Immucor deal prices late in the day; secondary backs off from Monday gains; NewPage better

By Paul Deckelman and Paul A. Harris

New York, Aug. 16 - Immucor Inc. came to market on Tuesday with its $400 million issue of eight-year notes, high-yield syndicate sources said. The deal priced too late in the session for any kind of aftermarket action.

Traders said that some of the issues that had moved up when the market firmed smartly on Monday, continuing the momentum seen at the tail end of last week, backed off a little from those gains on Monday, including such widely traded issues as the new HCA Inc. bonds and gaming giant Caesars Entertainment Corp.'s bonds.

However, some credits were going the opposite way. NewPage Corp.'s bonds were seen firmer on Tuesday. The bonds had been down by several points on Monday after the papermaker released quarterly results and was downgraded by a Standard & Poor's concerned about the company's ability to meet ongoing obligations and to refinance some bonds in time to head off possible acceleration of other parts of its capital structure.

Traders generally saw a quiet day at the traditional mid-month start to the usual August mid-summer doldrums, with "not a ton" of things going on, in the words of one.

Statistical indicators of market performance, which firmed on both Friday and Monday, were mixed in Tuesday's session.

Immucor prices $400 million

Tuesday's sole deal came from Immucor, Inc.

Just before press time Tuesday night, news circulated that Immucor had priced a $400 million issue of 11 1/8% eight-year senior notes (Caa1/B-) at 98.714 to yield 11 3/8%.

The yield printed in the middle of price talk, which had been set at 11¼% to 11½%.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and UBS Investment Bank were the joint bookrunners.

The issuing entity is IVD Acquisition Corp., which will be merged with and into Immucor.

Proceeds will be used to help fund the leveraged buyout of Immucor by TPG Capital.

Immucor is a Norcross, Ga.-based provider of automated instrument-reagent systems to the blood-transfusion industry.

Immucor - finding the price

For lead bookrunner JPMorgan, pricing the bond deal was a balancing act from the get-go, said a buyside source who participated in both the bond deal and the concurrent $600 million term loan.

Throughout the market turmoil of the past two weeks, it was a question of trying to place the bonds versus funding the bridge loan, which was capped at 12½%, said the buysider who also participated in the bridge loan.

Then of course price talk was a moving target as the market roller-coastered.

Prior to kicking off the bond roadshow, when the market was still healthy, it appeared that the bond deal could come with a yield as low as 9½%, according to a syndicate source.

Then, on the heels of the Standard & Poor's downgrade of the United States' long-term debt came market turmoil that may have climaxed with news from EPFR Global that global high-yield bond funds sustained a history-making $6.71 billion of outflows during the week ended Aug. 10.

At that point, the Immucor deal was being discussed in the context of a 12¼% yield - a stone's throw from the bridge's cap - according to buyside sources.

Soon thereafter, the market swung sharply higher, the accounts' net asset valuations were up, and Immucor price talk began declining. Heading into last weekend, one fund manager feared that the dealers would push pricing all the way down into the 10% range. A syndicate source confirmed that pricing as low as 10½% had been discussed.

In the end, the deal was done in the middle of the official 11¼% to 11½% price talk, which surfaced late Monday afternoon.

This yield was in line with a preference stated by one high-yield mutual fund manager who added that, although arguably on the cheap side, the price could provide some upside for accounts still smarting - and plowing their ways back - from losses sustained over the past fortnight.

Immucor - cutting the pie

Allocations were also a balancing act for JPMorgan, according to a fund manager who awarded good marks to the dealer on this subject.

The problem, said the investor, was that the $400 million bridge loan was fully syndicated, and much of it was taken by accounts that expected generous allocations in return for participating in the bridge. Even though there is not a formal quid pro quo regarding bridge participations and bond allocations, bridge participants nonetheless expect to be well treated when the allocations are made.

On top of that, there were two $100 million-plus anchor orders from accounts that did not participate in the bridge and had stepped into the deal at levels below the eventual price talk. When talk surfaced north of the whisper that was current when those original orders were made, the anchor accounts were even more keen to receive allocations representing appreciable fractions of the original orders.

Hence the accounts representing the anchor orders and the accounts that played the bridge were both presenting compelling cases for satisfactory treatment in terms of allocations.

With an order book said to have been at least 1.5 times oversubscribed, it was tricky business cutting the pie, the buysider said, adding that this was at least one reason the deal terms rolled out so late on Tuesday night even though the order book had been scheduled to close at 11 a.m. ET on Tuesday.

New deal appears too late

There was no aftermarket trading in the new Immucor eight-year notes, owing to the lateness of the hour at which that deal priced.

A trader suggested - correctly, as it turned out - that the company's new issue, which up to that mid-afternoon point had not been seen, would likely be "one of those 6 o'clock pricings" that would wait until the following session to trade.

Rock Ohio deal holds gains

Among other recently priced issues, a trader saw Rock Ohio Caesars LLC's 12 1/8% senior secured second-lien notes due 2018 trading in a 102-103 context on Tuesday.

That was little changed from the levels in a 102-104 range at which those bonds had been quoted on Monday.

It was up from its Friday trading levels around 100½ bid, 101½ offered, which in turn was well up from the 98.266 level at which the Cleveland-based gaming casino developer had priced its $380 million issue on Thursday, yielding 12½%.

The other notable deal from last week - Midland, Texas-based energy operator CrownRock LP's $150 million of 10% notes due 2016, which had priced as a drive-by offering on Friday at 92.681 to yield 12% - remained unseen on Tuesday, several traders said.

One suggested that the smallish deal had just been "snapped up and put away."

