Harbinger, USI, Rain CII cap $13 billion week; new Interactive Data falls; broad market softer

By Paul Deckelman and Paul A. Harris

New York, Dec. 14 - The high-yield primary sphere closed out one of its busiest weeks of 2012 on Friday by pricing a trio of new deals totaling $1.7 billion, syndicate sources said.

Diversified holding company Harbinger Group Inc. brought an upsized $700 million issue to market after restructuring that deal to shorten its maturity.

Insurance and employee benefits products concern USI Holding Corp. priced $630 million of eight-year notes.

Petroleum coke producer Rain CII Carbon LLC did a $400 million eight-year deal, as part of a larger dual-currency transaction that also included a euro-denominated piece. The dollar bonds were heard by traders to have firmed smartly when they hit the aftermarket, while the Harbinger and USI deals mostly stayed around their respective issue prices.

The three deals capped off a week which saw over $13 billion of new purely junk-rated, U.S.-dollar denominated paper from domestic and developed-country issuers price - one of the busiest weeks of the year in the new-deal market - as borrowers continued to play Beat The Clock to get their financing needs taken care of before Junkbondland goes into its traditional year-end activity lull.

Traders said that the new deals, and other recently priced transactions, remained the focus in the secondary market. While most issues were either unchanged or saw only small movements up or down from previous levels, Thursday's five-year PIK notes deal from Interactive Data Corp. via its Igloo Holding Corp. subsidiary was seen by several of the traders to have given up most of the roughly 2 point gain those bonds had notched in their initial aftermarket dealings.

The overall market was seen having softened a little from the strong levels of earlier in the week, with statistical performance indicators accordingly easier, although they remained better versus their week-ago levels.

Harbinger upsizes

A busy Friday session in the primary market saw three issuers each bring a single dollar-denominated tranche, to raise a combined total of $1.73 billion.

Harbinger Group priced an upsized, restructured $700 million issue of 7 7/8% 6.5-year senior notes (B3/B) at 99.362 to yield 8%.

The deal was increased from $650 million. The maturity was reduced to 6.5 years from seven years.

The yield printed at the tight end of the 8% to 8¼% yield talk.

Deutsche Bank, Jefferies and Macquarie were the joint bookrunners.

The New York-based diversified holding company plans to use the proceeds to refinance its existing secured notes and put cash on its balance sheet.

USI prices atop talk

USI priced a $630 million issue of eight-year senior notes (Caa2/CCC) at par to yield 7¾%, on top of price talk.

Morgan Stanley, Bank of America Merrill Lynch, Citigroup, Goldman Sachs, RBC and UBS were the joint bookrunners for the leveraged-buyout deal.

Proceeds will be used to help fund the acquisition of USI Holdings Corp. by Onex Partners

Rain CII in dollars, euros

Rain CII Carbon LLC and Rain CII Carbon Corp. a dual-currency two-tranche eight-year senior secured second-lien notes transaction (B1/BB-).

A $400 million tranche priced at par to yield 8¼%. The yield printed on top of price talk that was revised lower from earlier talk in the 8½% area.

A €210 million tranche also priced at par to yield 8½%, also on top of revised price talk. Earlier talk had the euro-denominated notes pricing 12.5 to 25 bps behind the dollar-denominated notes, implying a yield of 8 5/8% to 8¾%.

Citigroup was the left bookrunner. Goldman Sachs was the joint bookrunner.

The Kingwood, Texas-based calcined petroleum coke producer plans to use the proceeds to partially fund the acquisition of Rutgers NV and repay some existing debt.

The week ahead

Ancestry.com was expected to price its $300 million offering of eight-year senior notes (Caa1/CCC+) on Friday.

However the deal is now Monday's business, according to market sources.

The deal was talked to yield 10½% to 10¾% on Thursday.

Morgan Stanley, Barclays, Credit Suisse, Deutsche Bank and RBC are the joint bookrunners.

On Thursday Ancestry.com raised price talk on its $670 million seven-year covenant-light term loan to Libor plus 550 basis points to 575 bps from talk of Libor plus 475 bps to 500 bps.

Also, the original issue discount is now guided at 98 to 99, instead of just at 99, and 101 soft call protection for one year was added to the loan, the source said.

The loan modifications, which required recommitments, caused the release of final terms on both the loan and the bonds to be moved into the Dec. 17 week, according to a market source, who added that, save for the release of terms, the bond deal is done.

The only other deal on the active calendar, as the Dec. 17 week gets underway will be Sorenson Communications, Inc.'s $400 million offering of seven-year first-lien senior secured notes (expected ratings B3/B), via J.P. Morgan, Goldman Sachs and Deutsche Bank.

Rain CII Carbon climbs

When they were freed for secondary market dealings, Rain CII Carbon's dollar-denominated 8¼% notes were clearly the standout performers, with one trader calling the issue "the winner of the day." He saw those bonds "very active" in having pushed up to 102 bid, 102½ offered versus their par issue price.

A second trader quoted the bonds as high as 102¾ bid, with no offer seen at that level. A third had them going home at 102½ bid, 103 offered.

