Newfield, Accellent, Vanguard offerings price; market awaits Energy Transfer's mega-deal

By Paul Deckelman and Paul A. Harris

New York, Jan. 20 - The high yield primary market stepped up its activity level on Wednesday with several pricings, this after having spent the previous session - the first day back after a three-day weekend - merely calendar building.

Newfield Exploration Co. came to market with an upsized offering of 10-year senior subordinated notes. The Houston-based energy exploration and production company's opportunistically timed and quickly shopped bond deal priced too late in the session for any real aftermarket action, although a trader did quote the new bonds somewhat higher.

The day's other pricing came from Accellent Inc., which did a $400 million offering of seven-year senior secured notes, a deal the medical devices maker had announced Tuesday as part of a larger refinancing plan.

Two other offerings joined the forward calendar. One was from electrical wiring manufacturer Coleman Cable Inc., which slated an eight-year offering of senior notes for likely pricing early next week. But of more immediate interest was Dallas-based natural gas company Energy Transfer Equity LP, which unveiled plans for a mammoth $1.75 billion offering of seven-and-10-year notes, which could price as soon as Thursday, or, perhaps, on Friday.

Late in the session Vanguard Health Systems Inc. priced a downsized $950 million offering of eight-year notes.

Among overseas issuers, price talk also emerged Wednesday on China-based Evergrande Real Estate Group Ltd., which is selling at least $500 million of new paper, with pricing expected on Friday.

Traders did not see much activity in existing issues of Newfield Exploration of Coleman Cable, which are to be taken out using the anticipated proceeds from those companies respective bond deals.

Back among the established issues not impacted by the new-deal market, NewPage Corp.'s bonds continued to drop in apparent reaction to Tuesday's abrupt announcement that the paper company's chief executive officer had resigned.

Vanguard downsizes, prices tight

Well after Wednesday's close, Vanguard Health Holding Co. II, LLC and Vanguard Holding Co. II, Inc. moved up timing, and priced a downsized $950 million issue of 8% eight-year senior notes (B3/CCC+) at 98.555 to yield 8¼%.

The yield printed at the tight end of the 8% to 8¼% price talk. It was trimmed from $1 billion in size.

Previous to Wednesday evening's pricing, the deal had been expected to price on Thursday morning.

Bank of America Merrill Lynch, Barclays Capital Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. and Morgan Stanley & Co. were joint bookrunners for the issue.

Proceeds will be used to fund a tender for the company's 9% senior subordinated notes due 2014 and the 11¼% senior discount notes due 2015 and, together with cash on hand, to fund a dividend to Vanguard's existing stockholders.

Newfield upsizes

Elsewhere Newfield Exploration Co. priced an upsized $700 million issue of 6 7/8% 10-year senior subordinated notes (Ba3/BB+) at 99.109 to yield 7%.

The yield printed on top of the price talk.

J.P. Morgan ran the books for the quick-to-market issue, which was upsized from $650 million.

Proceeds will be used to fund the acquisition of TXCO Energy, as well as to fund the tender for Newfield's notes maturing in 2011, and to repay its revolver.

Accellent at tight end

Also on Wednesday, Accellent Inc. priced a $400 million issue of 8 3/8% seven-year senior secured notes (B1/B+) at 99.349 to yield 8½%.

The yield printed at the tight end of the 8½% to 8¾% price talk.

Credit Suisse, Wells Fargo Securities and UBS Investment Bank were joint bookrunners.

Proceeds will be used to refinance bank debt.

Evergrande sets talk

China's Evergrande Real Estate Group Ltd. talked its $500 million minimum offering of senior notes (B1/BB-/BB+) at the 13% area on Wednesday, according to an informed source.

The deal is expected to price on Friday.

Bank of America Merrill Lynch, Goldman Sachs & Co. (Asia) and BOC International are joint bookrunners for the Rule 144A and Regulation S offering.

The Guangzhou, China-based property company will use the proceeds to repay a structured secured loan, to finance existing and new property projects and for general corporate purposes.