New HCAs take a step back

A trader saw the two halves of HCA's recent $5 billion behemoth of a bond offering having slipped back a little after rising solidly during Monday's dealings.

He quoted the Nashville-based hospital operator's 7½% senior unsecured notes due 2022 down 1½ points on the day at 97¾ bid, while its 6½% first-lien senior secured notes due 2020 were a point lower at 99¼ bid.

Both of those tranches had risen a point or more on Monday in line with the general market rebound.

HCA had originally priced $3 billion of the 6½% bonds and $2 billion of the 7½% bonds in a quickly shopped deal on July 26, which saw both parts of the deal - which had been sharply upsized in total size to $5 billion from the originally announced $1 billion - price at par and then move marginally higher.

Market signs turn mixed

Away from the new-deal arena, market statistical indicators, which had been solidly positive on both Friday and Monday, turned mixed on Tuesday.

A trader saw the CDX North American Series 16 High Yield index down by ¾ of a point on Tuesday to close at 94 13/16 bid, 94 15/16 offered after having jumped by a full point on Friday and nearly 1¾ points on Monday .

The KDP High Yield Daily index, though, gained 10 basis points to finish at 72.50 on Tuesday. It rose by 48 bps on Friday and another 44 bps on Monday.

Its yield narrowed by 3 bps on Tuesday to 7.78% after having come in by 18 bps on Friday and another 16 bps on Monday.

And the Merrill Lynch U.S. High Yield Master II index gained 0.237% on Tuesday, adding to the 0.653% rise seen on Monday and the 0.689% advance on Friday, which, in turn, had snapped a skid of eight consecutive downside sessions that had brought its cumulative 2011 return down to near its lowest levels of the year, set in early January.

On Tuesday, the gain lifted the index's year-to-date return to 2.228%, up from Monday's reading of 1.986%. However, it remained well below the peak level for the year of 6.362%, set on July 26.

Ho hum, they said

A trader said of Tuesday's session that it "seemed like it was just one of these boring days."

He said that "stuff was trading, but nothing too exciting."

There was "not a ton" of paper really doing anything, a second trader observed.

The first trader that there was activity in some issues but not much in the way of price movement.

For instance, he said that more than $27 million of Ford Motor Credit Co.'s 5% notes due 2018 changed hands during the session, but the bonds of the Dearborn, Mich.-based auto-loan arm of carmaker Ford Motor Co. didn't drive very far, ending at 96 bid, up perhaps a half point.

NewPage improves

A trader said that NewPage's 11 3/8% senior secured notes due 2014 were going home at 81 bid, 81½ offered, which he called up about a point from the levels to which the Miamisburg, Ohio-based coated-paper manufacturer's bonds had eased on Monday.

He also saw its 10% notes due 2012 at 12 bid, 13 offered, which he called "pretty much unchanged, maybe up a half point from Monday's somewhat lower levels.

A second trader, though, said that the NewPage bonds "were pretty quiet today," pegging the 11 3/8s at 80½ bid, 81 offered and the 10s at 11 bid, 12 offered.

The NewPage bonds had retreated on Monday amid the company's second-quarter earnings numbers showing it still losing money, albeit less than it had a year earlier, and company warnings that it may face acceleration of some debt maturities if it does not refinance or repay its 10% notes by certain deadlines.

NewPage also formally warned in its 10-Q filing with the Securities and Exchange Commission that if the company is not able to refinance its debt or generate enough cash flow to service its obligations, it will have to restructure its debt or file for Chapter 11 bankruptcy.

Standard & Poor's also announced that it had downgraded NewPage's corporate credit and first-lien term loan ratings a notch, to CCC, and cut its second-lien notes and senior subordinated notes two notches, to CC, and put all ratings on CreditWatch with negative implications. The ratings agency warned that NewPage could be challenged to meet its fixed charges, including more than $160 million of cash interest expense during the remainder of this year, based on lowered 2011 EBITDA expectations and the likelihood of no additional material assets sales over the upcoming months.

Bad trip for Travelport

A trader said that Travelport, Inc.'s 9 7/8% senior notes due 2014 lost a point or two after Moody's Investors Service downgraded the ratings of the Parsippany, N.J.-based travel distribution services company. He said the bonds finished at 86 bid.

Moody's cut the corporate family rating and probability-of-default rating of parent Travelport LLC to Caa1 from B3. The senior secured, senior unsecured and subordinated instrument ratings were lowered to B1 from Ba3, to Caa2 from Caa1 and to Caa3 from Caa2, respectively, and the outlook remains negative.

The agency cited weak first-half operating results. EBITDA fell to $283 million from $295 million in 2010.

Caesars seen off

A trader said that Caesars Entertainment's 10% notes due 2018 - originally issued under the Las Vegas-based casino giant's former and more familiar name, Harrah Operating Co. - were down 1 3/8 points at 81¼ bid, and its 11¼% senior secured notes due 2017 were down 1 point at 1061/2, in line with a generalized market retrenchment from some of the highs reached on Monday, when the bonds were seen up by around 1 point.

He said that this and many other issues "bounce up, they bounce down," and so on.

He said that "nothing was up too stellar. A couple of things were up maybe 2 points, just a handful of things," but these were mostly in fairly small and thus non-representative transactions.

Looking at the activity of the past two sessions, he opined that "it's like a frenzy. Everyone comes in after the weekend [saying] 'we gotta buy, buy.' Then, as the week rolls on, things kind of drift a little bit lower.

"So we'll see as we fade into the end of summer," traditionally a pretty slow time in Junkbondland.

"Nothing too exciting is going on one way or another. I want to just go lay in my hammock and drink lemonade."

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