USI, Harbinger around issue

On the other hand, the new USI Holding Corp. bonds issued by Onex USI Acquisition "traded a lot but didn't really go anywhere," one of the traders said. He called them "fairly active" around a 99 7/8 to par bid context, right around their par issue price.

Harbinger's restructured 7 7/8% notes meantime were also seen hovering around their issue price of 99.362. One of the traders pegged those bonds at 99½ bid, 99 7/8 offered, while a second saw them trading around 99½ to par, before going out around 99¼ to 99 5/8. Another trader quoted them at 99¼ bid, 99¾ offered.

Access, Charter calm down

Traders said that new or recently priced issues remained the focus of most junk bond players.

Two of the busiest names in Thursday's trading were again active on Friday, though at greatly reduced volume levels.

Access Midstream Partners LP's 4 7/8% notes due 2023were seen by a market source down ¼ point on the day, ending at 101 7/8 bid, on volume of $11 million. That was a far cry from Thursday's frenetic trading in the issue, which saw over $106 million of those bonds changing hands - easily the most active junk issue that session.

Oklahoma City-based Access Midstream, which earlier this year bought most of Chesapeake Energy Corp.'s midstream natural gas gathering and processing assets - with a deal for an additional batch of such assets announced just earlier this week - priced $1.4 billion of the bonds at par in a drive-by offering on Wednesday. They were freed to trade Thursday, zooming above the 102 level in heavy dealings.

Meanwhile Charter Communications Corp.'s new 5 1/8% notes due 2023, issued by the St. Louis-based cable operator's COO Holdings LLC and COO Holdings Capital Corp. subsidiaries, first traded up around 1/8 point but finished down 1/16 point at 100 3/16 bid, on volume of over $17 million, according to the market source.

As was the case with Access Midstream, that figure too, while respectably busy, was well down from the heavy dealings seen on Thursday, when some $83 million of the bonds traded.

Charter priced $1 billion of the notes at par on Wednesday in a quick-to-market transaction, upsizing the deal from an originally announced $750 million. Unlike the Access bonds, which jumped some 2 points when they began trading around, the Charter paper hung in just a little above its issue price.

A trader, quoting the Charter issue at 100 1/8 bid in a locked market, called the bonds down ¼ point on the day, "about what the [broader] market was down."

Igloo issue melts

Another notable name among recently issued bonds on Friday was Interactive Data's 8¼%/9% senior PIK toggle notes due 2017, which the Bedford, Mass.-based financial information provider is issuing via its Igloo Holdings Corp. subsidiary. It priced $350 million of the bonds in a quickly-shopped deal on Thursday at 99 to yield 8½%, with the new paper firming solidly to 101 bid, 101½ offered when it was freed to trade.

However, on Friday, a trader said those bonds traded at 99½ bid "a bunch of times," while a second trader agreed that "they were definitely down," quoting the notes now offered at 99 5/8, with no bid. Yet another trader saw the bonds going home in a 99¼ to par bid context.

But some of the other deals which priced during the week and notched good gains in the secondary market managed to hang in around those higher levels.

A trader saw Michael Foods Holding Inc.'s 8½%/9¼% senior PIK toggle notes due 2018 at 102¾ bid, 103¼ offered, while a second had them at 102 5/8 bid, 103½ offered. The Minnetonka, Minn.-based food-products distributor priced $275 million of those bonds in a quick-to-market deal on Tuesday at 99.5 to yield 8.61%, and they jumped up to 103 bid, 103½ offered in initial secondary dealings. Though down a little from those lofty early levels, a trader sad "they've hung onto to most of their gains."

And FAGE International SA's $250 million add-on to its existing 9 7/8% notes due 2020 was seen by a trader at 106¼ bid, 106¾ offered on Friday. The Greek dairy products producer sold $250 million of those bonds on Wednesday, pricing them at 101 to yield 9.618%, and they quickly climbed 4 points in initial secondary dealings to the 105 to 105½ bid level, continuing to firm after that as well.

Indicators soften up

A trader said that the overall market "was softer across the board - but nothing stood out. The focus was all on the new-issue stuff that's priced in the last week or two weeks. Volume was fairly heavy - but not in the older names."

Away from that, statistical junk market performance indicators turned softer, after having begun the week on a strong note before turning mixed on Thursday. However, they were still up on the week.

The Markit Series 19 CDX North American High Yield index saw its second consecutive loss Friday, losing 1/8 point to end at 100¾ bid, 100 7/8 offered, after having dropped 3/8 point Thursday.

It was up versus the 100½ bid, 100 5/8 offered level seen at the close the previous Friday, Dec. 7.

The KDP High Yield Daily Index was unchanged at 75.30, snapping a streak of 18 consecutive sessions in which it had risen, including the 1 basis point gain recorded Thursday. Its yield was likewise unchanged on Friday at 5.72%, after having come in on Thursday by 1 bps.

Those levels still compare favorably with the week-earlier index reading of 75.03 and yield of 5.80%.

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