the week, particularly on Tuesday. Thus, they ended lower on the week across the board for the first time in 2012.

A market source said that the CDX North American Series 17 High Yield index was down by 1/16 point on Friday at 96 15/16 bid, 97 3/16 offered after having gained 9/16 point on Thursday.

However, it was down from 97 7/8 bid, 98 offered level at which the index had closed the previous Friday, March 2.

The KDP High Yield Daily Index eased by 3 basis points on Friday to end at 74.08, down after being unchanged on Thursday. But its yield still narrowed by 3 bps to 6.57% after having been unchanged on Thursday.

Those levels compare unfavorably with the 74.66 index reading and 6.37% yield seen the previous Friday.

And the widely-followed Merrill Lynch High Yield Master II Index notched its third consecutive daily advance on Friday, gaining 0.113%, on top of Thursday's 0.162% rise.

The latest gain lifted the index's year-to-date return to 4.966% Friday from 4.848% on Thursday. However, it is still down from its peak level for 2012 of 5.36%. That eclipsed the previous high of 4.501%, which was recorded on Thursday.

The index also showed a one-week loss of 0.315%. That is first weekly loss of 2012 and the first weekly loss after an 11-week winning streak that dated back to mid-December.

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