Energy Transfer to bring $1.75 billion

Energy Transfer Equity, LP plans to price $1.75 billion of senior notes with maturities of 2017 and 2020 (Ba2//BB) before the end of the week.

Credit Suisse, Morgan Stanley, Wells Fargo Securities, Bank of America Merrill Lynch and UBS Investment Bank are joint bookrunners for the offering.

Proceeds, together with a new $200 million revolver, will be used to take out the partnership's existing $500 million revolver and term loan, and to terminate its interest rate swap agreements.

Coleman Cable for early next week

Finally, Coleman Cable, Inc. plans to price a $235 million offering of eight-year senior notes (expected ratings B3/B+) early next week.

Bank of America Merrill Lynch and Wells Fargo Securities are joint bookrunners.

Proceeds will be used to fund a tender for all of the company's outstanding 9 7/8% notes due 2012.

New Newfields quietly higher

The Newfield Exploration and Accellent deals priced too late in the session for any kind of meaningful aftermarket activity, although a trader did quote Newfield's 6 7/8% senior subordinated notes due 22020 as having traded into a 99¾ bid, up from the 99.109 level at which the company had earlier priced its $700 million of new paper - upsized from $650 million - to yield 7%.

A trader at another shop meantime said that he had seen a seller "come in offering bonds at par. Some traded at 993/4, but most buyers seemed to be content to hold" their paper.

No levels were seen on Accellent' new notes.

Existing Newfield, Coleman paper little seen

A trader said that at his shop, "we were looking for those [existing Newfield and/or Coleman Cable] bonds, but we didn't see much.

He saw "no activity at all" in Coleman Cable's 9 7/8% notes due 2012, which are to be taken out using the proceeds from the Waukegan, Ill.-based manufacturer's new deal; the company is tendering for the bonds, with total consideration of $1,027.50 per $1,000 principal amount for those holders who tender their bonds by the Feb. 2 consent deadline.

He meantime noted that there was "nothing today" going on in Newfield's $175 million of 7 5/8% notes due 2011, which the company is tendering for at a total consideration price of 105 for those holders who tender by the Feb. 3 consent date. He had seen a 104 7/8 bid level on the bonds on Tuesday.

"I guess people are just content to hold it," he said. "NFX probably isn't a bond that a lot of people short. There's a 105 bid out there for a couple of million, so the shorts aren't going crazy."

Market indicators keep nosing southward

Among the established bonds, a trader saw the CDX Series 13 index down 1/8 point for a second consecutive session on Wednesday, ending at 99¼ bid, 99½ offered.

Another trader said that in the early part of the session, the index had gone as low as 99 1/8 bid, 99 5/8 offered level from 99 3/8 bid, 99 5/8 offered late Tuesday, "a little softer but the offering didn't really come in."

The KDP High Yield Daily Index meanwhile lost 5 basis points on Wednesday to 71.90, after having fallen by 8 bps on Tuesday.

Advancing issues were behind decliners for a second straight session on Wednesday, but as had been the case on Tuesday, by only a relatively narrow margin - a handful of issues out of nearly 1,500 tracked.

Overall market activity, as measured by dollar volume levels, gained some 25% from Tuesday's pace.

A trader characterized Wednesday as "kind of a quiet day" in Junkbondland. "I think there's a bunch of deals in the wings, but [the primary] has kind of run out of steam a little bit - the market's not going crazy."

He added that on Tuesday "the [secondary] market seemed to get beat up a little bit in the morning and then came back in the afternoon. I saw a little bit of the same kind of thing today, though to a much lesser extent."

He said that things were a little softer in the morning, but [the downturn] didn't gather a head of steam. Afterward, "Trace was moderately busy - [junk] felt a little soft in the morning, but ended the day in pretty good shape, I'd say."

That having been said, another trader said that "a couple of things seemed like they settled [at lower levels] today."

NewPage pummeled on CEO news

Certainly the biggest loser, he said, was NewPage Corp.'s 10% notes due 2012, which slid for a second consecutive session following Tuesday's unexpected announcement that the company's president and CEO, Richard D. Willett, Jr., had resigned from both of those posts, effective immediately, although he will remain with the company through the end of March as a consultant.

The Miamisburg, Ohio-based coated paper company's bonds had recently been trading in the lower 80s, but fell by several points on Tuesday into the upper 70s on the news of Willett's surprise resignation, which was explained only by a terse reference in the company's announcement that he had chosen to leave after "considerable personal reflection on my longer term career interests," in order to "pursue opportunities in other industries," which were not specified.

On Wednesday, the trader said, the bonds had opened around 76 bid, 77 offered, at one point ventured as high as around 78 bid, but then ended down around 70½ bid, 71½ offered, a 6 point slide on "a lot of volume." He said that most of the day's trading had taken place between 73 and 74, "and then they tailed off at the end of the day to 70-71."

At another desk, a trader saw the bonds do even worse, going home at 691/2, calling that an 8½ point plunge on top of a 3½ point easing to around 78 the day before, in brisk activity. The source said that as of mid-afternoon, over $36 million of the bonds had already changed hands, making it easily one of the day's most actively traded names, and speculated that the final volume tally would go still higher.

Yet another trader declared that NewPage was certainly "the most active name, and it got weaker as the day wore on," falling from prior levels in the mid-70s down to around a 68-69 context on heavy volume. Besides the CEO's resignation, he also cited Tuesday's release of preliminary fourth-quarter results, which were disclosed in a filing with the Securities and Exchange Commission and which included projections of a net loss of between $52 million and $57 million - a sequential improvement from the $138 million loss which the company posted in the third quarter, but an increase in red ink from its year-earlier deficit of $42 million.

NewPage also warned that net sales will likely fall to between $853 million and $861 million, down from a year-ago level of $977 million.

"It's been a tough couple of years for the paper companies," the trader noted.

NewPage rival in retreat

As if to emphasize that point, NewPage competitor Verso Paper Holdings LLC's 11 3/8% notes due 2016 dropped by 3 points on the day in fairly active trading to 87 bid, while the Memphis-based coater paper maker's 9 1/8% notes due 2014 likewise eased to 96 7/8.

That downturn was in line with a more than 6% fall in the company's New York Stock Exchange-traded shares on Wednesday, after Credit Suisse analyst C.A. Dillon downgraded it; he noted the strong run-up the stock has already had - more than tripling in price since last summer to Wednesday's closing level at $3.68 - and cautioned that industry conditions remained soft, with coated paper prices near a low, and continuing to fall in Europe. He also cited unsuccessful recent attempts to raise prices in the United States.

Financial names trade around

Elsewhere, there was some activity in the new CIT Group Inc. 7% notes, which have been actively traded ever since they were issued several weeks ago upon the New York-based commercial lender's exit from Chapter 11.

A market source quoted CIT's 7% notes due 2017 up nearly 4 points on the session at just above 88 bid, while its 7% notes due 2016 gained more than 3 points to also end around 88, both on fairly brisk trading.

Another market source meantime saw the 7% notes due 2014 having traded up to 92½ bid, while the 2013 notes also topped the 92 mark.

Also among the financials, bond insurer MBIA Inc.'s 6 5/8% bonds due 2028 were seen down 1½ points to just under 50 bid, while Parsippany, N.J.-based real estate operator Realogy Corp.'s 12 3/8% notes due 2015 hovered at 77 bid, down more than a point on the session.

A trader said that American International Group Inc.'s bonds were "mostly where they were," seeing AIG's American General Financial Corp.'s 6.90% notes due 2017 holding around 75 bid, while its 4% notes due 2011 closed at 931/2. There was, he said, not much activity in the 4s at all, and the 6.90s were where they began the week," in a 75-76 context, on "not much trading."

AIG's International Lease Finance Corp.'s 6 5/8% notes due 2013 gained a bit more than a point, trading north of 86 bid on fairly busy dealings.

Momentive has momentum

A trader said that Momentive Performance Materials Inc.'s 9¾% notes due 2014 were up a point to a 98-99 context. While he said that the Albany, N.Y.-based chemical producer saw "some trading, not much, and not much activity in the name, they did have numbers out and sounded a little higher."

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